How To Invest in Gold - 6 Ways Explained !

8/6/2015
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How to Invest in Gold 6 ways explained !

MANISH CHAUHAN 100 COMMENTS
Gold recently crossed its Rs 30,000 per 10 gm mark . This is a historic moment and I am sure a lot of people
want to get into gold investments for their own set of reasons. But how to invest in gold, given there are so
many ways of gold investing these days, most of the people are stuck with so much of choices . More than the
price , the bigger deterrent the confusion of best option to invest in gold.
6 ways to invest in gold

http://www.jagoinvestor.com/2012/06/bestwaytoinvestingold.html
1/23
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In this article we will see how to invest in gold in different ways and what are the pros and cons of all the
options. The main focus of this article is to make the options more clear to you and help you take decisions.
1. Physical gold
The oldest and most widely used way to invest in gold is in the form of physical gold. I would say this is form
with which most of the people are comfortable with . From centuries, physical gold is the only way to invest
in gold . Now coming to the point , there are two ways to invest in physical gold
a) Jewellery This is the most famous way of investing in physical gold. This is mostly done for
consumption rather than investment . Obviously jewellery is also an investment product in itself , but
most of the people buy it for consumption purpose. The best part of Jewellery is that its very easy to
invest in it , all you need to do is cash or cheque and thats all , you can buy it . Also the whole family is
more comfortable with this option. However the sad part is that you do not just pay the market price of
gold , but also making charges for jewellery . As its in physical form , there are chances of theft also . One
more problem with jewellery is that there are chances of fraud at times , you can be sold a inferior quality
of gold in the name of high quality gold. So its very important from where you buy it.
When should you buy ?

Its advisable that if there is some marriage going to
LandInvestment
NearGoa
be there in your house in near future, you can invest
Buyland90minsfromPanajiOnly
Rs.50psf.Easy48months
term. It might also be a possibility that you are more
in physical gold . Also note that you are very clear

that it will not be required for emergency in short
attached to physical things and do not believe in
online option , thats another reason you can go for
it.
b) Gold Bar/Coin
Gold Bar and Coins are another good way to invest
in physical form of gold. Gold bar/coins are sold by
all the banks and jewelers . Its a good way to invest in gold if you want to do it for pure investment
purpose or for some distant future marriage like your sister or daughter marriage. The good point about
bars/coins is that depending on the requirement you can either buy more (bars) or less (coins) and easily
available at Banks and jewellery shops , but banks only sell it , do not buy it back. Also generally there is
no consumption done on regular basis so a person can keep it in locker or some safe place for long time.
The bad part of gold bar/coins are that its always available at a premium price of 5-10% and at the time
of selling them , you again will get a discounted price of 5-10% , so overall your returns will go down .
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You can buy a gold bar/coin if you are too attached to physical gold and can not go for online option
. You can buy it for investment purpose also , but note that returns would be compromised because
of the discounted price you get at the time of selling and at the time of buying . In case you have
some marriage at home in coming future (not very near) , then also you can buy it .
2. Gold ETF
Gold ETFs are just like stocks , you can invest in these if you have a demat account . An ETF a online version
of physical gold . The best of gold etf is that its convenient to invest in Gold ETF if you already have a demat
account and can start with a small amount (1 gm value) and as and when you want you can invest from time
to time. However the sad part is that you have to pay the brokerage and you do not get a feel of gold in your
hands which you get with physical gold . The gold ETF can also be illiquid at times if you have not chosen the
right one . Also there are high chances that you will sell your gold ETF in the time of small emergencies which
you will not do with physical gold. Gold BeeS from Benchmark and Kotak Gold ETF are one of the biggest
gold ETFs in India right now and they are highly liquid. We recommend Gold ETFs to our Financial Planning
clients as their expectation is liquidity + some exposure to gold for investment point.

You should buy gold ETF if you already have a demat account and would like to invest from pure
investment perspective , You can consider them as liquid as you can sell them on any day in the stock
market .
3. Gold Fund of Funds

Gold Mutual funds are those mutual funds which invest in another parent mutual fund which nally invests
in stocks of gold mining companies and companies which are related to gold related activities . They also buy
physical gold , but in very small quantities . This is not the suitable investment for those who want to track
gold prices , because these funds do not invest most of their money in gold , but gold related companies . So
its mainly a equity fund which invests in companies. For example AIG World Gold Fund , which does nothing
but invests in its parent mutual fund AIG PB Equity Fund Gold, which nally invests in different companies .
The good part of these funds is that if you are optimistic about the future of those companies involved in
gold, these are good funds , but the sad part is that you will pay expense ratio two times because it is fund of
funds. A lot of people invest in these funds by mistake thinking that they invest in real gold.

