Gold Investment: Different ways to invest in gold


Gold as an asset class has always worked as a hedge against inflation and geopolitically turbulent times. Along with investment in equities, it is prudent to have some allocation to gold as it is inversely correlated with equities.

Purchasing physical gold

There are two ways of doing this. The traditional way is purchasing gold jewellery from a trusted gold jewellery shop. However, one needs to be careful about the making charges, purity, safety and quality while buying. Alternatively, one can buy the gold in the form of coins and bars from the jeweller or a bank.

Sovereign gold bonds

Sovereign gold bonds (SGBs) are issued by the RBI in tranches. These bonds are offered in terms of gram at the current rate of gold and offer a fixed rate of interest. The investor receives value of gold at the rate prevalent at maturity. Investment in SGBs can be made through banks, post offices or stock exchanges. This is a long term investment and redemption at maturity is tax-free.

Gold ETFs

Investment in gold through gold ETFs can be made online using the broker platform at very low charges. These ETFs invest in physical gold, SGBs, gold companies and funds.

Digital gold

Digital gold is investment in pure gold in digital form. Here, the seller stores an equivalent quantity of physical gold in a secured vault which is reflected in the digital gold account of the investor. The investor can also take physical delivery of gold.

Points to note

Each of the investment mode has a different tax implication with respect to sale and redemption.

It is best to consult your tax advisor before deciding on the mode of investing in gold.

Content on this page is courtesy Centre for Investment Education and Learning (CIEL).
Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.



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