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Gold is the most popular as an investment.
Investors generally buy gold as a hedge or harbour
against economic, political, or social fiat currency
crises . The gold market is subject to speculation
as are other markets, especially through the use of
futures contracts and derivatives.
Gold price has shown
along term correlation
with the price of crude
oil. This suggests a
reason why gold is sold
off during economic
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One can buy physical gold
from a reputed jeweller.
This can be bought as
bars/coins of pure gold or
as jewellery. Now-a- days
most banks also sell gold
coins. Buying physical gold
has high transactional
costs and also if bought
from a non-reputed
jeweller, it also has risks in
terms of getting duped on
purity of gold.
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E-gold is ‘electronic -gold’
and is held electronically in
the demat form. In India, e-
gold is offered by the
National Spot Exchange
Limited (NSEL).An investor
needs to register as a client
with any NSEL member.
Once purchased, a person
has the option of
converting the e-gold into
physical gold. The
minimum quantity of
conversion is 1 gm.
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Gold ETFs are exchange
traded funds that have an
investment objective to
generate returns that are in
line with the performance of
gold. Some portion of cash
in these funds is also
invested in Debt Securities
and Money Market
The minimum investment for a Gold ETF is one
unit of gold. Generally an ETF will charge the
investor 1-1.5% as fund expenses.
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Typically in an ETF, one
needs a demat and trading
account to transact. If one
doesn’t have these, one can
still invest in gold ETFs via
Gold Funds. Gold funds are
fund of funds where the fund
would invest in an
The advantage of this to the investor is that he/she
can now invest in gold like normal mutual funds and
can also avail automatic SIP facility.
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You own a demat account gold ETFs are the best
form of gold investment for you. If you don’t, choose
gold mutual funds. E-Gold needs time to mature as a
product and the separate account requirements are
too demanding for those not accustomed to trading.
While jewellery has value as consumption article,
gold bars and coins should be avoided.