By now you will be very clear that these are actually like a sectoral fund which invests in only those
companies which have their work in gold related things like mining gold etc. So its extremely risky or
rewarding . So if your criteria is to invest in gold companies and not gold , these are the funds to invest in
4. Gold Saving Funds

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8/6/2015
These are the mutual funds which invests in real gold . They pool in money from people and buy gold and you
can buy the units of these mutual funds . The best part of these funds is that you can systematically invest in
gold per month through SIP route . The best part of this is that you dont need to have a demat account to
invest in gold saving funds . You also can invest regularly in gold through SIP through this funds. But the sad
part is that you pay administrative charges and expense ratio just like any other mutual funds.

This is really a great way to invest in Gold if you do not have a demat account and would like to regularly
invest on monthly basis . This is highly liquid option also because you can anytime sell the gold fund
units like any other mutual funds unit .
5. e-Gold
e-Gold was launched some time back in India from the exchange called NSEL , which also has other
commodities like Silver and Platinum in e-format . Its very much like Gold ETF , where you can invest in Gold
in online format . For investing in E-Gold you still need a demat account, but with one of the companies
authorised by NSEL (list here) . The best part of this option is that you can also take physical delivery of gold
with some terms and conditions. But the sad part is that not all big broking houses demat account can be
used to buy this, you need to open another demat account for this and this option is not too much popular
with retail investors .
When should you buy it ?

You can buy this if you need physical delivery of gold at some future point of view , but you also want to
6. Gold Futures
bene t from the online advantages like the market price and no storage cost at your side. Read more
about this in detail here
12
One more option to invest Gold is through Gold Futures, but I would like to call it more of a trading activity
86 and not investment because its short term in nature. You can use Gold Future to protect the pricing . If the
price of gold today is Rs 30,000 and a 3 month gold future price is 30,500 , then you can lock the price at this
moment to 30,500 , so that when you want to buy the gold after 3 months, you get it at 30,500 only . This
would require a little bit of knowledge on how futures work .
This option is bit more technical and one should only use it if you have decent amount of knowledge . Do
this if you want to lock the price of gold which you want to buy in future, if you fear that prices can go
very high .
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8/6/2015
Which option are you going to choose and why ? Are you now clear on how to invest in gold as per your
condition ?
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5/23
8/6/2015
MOHIT
May 19, 2015 at 12:10 am
Hi,
I want to invest in physical gold on every month basis and I can invest every month
Rs.2000-2500. So please suggest me, what can I do and from where I can purchase gold
with 999.0% purity.
Regards,
Mohit
Reply
Manish Chauhan
May 29, 2015 at 1:47 pm
Hi Mohit
You can purchase it from jewellers only . There is something call Vedni (in
maharasthra) which is just raw gold ..
Reply
Prafull
April 19, 2013 at 2:50 pm
Hi Manish,
Thanks for all the excellent work you are putting up.
I wanted to know about such a gold investment in which I am free of wealth tax and
most importantly in which I can get income tax bene ts, say, that I can get redemption
in income tax?? Can u give me such a link in which, how that investment works, is
explained.
Reply
Manish Chauhan
April 26, 2013 at 2:41 pm
there is no such gold related investments

Reply
6/23
8/6/2015
BV Anil
January 9, 2013 at 11:27 pm
Im a govt employee and I get subscribe around 1lac every year in PF which has an
interst of around 8%.
Im planning to invest a lumpsome amount of around 1lac in gold fund and also.. start
any monthly investiment plan in gold.I dont have a demat.
I heard bullionindia.in and Reliance gold plan are newly introduced.
I dont need physical gold but am looking for good returns.
Reply
BV Anil
January 9, 2013 at 11:16 pm
Hi Mr. Manish,
I earn around 4lac/annum. I PF subscribtion is around 1lakh per annum at an interest of
8%.
Honeslty, Im looking forward for an entity which gives good returns.
So do you think gold fund is a good option for me?
Could you please let me know if Reliance gold plan is good or if bullionindia.in or could
you please tell me which is the best wherein I can get the amount in liquid form when
ever I need?
I dont have a demat account. And moreover Id like to go for a one time investiment plan
or almost 1 lakh for one year- two years.
Reply
7/23
8/6/2015
Anurag
November 9, 2012 at 12:15 pm
Hi Manish ,
I need physical gold after 4-5 years .What option should I choose to average the Gold
prices in a systematic way .Should it be gold etf or e-gold ?
Reply
Manish Chauhan
November 12, 2012 at 8:20 am
Truely speaking , you can go for anything, does not matter much at the end of
the day , but if you already have a demat account, you can go for gold ETF
Reply
8/23
8/6/2015
Mandeep
Hi Munish, Plz tell me about GOLD GINNI.

