Gold has been used as an instrument of financial security and investment for the past many decades. It has worked well as a system of financial support providing assistance in emergency situations.
This has led to the emergence of gold exchange-traded funds or ETFs and sovereign gold bonds or SGBs. In addition to this, there are numerous other ways of investing in gold, other than simply buying jewelry, and we will discuss a few of these options in this article.
Gaining the possession of jewelry is one of the most commonly known and used method of investing in gold. In the South Asian region, holding a huge amount of gold is considered as a source of pride in the local communities.
While beneficial, this traditionally used gold investing tool hold as few disadvantages as well. First, there is a minimum of 6 per cent and up to 25 per cent of the gold value lost as ‘making charges’ and this cannot be recovered. Attached to this is the lost value in the case of out of fashion jewelry design which no one is willing to purchase later on. And secondly, there are certain security risks associated with the act of holding a vast amount of gold jewelry.
Gold coins are another good source of investing in gold. These coins can easily be purchased from any gold jeweler, and now even banks and e-commerce companies.
The advantage of investing in gold coins is that there is no loss of gold value as ‘making charges’ as in this form the gold has not been molded into any specific shape or design. You can find the latest gold coin price values at the Gold News Australia website.
Gold Savings Schemes
There are two types of gold saving schemes that you can opt for. The most common form requires a monthly fixed deposit for the duration of your choice. When the duration or tenure of the agreement ends, you can buy the amount of gold you have deposited during the tenure plus a bonus amount.
In the other gold savings scheme, a month’s installment is added at the end of the tenure for the investor in the form of a gift or cash incentive. Other than that, the entire mechanism stays the same.
Gold Exchange Traded Funds (ETF)
Gold ETFs are a form of paper gold and this form of investment is carried out on a stock exchange. This is a more cost effective method of owning gold as the hassle and cost associated with trading actual gold is avoided. An added advantage is the clarity in the pricing mechanism.
Sovereign Gold Bonds (SGB)
SGBs are another form of owning paper gold and holds the same advantages that gold ETFs do. This is an instrument which is issued by the government on a specific window or time frame. Usually this happens at an interval of up to three months and invites investors for a typical period of a week or seven days.
Outside the designated time, investors can purchase SGBs at market value.
Digital gold is the option of buying physical gold on online mediums. This instrument is provided via different mobile wallet options, and other mobile app and websites.
Having reviewed all gold investment options above, paper and digital gold seems like the most convenient and lucrative options for investing in gold. Having said that, it is important to think about the reasons for which you are investing in gold before proceeding.