How to invest in gold: The Beginner's Guide

Investing in Gold is emerging as a popular option for investments. In times of market turbulence and money crunch, it is a secure haven! There were times when the central governments used to buy Dollars by dumping gold but in recent times, we have seen a complete vice- versa situation. With the increase in the purchasing power of the people, people are becoming more inclined towards gold buying. Curious to know about how to invest in gold? Learn about the options through which people invest in Gold.

Sovereign Gold Bonds

Such gold bonds are issued on behalf of the government by the Reserve Bank of India in multiples of 1gm. They pay a fixed interest of 2.5%. One can opt for the exit option available in the fifth year, though the tenor of the bond is for eight years. One can borrow money on collateral of these bonds. Such bonds are also listed in BSE and NSE where the investors can buy and sell the bonds on the stock exchange after the subscription period is over at the current market price. The bonds can be bought from Stock Exchanges, banks, Designated post offices, and other sources notified by the Government. Such bonds can be bought in cash up to ₹20.000 and online as well where one can discount up to ₹50 on the Issue Price.

Gold’s Exchange Traded Funds

Gold’s Exchange Traded Funds

ETFs offered by primarily Mutual funds trade in Physical gold where physical gold held in ETF Units equivalent to 1gm each by the custodian banks. As per SEBI guidelines they are valued periodically. There is a cost involved in managing ETFs. Investors who invest in ETF’s should open a Demat account and also have a trading account opened with Broker to buy or sell the ETF units after the new fund offer for the ETF closes., Just like any other mutual fund, Investors can buy units of the gold funds and these funds invest in the units of the gold ETFs to give investors similar exposure to gold.

Digital Gold

These days one can buy digital gold by the facility offered by MMTC-PAMP Pvt. Ltd., which is a joint venture between MMTC Ltd. And Switzerland-based bullion brand PAMP SA, wherein the gold is accumulated by buying online through institutions, broking houses and payment platforms such as Stockholding Corporation of India Ltd (SHCIL), Paytm and other payment options. In this facility, an investor can accumulate gold of value as low as ₹1,000 by regularly buying gold. Insecure storage of MMTC-PAMP with full insurance, the accumulated gold is kept and investors can ask for its delivery in the form of different denominations of coins. The minimum delivery is 1gm.

Last but the very popular way of investing in Gold is buying Physical gold in the form of coins, gold bars, or jewelry. If Gold is bought in jewelry form then making charges are to be paid. Such charges are deducted when the gold has to be sold off. The coins are available at Metals and Minerals Trading Corporation of India Ltd. (MMTC) outlets and designated banks. The buyback of these coins or bars is also offered by MMTC at the prevailing price thus offering investors the required liquidity. Jewelers also offer gold savings schemes, where buyers make periodic deposits and use the sum to buy gold after a specified period. They offer a discount or a similar benefit in such a scheme.

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