India is the biggest purchaser of gold on the planet. The utilization of the yellow metal by Indians represents about one-6th of the aggregate utilization of gold on the planet. The sheen of gold has pulled in the general population of India from times untold.
In our country, gold is a popular investment across the social strata because of the status it provides as a safe-haven asset that gives good and sure returns when all other asset classes fail.
In any case, as of late, numerous Indians are understanding that keeping physical gold in bank lockers isn't the perfect approach to put resources into the yellow metal. Individuals in the nation are looking for better contrasting options to put resources into gold. Here are the most widely recognized methods for putting resources into gold electronically.
Sovereign gold bonds: Sovereign gold bonds were introduced by the Government of India to discourage the demand for physical gold and urge Indians to possess paper gold that would profit the fiscal deficit of the nation. The greatest favorable position of putting resources into sovereign gold bonds against some other type of gold venture is the way that bondholders get an interest coupon of 2.5% for every annum. Sovereign gold bonds have a lock-in time of five years. At the end of lock-in period of five years, the principal received by the investors will be decided on the price of gold prevailing at that time. These bonds are listed on the stock exchanges and investors can actively trade them, in the same way as stocks. Another big benefit of sovereign gold bonds is that they are tax-free for individual investors. Gold bonds also eliminate the risk and costs of storage of physical gold.
Gold ETF: Gold exchange traded funds (ETFs) are professionally-managed funds that are traded on the stock exchanges. Buying and selling of ETF units happen just like a stock during market hours. There are several benefits of owning gold ETFs. ETFs can be traded like shares and are liquid in nature. ETF holders do not have to worry about theft or pay bank-locker charges. However, the exchange-traded funds do have an asset management fee of 1% per annum. This can be a significant drag on performance over the long term.
E-gold: If you want all the benefits of investing in gold without worrying about storage in its physical form, e-gold is just the thing for you. E-gold is gold that is held electronically in the investor’s demat account. This electronic gold can be exchanged for physical gold at any time after surrendering the demat certificates to a depository participant. E-gold facility is offered by the National Spot Exchange Limited (NSEL). E-gold has the same taxation treatment as physical gold and only qualifies for long-term capital gains if the holding period is more than three years. However, the biggest advantage of e-gold is that they can be exchanged for physical gold at any time, which is helpful during occasions such as a wedding in the family.
Gold Futures: Gold futures are another way of investing in gold. Gold futures, like other commodity futures, tracks the spot price of gold. Gold futures are actively traded on commodity exchanges. However, this product should only be used by investors who are very experienced and have a high-risk tolerance. Gold futures offer investors a high degree of leverage which can give high returns but can also magnify losses significantly.
The traditional way of physically holding gold is slowly making way for electronic investment in gold. Out of the electronic methods, sovereign gold bonds is the best as it combines low transaction costs, tax exemption and interest coupons. These reasons ensure that an investment in sovereign gold bonds would give the returns out of all the online methods of investment.