Deconstructing the yellow metal’s sheen

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Saikat Neogi: Nov 28 2012, 00:07 IST

proposed hike before the auspicious Akshaya Tritiya festival. The demand of the metal, however, picked up in the three months to September this year to 205 tonnes because of festival and marriage buying. Moreover, according to the World Gold Council, although lower monsoon rains during August had curtailed demand, a recovery in rainfall during September boosted sentiments and drove the relief-related demand. With the price of gold almost doubling in the last two years, the metal has given the best 5-year returns as compared with bank deposits and the Sensex. Traditionally, like everyone globally, Indians too consider gold as a good hedge against inflation and with headline inflation remaining sticky, the demand for the metal has risen.

How do Indians invest in gold?

In the physical form, jewellery accounts for about 60% of the total demand and the rest is in the form of bar and coins, basically for investment purposes. Increasingly, Indians are also investing in gold ETFs with mutual funds because, by investing in the paper form, one can eliminate issues related to purity, insurance, storage and even reselling. The assets under management of mutual funds went up from R743 crore in March 2009 to R11,477 crore in October 2012. One can invest in the yellow metal through the mutual fund route or gold systematic investment plans. It enables the investor to invest in the yellow metal in paper form. One can also invest in e-gold through the National Spot Exchange. With a demat account, one

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