Those looking to invest in gold today have multiple options to choose from. One can invest in physical gold, in the form of jewellery, coins or biscuits, or set up a demat account to purchase gold electronically. Other than physical gold, a range of gold-based financial products are available today, such as gold ETFs (exchange traded funds), and gold schemes such as gold-denominated bonds. In contrast to physical gold, financial products such as gold ETFs act like mutual funds, wherein the value of investment is linked with the market price of the underlying asset. Besides, government-backed schemes such as the Sovereign Gold Bond (SGB) Scheme, the Indian Gold Coin Scheme and the Gold Deposit Scheme (GDS) are among some of the other avenues available today to invest in non-physical gold.
Here are five options available today for investment in non-physical gold:
1. Gold Exchange Traded Funds (ETFs)
Gold ETFs are similar to mutual funds wherein investors can buy their units online and keep them in a demat account. Gold ETFs are traded on the cash market, and can be bought and sold at market prices. Investment in gold ETFs attracts much lower expenses as compared to physical gold, according to the NSE's website - nseindia.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 are redeemed in cash on maturity. The bonds are issued by the RBI on behalf of government. The central bank notifies the terms and conditions for the scheme from time to time. Here's the schedule of the issuance of gold bonds under the Sovereign Gold Bond (SGB) scheme:
|Tranche||Date of Subscription||Date of Issuance|
|2019-20 Series I||June 03-07, 2019 (Completed)||11-Jun-19|
|2019-20 Series II||July 08–12, 2019 (Completed)||16-Jul-19|
|2019-20 Series III||August 05-09, 2019||14-Aug-19|
|2019-20 Series IV||September 09-13, 2019||17-Sep-19|
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The deposits outstanding under the Gold Deposit Scheme (GDS) are allowed to run till maturity unless these are withdrawn by the depositors prematurely as per existing instructions.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.
4. Indian Gold Coin Scheme
MMTC or Metals and Minerals Trading Corporation of India has been authorized by the central government to manufacture India Gold Coins (IGC) and supply these coins to the domestic market, according to the RBI.
Electronic gold or e-gold enables investors to invest their funds into gold in smaller denomination and hold it in a demat (dematerialised) form. E-gold was introduced in India by NSEL (National Spot Exchange Limited). "One can easily buy e-gold from NSEL (National Spot Exchange Limited). All you need is to open a demat account. Also, one needs a client or a trading account. This demat account has to be opened from the DP (Depository Participant) that is approved by the National Spot Exchange Limited," according to Abhishek Bansal, chairman, ABans Group of Companies.
According to Rahul Agarwal, Director, Wealth Discover, the most common method of systematic investment in gold through e-gold is through a Gold Accumulation Plans (GAPs). "These plans allow you to buy as little or as much as you want on a regular interval," he said.
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