Investing in gold in India |
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Each investor has to diversify his investment and gold is one of the best investment options. In India gold is considered as safe investment, but investing in jewelry is not as good an investment as buying 24 karat gold coin, gold biscuits or gold bars.
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How to invest in gold in India?
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One can invest gold in the form of:
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Gold Coin/ Gold Biscuits / Gold Bars.
- From jewelers
- From Bank
- From PostOffice
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Gold Exchange Traded Funds/Online
- Online over the internet
- Gold ETF Funds
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From Jewelers:
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All jewelers sell gold coins, gold biscuits and 24 karat gold rings. Always visit your trusted jeweler store to purchase gold and resell without any loss in value.
Things to remember:
- Always purchase gold from your trusted seller.
- Check that gold coin/bar/biscuit /ring has a 24 karate seal in it.
- Just crosscheck the product purity with other jeweler.
Merits of buying from jewellers:
- It’s easy to buy gold from jewelers and they are easily accessible.
- They sell as well as buy back the gold.
Demeits of buying from jewellers:
- Fraud among jewellers is common,so its better to verify the purity of gold from another jeweller.
- It is important that you check that the gold coin / bar / ring etc has a 24 karat seal on it.
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From bank:
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All major banks sell gold coins.
ICICI Bank, State Bank of India, Axis Bank, Bank of India, and HDFC Bank are amongst banking institutions selling gold coins.
Merits of buying from bank:
- Banks are the most trusted source to buy gold.
- One can be sure of the purity of gold.Banks give certificates of purity for the gold coins they sell.
Demerits of buying gold from Banks:
- Banks may charge premium of 10 to 15% over the market rates.This decreases your profits when you sell the gold.
- Banks are not permitted to buy back the gold they sell. So, you have to find another buyer to sell it.
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From Post Office
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Indian Post office also started selling the gold coins.
Merits of buying from Post office:
- India Post office provide gold coins in lower denominations (0.5 grams, 1.0 grams, 5.0 grams and 8.0 grams), which is easy for the buyers.
- Post offices are an extremely reliable source to buy gold and also prices are very reasonable.
Demerits of buying gold from Post office:
- Post offices are not permitted to buy back the gold they sell, so in that case one should have to find another buyer for it.
- At present limited post office has this facility (Delhi, Mumbai, Chennai, Ahmadabad, Surat, Baroda, Pune, Nashik, Nagpur, Trichy , Coimbatore, Salem and Madurai.). Due to limited cities it has its own limitation.
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Online over the Internet
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One can buy gold coins online in the format of demat a/c. There are lots of trusted site that allow user to register, buy and sell the gold online.
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Gold Exchange Traded Funds (ETFs) in India
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ETF are open ended mutual funds that are listed and traded on stock exchanges (NSE/BSE) like stocks.
Gold ETFs provided investors a means of participating in the gold bullion market by buying the gold in demat form and selling through the trading of security on stock exchange.A unit of an ETF fund approximates the value of 1 gram of gold.Gold ETF tracks the performance of Gold Bullion, so
when gold prices move up, the ETF appreciates and when gold prices move down, the ETF loses value.
Merits of buying from Post office:
- It’s in the form of demat, so no need of storing the physical gold.
- Unit of ETF is available in 1 /2 and 1 gram of gold, so investor can chose depend on there budget.
- You can save the cost of storage of gold coins and the time and effort to secure your purchase (such as bank locker charges).Fund house takes the responsibility.
- Need not worry about the accuracy of weight or purity of the gold.
- Transparent pricing and taxation of mutual fund.
Demerits of buying gold from Post office:
- Mutual Funds and Securities investments are subject to market risks.
- The NAV (Net Asset Value) of the units issued under the ETF can go up or down depending on the factors and forces affecting the Bullion Market, Capital Market and Money Market.
- ETFs are a new concept in India compared to other parts of the world.
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