can we buy GINNI in physical form, may be it is best than jewellery.
Regards,
Mandeep
Reply
Manish Chauhan
yes, you can buy it , what exacty you want to know on that ?
Reply
Mandeep
Hi
may be i heard about GINNI that its price is as per market rate, like
when we sell gold jewellery the amount deducted from 5-10% or
more may be, but in GINNI case, which is current price, we can sell
the same on that price is this correct?
may be you can understand, what i want to know.
regards,
mandeep
Reply
Manish Chauhan
I have no idea on this GINNI thing !

Reply
9/23
8/6/2015
Mandeep
Hi Munish,
I read the Article, there are many options to invest in GOLD. As per my requirements, i
am investing in Reliance Gold Saving Fund (G), which i think, is best for me and it is also
giving me a good return.
As per my views, SIP option is best,
Regards,
Mandeep
Reply
Manish Chauhan
Thanks for your views !

Reply
10/23
8/6/2015
Swagata Guha
October 29, 2012 at 10:04 am
Hi Manish,
I invest in gold through benchmark gold etf. I m very fond of investing in silver too. But
not in physical form. I came acroos an article in business standard on investing online in
gold and silver at wholesale price through bullion India platform (article was given on
22nd October)
http://www.business-standard.com/india/news/now-invest-online-in-gold-silver-atwholesale-prices/192427/on
Bullion India provides the convenience of buying as low as 0.1 gm of gold and 1 gm of
silver at live wholesale prices. Along with the price bene t Bullion India avails facilities
like no storage fee, free insurance, no account opening charges and no brokerage. These
fully insured bars are home delivered at a nominal cost.
Is investing in this way safe and reliable??? Can you guide me regarding this article? Can
I go for this?? Pls suggest.
Reply
Manish Chauhan
October 30, 2012 at 10:50 am
I am not aware about it , so cant comment, can you open a thread to discuss
about it at our forum http://www.jagoinvestor.com/forum
Reply
11/23
8/6/2015
Suchi
October 27, 2012 at 9:09 pm
Hi Manish,
Can you please tell me the difference between e-gold and gold etf ?
I can invest 1-2,000 per month in this and I dont mind buying anyother metal also, if it is
pro table. Also, I dont require it in physical form.
Please suggest which one is better.
Do I need to open trading and demat account both for investing in either of the two?
Please let me know in terms of service and brokerage, from whom I should get my
demat account openned?
Sorry for so many questions, this will be my rst investment
Thanks,
Suchi
Reply
Manish Chauhan
October 30, 2012 at 11:22 am
e-Gold is traded at different stock exchange , Gold etf is traded at stock

makrets ,here is the difference
http://www.jagoinvestor.com/2010/09/invest-in-gold-and-silver-through-egold-and-e-silver.html
Reply
12/23
8/6/2015
Suchi
Hi Manish,
I think I have found the right person who can answer my questions.
I want to invest in gold monthly(1,000-2,000 per month). Do not require it in physical
form, just need pro t
By now, I think Gold ETF and e-gold are most attractive but m not very clear about the
difference between the two.
Also, do I need to open trading account and demat account both for investing in any of
the two?
In future I dont mind investing in any other metal too. I think, I can avail this facility in
case of e-gold but m not very sure about gold etf.
Please let me know which one can be the best option for me and from whom I should
get my demat account openned?
Thanks
Reply
Manish Chauhan
October 30, 2012 at 11:22 am
See this http://www.jagoinvestor.com/2010/09/invest-in-gold-and-silverthrough-e-gold-and-e-silver.html

Reply
Sravi
Hi Manish ,
Thanks for the wonderful article again. I want to invest in gold (not in physical form) for
my kids marriage and now she is 2 years old. please help me in which form of
investment is good for me in long term considering all the charges.
1. Shall i get demat account and invest in gold etf ?
or
2. Shal li invest in gold saving funds through SIP.?
13/23
8/6/2015
2. Shal li invest in gold saving funds through SIP.?

or
3. Shall i go for e-gold?
Please throw some light on it.
Thanks,
Sravi
Reply
Manish Chauhan
You can start with gold saving fund through SIP , it will be like buying mutual
fund only !
Reply
sravi
Hi Manish,
But, gold fund eats most of our returns by charges and gives less
returns. wat say?Further research seems e-gold looks good with
charges wise and returns wise also its comparative to gold etf and
gold fund. But one time demat account opening is required. Wats
your thoughts on it. do you think e-gold is risky in any way?
Thanks,
sravi
Reply
Manish Chauhan
Your analysis is correct !

