5 best options to invest in gold in times of Covid-19

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Published: July 3, 2020 4:05 PM

With contracting global output, global economies in a deeper recession than anticipated, and dearth of good returns in many other asset classes, gold has emerged as a safe bet for investors across the globe.

 gold, gold investment in India, best options to invest in gold, in times of Covid-19, ETF, Gold Accumulation Plans , physical gold, Sovereign Gold Bonds Sovereign gold bonds have a tenor of eight years, with investors having the option to exit after the fifth year on interest payment dates.

With contracting global output, global economies in a deeper recession than anticipated, and dearth of good returns in many other asset classes, gold has emerged as a safe bet for investors across the globe — particularly in times of the Covid-19 pandemic. Although the physical demand for gold has declined drastically due to the current restrictions and lockdowns, people continue to buy or invest in gold digitally as the activity of global central banks and their net purchases of gold signal that the current uncertainty will continue for most of 2020.

Here we are taking a look at 5 best options to buy or invest in gold in times of Coronavirus.

1) Buying physical gold from local jeweller: One of the options to buy physical gold is buying it from your neighbourhood jeweller whom you trust also. It is as simple as paying in cash and purchasing jewellery from the local jeweller. However, if jewellery shops are still closed in your locality or going out doesn’t seem to be a good idea in the current situation, then you need to look at some other options.

2) Investing in gold ETFs (Exchange Traded Funds): You can also invest in gold ETFs. