I am keen to invest in gold but am not sure about the instrument to invest in. Can you please explain the different types of gold investments that I can make including gold ETFs and which is more profitable in long run?
- Shipra Srivastava
There are a couple of ways by which you can have an exposure to gold. For instance, if you are looking at converting the metal into jewellery, then the best option available is to buy gold physically in the form of bars and coins. If you are looking at investing in gold, there are three ways to approach it; first, you can invest in funds that invest in gold mining funds such as AIG World Gold and DSPBR World Gold Fund. Next, you can invest in paper gold through gold exchange traded fund (ETF), wherein you buy the gold units from the stock exchange for which you need a demat account to buy and sell the units on the stock exchange. And more recently, you have the option of investing in a gold fund of fund, such as Reliance Gold Savings, Kotak Gold and SBI Gold fund, which are all passively managed fund of fund that invests in the open-ended Gold Exchange Traded Fund of their fund houses, which in turn invests in physical gold with 99.5 per cent purity. This structure is convenient for those who do not have a demat account and want to start a systematic investment plan in gold. Depending on your convenience and investment needs; you can consider any of the options to invest in gold. Amongst the investing option; ETFs and gold funds should be better for the liquidity they offer and the fact that these invest into physical gold, their value will be closest to that of gold.