In India, there are several ways to profit off of gold price-linked rallies, some being conventional and some being modern, government-backed schemes.
Some traditional ways of investing in gold include purchasing jewelry, gold coins, gold bars, gold articles, etc. Although physical gold offers high liquidity, a lot of charges like melting charges, making charges, etc. are incurred when purchasing physical gold. Moreover, the high risk of theft/burglary also prevails in the case of physical gold.
Some of the more contemporary ways of investing in gold are gold exchange-traded funds (ETFs), gold mutual funds(fund of funds), and sovereign gold bonds (SGBs).
Gold exchange-traded funds (EFTs) are a type of investment instrument where-in one is not required to purchase physical gold and instead, EFTs exist in a paper format (Demat account). ETFs are traded just like shares on the market and it’s price changes multiple times throughout the day. Gold EFTs offer stable returns, convenience as the instrument exists in the Demat account, have high liquidity and hedge against inflation and fluctuation risks.
One can invest in gold exchange-traded funds across major companies in India such as IDBI Bank, State Bank of India (SBI), HDFC Bank, Nippon Gold ETF, UTI gold ETF, etc.
Gold Mutual Funds- These are the type of mutual funds in which the broker invests across gold EFTs, physical gold, and companies that mine gold; depending on the risk appetite of the investor. Gold funds need not have to be stored as they don’t exist in physical form. Gold funds have an advantage over Gold exchange-traded funds as one can invest at regular intervals, in the form of Systematic Investment Plans (SIPs).
One can invest in gold funds across major national banks in India such as Axis Bank, State Bank of India (SBI), HDFC Bank, Kotak Mahindra Bank, etc.
Sovereign Gold Bond scheme (SGBs)- Sovereign Gold Bonds are the type of investment instruments issued by the government, wherein the availability of bonds for investment purposes is available only when the government opens up a week-long window and not whenever an investor wishes to invest. However, these bonds carry a big advantage- investors are assured with the current market value of gold upon maturity plus an additional guaranteed interest of 2.5% per annum. The maximum limit of subscription is 4KG for individuals. SGBs have a tenure of 8 years, although the lock-in period can be terminated at the end of the 5th year itself.
Sovereign gold bonds 2020- The Reserve Bank of India has released a series of 6 Sovereign gold bond windows to investors. The Sovereign Gold Bonds 2020 windows are as follows-
|Sovereign Gold Bonds 2020 Schedule |
|SGB Sl No.||SGB WIndow||SGB Bonds Issue Date|
|Sovereign gold bonds- Series 1||April 20-24, 2020||April 28, 2020|
|Sovereign gold bonds- Series 2||May 11-15, 2020||May 19, 2020|
|Sovereign gold bonds- Series 3||June 8-12, 2020||June 16, 2020|
|Sovereign gold bonds- Series 4||July 6-10, 2020||July 14, 2020|
|Sovereign gold bonds- Series 5||August 3-7, 2020||Aug 11, 2020|
|Sovereign gold bonds- Series 6||August 31- September 4, 2020||Sep 08, 2020|
Digital Gold- Digital gold is an advanced way of purchasing gold with just a minimum requirement of a smartphone and internet connection. You can now purchase gold coins, gold bricks, etc. through applications like PayTM, GoldRush, Me-Gold, etc. One of the biggest advantages is that one can invest in digital gold starting with just Re.1.
Digital gold has yielded close to 40% returns over the past year and offers convenience to investors to get the gold physically delivered after the investment period. However, relevant charges would apply in that case.