Investing With Gold | How to Invest In Gold? | Types & Benefits

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Investing With Gold | In India, gold has long been viewed as a traditional way to invest, encompassing jewelry and adornments as well. It serves not only as a valuable asset but also as a representation of one’s hard work and perseverance in trying times. Its worth transcends beyond just its financial value, as it holds deep emotional and cultural significance to the people. Despite the advent of various investment avenues, the importance of gold remains unchanged and new opportunities for investment in the precious metal have come to the forefront.

Benefits of Investing With Gold

Material Possession: Gold belongs to a category of physical assets that many individuals consider buying for their future prospects.

Bright Past: Gold boasts a favorable history of growth in price and worth. People from all walks of life, from the common to the wealthy, have recognized and taken advantage of its value.

Defense against Inflation: Investing in gold has established itself as a secure method of protecting against inflationary pressures.

Ease of Exchange: The process of buying and selling gold is straightforward, making it one of the most readily tradable assets in the market.

Straightforward Investment: Investing in gold does not necessitate any special expertise or research, making it an accessible option for investors.

Portfolio Expansion: Including gold in a portfolio is a means of expanding diversity and serving as a supplementary investment choice.”

Types of Gold- Investing With Gold

Investors who are considering investing in gold should be aware of the different forms of gold available and understand why one may be more valuable than the other. The purest form of gold is 24-karat, which signifies a level of purity at 99.9%. This form of gold can be found in the form of coins or bars, but it is not ideal for jewelry making. As a result, 24-karat gold holds the highest value due to its lack of impurities.

In contrast, 22-karat gold contains a mixture of 22 parts gold and 2 parts other metals. This combination makes it a more viable option for jewelry creation. It has a gold content of approximately 91.67% and is also commonly referred to as “916” gold.

18-karat gold comprises a blend of three-quarters gold and a quarter of various metals. Despite being less valuable compared to 24-karat and 22-karat gold, it is favored for creating jewelry because of its robustness and stability.

Ways to Investing With Gold | investing with gold

  1. Gold ETF– Traded Funds (ETFs) are a popular investment option that follows the market value of gold. The ETFs provide a way for individuals to invest in precious metals by buying into gold reserves. Each unit of a Gold ETF represents 1 gram of pure gold. Some key characteristics of Gold ETFs include: Investors must have a Demat account to purchase units of Gold ETFs. The minimum investment is set at 1 gram of gold. Gold ETFs offer high market liquidity, allowing for easy buying and selling. ETF units can be traded on stock exchanges just like stocks. There are no exit fees when selling units of Gold ETFs. The underlying asset of Gold ETFs is physical gold, providing a secure investment option. 
  2. Investing in a Gold Mutual Fund: This investment strategy involves putting one’s funds into gold ETFs as opposed to physically buying gold. The investment is made through the medium of ETFs and falls under the umbrella of “Fund of Funds”. This option is ideal for individuals who lack a Demat account and seek to gain from the expert management of gold prices and their upward trend.
  3. The Sovereign Gold Bond Initiative: In an effort to curb demand for tangible gold, the Indian government launched the Sovereign Gold Bond Scheme in 2015. Dubbed as the “Government-backed gold bond,” these bonds are facilitated by the Reserve Bank of India and serve as a representation of the Indian government.
  4. Virtual Gold Investment: An online investment option for gold, virtual gold, offers a hassle-free and economical choice for those who want to invest in precious metal. Instead of physical storage, investors can own digital representations of 24-karat gold that are linked to its value.
  5. Investing in Tangible Treasures: For those who believe in the traditional method of acquiring gold and preserving it for extended periods, purchasing gold coins or bars is an option. It’s crucial for investors to source their gold from trustworthy and authenticated sources to guarantee its quality. The gold coins and bars come with a 24-karat fineness, reflecting the value of pure gold. Available in standard measurements such as 1 gram, 5 grams, 10 grams or more, investors should verify the gold’s hallmark to ensure it meets the BIS standards of purity.

Point to Remember Before Investing In Gold

Investing With Gold | The value of gold is influenced by a range of variables, including supply and demand, the nation’s economic status, and global market demand among others. In India, gold is perceived as lucky and is often bought for special events such as Diwali, Akshaya Tritiya, marriages, etc. It is commonly perceived that the price trend of gold differs from the stock market, making it a feasible investment opportunity. Nevertheless, it should not comprise a major portion of an investment portfolio.

As with other investment options, prior to investing in gold, it’s crucial to evaluate one’s investment objectives, investment duration, risk appetite, and future investment strategy.

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