Best Gold Investment Options Other Than Physical Gold

Published: Friday, September 23, 2016, 11:39 [IST]

There are numerous ways through which gold lovers can invest in gold. Traditionally, only physical gold was bought with the intention to sell during need. Gold is considered as a hedge against inflation and best asset during political uncertainty.

Last year, the government came up with the latest scheme in order to curb the gold imports burden. Here is best investment option in gold other than physical gold:

Sovereign Gold Bond

Sovereign Gold Bonds (SGB) would pay interest on the certificates issued.
Sovereign Gold Bonds currently pay an interest of 2.75 per cent per annum. Under SGB, physical gold is converted to certificates.
The other good thing of the Sovereign Gold Bond is that it tracks the prices of gold.

Gold Monetisation Scheme

The GMS will be replacing the existing Gold Deposit Scheme, 1999. However, individuals holding the outstanding under the Gold Deposit Scheme can keep it till maturity unless he wishes to withdraw prematurely.
Gold under the scheme will be accepted at the Collection and Purity Testing Centres (CPTC) which is certified by Bureau of Indian Standards (BIS).
The deposit certificates will be issued by banks in equivalence of 995 fineness of gold.
Individuals will be allowed to prematurely withdrawal and will be subject to a minimum lock-in period and penalty will be applicable.

Ashok Chakra Gold Coin

The Ashoka Chakra Gold Coin is a part of the Gold Monetisation Programme. As of now, the coins will be available in 5 and 10 grams denominations. While, a 20-gram bar will also be available on request.
Ashoka Chakra gold coin will carry advanced with anti-counterfeit features and tamper proof packaging that will aid easy re-cycling.
The Indian Cold coin will be of 24 karat purity & 999 fineness. All coins will be hallmarked as per the BIS standards. These coins will be distributed through designated MMTC outlets across India.

Gold Futures

Gold can be bought and sold in the futures market in India. Gold future prices track gold prices, and the contracts have to be settled with a pre-determined period.
Gold Futures are considered as a risky investment, as an investor have to settle the contract, even if you make a loss. In case of gold coins and bars, you can continue to hold the same, if you incur a loss.
Gold in the futures market can be bought in the same way as you buy shares in the stock market. You need to open an account with a broker to trade in the commodities market.

SBI Gold ETF

The scheme invests in gold and gold bullion tracking price of the gold. The one year retrn on the fund is 19.2 percent and Gold ETFs are better than physical gold and offer many advantages. They can be easily sold as they are held in electronic form and fewer chances of theft.

UTI Gold ETF

UTI Gold ETF has given returns of almost 19.5 per cent in the last one year. This is better than most investments, including bank deposits.
The scheme will be bench-marked against the price of Gold. So, when gold prices climb the price of UTI Gold ETF will climb.
Minimum one unit can be bought or sold in demat form at prices quoted on the NSE.
As mentioned earlier, if share prices crash, gold will rally, so it good to buy Gold ETFs.

GS Gold BeES

GS Gold BeES is the biggest gold ETF in the country. The fund has given the best returns after UTI Gold ETF of 19.4 per cent in the last one year.
If you are looking at long term investments in gold, this would be an ideal fund to invest in.
Gold ETFs are taxed in the same way as physical gold. You can buy the same from the NSE and BSE, just like you buy shares. Or talk to your broker, who will help.