Indians mark Akshaya Tritiya by purchasing gold as it is considered auspicious to do so. However, the celebration of this year has been much different from what it generally used to be as individuals have not been able to purchase physical gold due to the lockdown. You should not lose hopes, as there are other ways of investing in gold.
Investing in physical gold has now turned out to be old fashion. Gold jewellery comes with several additional expenses, such as making and wastage charges. This has made physical gold unattractive for investors. However, this does not take away the love that Indians have for the yellow metal. It is for this reason that alternate gold investment options have come up in the recent past.
The following are the ways in which you can invest in gold:
1) Digital Gold:
Digital gold investment option is provided by the Metals and Minerals Trading Corporation of India (MMTC), a state-owned company. It has collaborated with Produits Artistiques Métaux Précieux), a global leader in bullion based out of Switzerland. You purchase the purest form of gold by investing in digital gold; however, you don’t get to possess it physically.
Therefore, there is no need to worry about safety, storage, liquidity and other expenses such as wastage and making charges. You can invest as low as Rs 100 in this option. This is the best way of investing in gold as the transactions are transparent and are entirely digital.
You need to have a digital gold account with any of the authorised third party in order to invest in digital gold. The third-party would buy gold on your behalf and preserve in a safe vault when you invest. Similarly, when you redeem, the third party would sell the gold at the prevailing rate and credit the amount to your account.
2) Gold ETFs
Gold exchange-traded funds (ETFs) are open-ended mutual funds that track the domestic price of physical gold. These funds are managed passively and listed on the Bombay and National stock exchanges. The units of gold ETFs can be bought and sold at the prevailing market price.
Investing in gold ETFs is much like buying gold electronically. Buying one unit of a gold ETF means that you are buying one gram of gold, which is backed by the equivalent amount of gold of the highest quality in physical form. Gold ETFs will provide you with the dual benefit of trading units like stocks and flexibility.
3) Gold Mutual Funds
Gold mutual funds are open-ended mutual funds that invest in gold reserves. These funds predominantly invest in the shares of gold mining and producing companies. They also invest in physical gold and entities involved in distributing gold. The price of gold dictates the overall value of the fund.
Investing in these funds is considered safe as they are always under the purview of the Securities and Exchange Board of India (SEBI). You can invest as low as Rs 500 in these funds. Gold mutual funds provide much-needed flexibility. You can buy and sell units anytime you want at the prevailing net asset value (NAV).
Investing in physical gold is now a thing of the past. The world has moved on as have the investments. Right now, staying at home is the need of the hour as your safety is of utmost importance. Investing in the gold-related schemes mentioned above is simple, straightforwards, and can be done from home itself.
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Engineer by qualification, financial writer by choice. I am always open to learning new things.