Reply
Ram
July 2, 2012 at 5:31 pm
Hi Manish
14/23
8/6/2015
I found different banks are charging different premiums for Gold coins (in some cases, it
is more than 15%) and Banks will not buy back the Gold. Then, there is no point in
investing in Bank Gold Coins.
I found some reputed jewelers are selling the Gold coins/bars at Market value of 24ct.
And they will buy back also.
Hence, I hope out of all the above options listed and detailed by you, purchase of
Physical Gold coins/bars at No Premium from Reputed jewelers is the BEST OPTION.
I hope this is the main reason for its popularity among Middle Class Indians. I think
more than 70% of Gold investment in India is done in this form only (Physical Gold bars
purchased at Reputed Jewelers at No Premium charges).
Request you to pl. correct me if I am wrong.
Regards, Ram
Reply
Manish Chauhan
July 5, 2012 at 10:45 am
Ram
If you are comfortable with jeweellers , then you can go ahead, but i m sure the
chances of getting pure gold from bank is always higher , what do you say ?
Reply
Vandhana Karthick
July 17, 2012 at 1:29 am
Mr.Manish, Pure gold buying from bank is not that much easier..In
jewellery shop they gold testing machine and we can check and now
a days you can check anywhere apart from where you buy.If we prove
with loss of purity they will just refund or they will replace.But in
bank price is little bit higher than shops and also only coins can be
purchasedYour articles are excellent and keep writing as now
usefullyAll the best..Is there a chance of guest post?
Reply
Manish Chauhan
July 17, 2012 at 9:39 am
Vandana
15/23
8/6/2015
Vandana
THanks for you comment
We do not take guest posts randomly,. we do it only when

we know the person from long time and if he/she can give
some thing related to persoanal nance (no stock market
stuff) and somewhich does not exist already on the blog .
Reply
prasanna
i read in some news articles that banks are offering loans with e-gold
as security
can you tell me the names of some banks which offers e-gold or esilver as
a pledge and sanctions loans
Reply
Manish Chauhan
October 9, 2012 at 10:33 am
I have not heard of this till now, can you share the news
source !
Reply
prasanna
http://articles.economictimes.indiatimes.com/2011-0524/news/29577719_1_etfs-and-gold-e-gold-reliance-goldsavings-fund
Reply
Manish Chauhan
Yes .. with this , it looks like some banks have started

16/23
8/6/2015
Yes .. with this , it looks like some banks have started

taking that , but which banks it not clear, so you
need to ask to banks if they take it or not
Reply
smitha
June 26, 2012 at 2:45 pm
Hi Manish,
You wrote that at the time of selling gold, there is a discounted price of 5% to 10%. We
have bought gold coins before and they said if it is the hallmark variety, we will get the
price of gold prevailing that day. No discounts or whatever.
Could you tell me what is this discounted price at the time of resale of gold coins/bar?
Reply
Manish Chauhan
June 26, 2012 at 5:36 pm
Smitha
The meaning for that was that if you sell gold coin/bar , you get lesser price
than market price .
Reply
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How to Invest in Gold 6 ways explained !

6 ways to invest in gold

When should you buy ?

be there in your house in near future, you can invest

term. It might also be a possibility that you are more

in physical gold . Also note that you are very clear

When should you buy ?

When should you buy ?

3. Gold Fund of Funds

When should you buy ?

4. Gold Saving Funds

When should you buy ?

When should you buy it ?

about this in detail here

What do you want to read about

Books / Launches / Intiatives

EPF - Employee Provident Fund

Psychology & Wisdom

Other Products and Concepts

Credit Report & Score

PPF (Public Provident Fund)

there is no such gold related investments

Hi Munish, Plz tell me about GOLD GINNI.

I have no idea on this GINNI thing !

Thanks for your views !

e-Gold is traded at different stock exchange , Gold etf is traded at stock

See this http://www.jagoinvestor.com/2010/09/invest-in-gold-and-silverthrough-e-gold-and-e-silver.html

2. Shal li invest in gold saving funds through SIP.?

Your analysis is correct !

We do not take guest posts randomly,. we do it only when

Yes .. with this , it looks like some banks have started

Yes .. with this , it looks like some banks have started

Please subscribe me to your Email Newsletters

Buy Health Insurance

Select your gender

Looking at buying Health Insurance?

Select members to be insured

Get Advice from Experts when you

Buy our Books

11 tax-free income in India - every

4 important things to complete when

Buying Health Insurance in Indi

investor should know

you Close your Home Loan

Follow this 13 point checklist

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