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Home » Gold Investment (Gold Schemes, Gold ETFs, Gold Fixed Deposit, Mutual Funds)

Gold Investment (Gold Schemes, Gold ETFs, Gold Fixed Deposit, Mutual Funds)

SGBs are government securities denominated in grams of gold.

Gold investment is considered as a means to bring financial security in one’s portfolio. There are several gold investment options available in the market. The traditional gold investment mode is purchasing of physical gold. However, analysts suggest going for electronic gold. With physical gold, people generally have to pay for associated charges as well like the Goods and Services Tax (GST). Gold schemes backed by government can also be considered, they say. Sovereign Gold Bond (SGB) Scheme, Indian Gold Coin Scheme and Gold Deposit Scheme (GDS) are some of the gold investment options.

Given below are 5 types of gold investments and their benefits:

1.E-gold: E-Gold or electronic gold is a new incarnation of gold, innovated by National Spot Exchange (NSEL), which enables investors to invest their funds into gold in smaller denomination and hold it in demat form. It is available on the pan India electronic trading platform set-up by National Spot Exchange, which can be accessed through members of NSEL or their franchises, according to National Spot Exchange’s website- nationalspotexchange.com.

2. Sovereign Gold Bond (SGB) Scheme: SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The bond is issued by Reserve Bank on behalf of Government of India. The bonds are issued in denominations of one gram of gold and in multiples thereof. Minimum investment that can be done in the bond is one gram with a maximum limit of subscription of 4 kg for individuals, 4 kg for Hindu Undivided Family (HUF) and 20 kg for trusts and similar entities notified by the government from time to time per fiscal year (April – March), according to RBI’s website- rbi.org.in.

3. Gold Deposit Scheme (GDS): The deposits outstanding under the Gold Deposit Scheme (GDS) are allowed to run till maturity unless these are withdrawn by the depositors prematurely as per existing instructions. All designated banks are eligible to implement the scheme. The deposit of gold made under this scheme with a designated bank is for short term period of 1-3 years.

4. Indian Gold Coin Scheme: MMTC (Metals and Minerals Trading Corporation of India) has been authorised by the central government to manufacture India Gold Coins (IGC) with Ashok Chakra and supply these coins to the domestic market, according to the central bank.

5. Gold Exchange Traded Funds (ETFs): Gold ETFs are similar to mutual funds. Investors can buy gold ETFs online and keep it in their demat account. These combine the flexibility of stock investment and the simplicity of gold investments, according to National Stock Exchange (NSE) website. ETFs trade on the cash market can be bought and sold continuously at market prices. Because of its direct gold pricing, there is a complete transparency on the holdings of an ETF, according to NSE.

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