On Monday, gold touched its highest level in the last one year on the back of an escalation in geo-political tensions due to North Korea's powerful nuclear test. While in the domestic bullion market it rose Rs 200 to touch Rs 30,600, in the international market it raced above $1,300 an ounce due to uncertainties in equity markets and weakness in the dollar. If tensions continue, prices of the gold are expected to go up further. In India, the upcoming festive season will further boost the demand of gold.
Here're some of the options through which you can take exposure in gold whether for consumption or investment purpose.
Jewellers: While this is the oldest and the most common route to purchase gold, especially gold jewellery, it is not without any flaws. Most often customers are saddled with inferior quality of gold in the name of the higher one by the jeweller. Before finalizing the purchase, look for 5 hallmarking signs on the jewellery and if you are buying coins, make sure they are in tamper-proof packing. Buy gold from Bureau of Indian Standards (BIS) certified jeweller. India has over 13,700 BIS-hallmarked jewellery showrooms.
Paytm: This is the newest way to accumulate gold. Paytm partnered with gold refiner MMTC-PAMP to buy and sell gold in Gold accumulation plan through its app. Gold can be bought with as low as Rs 1 or starting 0.1 gm by simply log in through your user id. Payment can be made either via Paytm wallet, debit, credit cards or net banking. The gold is available in coins made by MMTC-PAMP and bears different making charges based on the weight and design. One can buy up to Rs. 20,000 worth of gold without KYC on the app. The platform also allows delivery within 14 days of the request made by the buyer. However, the latter has to bear the delivery charges depending on his place of residence. Till the delivery is ordered, the gold is kept secured in MMTC-PAMP vault.
Sovereign gold bonds: Government issues gold bonds from time to time under Sovereign Gold Bond Scheme where the returns are linked to current price of gold. They are usually sold through post offices and commercial banks for minimum investment of 1 gm of gold. The second tranche of Sovereign Gold Bonds (SGB) 2017-18 carried an interest payout of 2.5% per annum on the amount & a discount of Rs 50 per gm of gold. The gains are qualified for tax exemption upon holding bonds for 8 yrs straight.
E-gold: Another option to buy gold is through National Spot Exchange Limited (NSEL). The annual expenses are as low as 0.40% per annum. This is inclusive of storage, insurance and management. You can buy e-gold by logging in to the NSEL site through your demat account. The units get credited to you 2 days after the transaction.
Gold ETFs: You can also invest via gold exchange-traded funds (ETFs). These are like mutual fund units where each unit is equal to 1 gm of gold. They are bought & sold like MF units. However, you have to shell out a management fee of around 2% annually that may have an impact on the return of your asset.
Gold Funds: These are funds that invest in gold ETFs & do not necessitate opening a demat account. Investing in them is similar to MF. However, these funds charge 0.5%-1% annually as management, administrative and others charges in the form of an expense ratio.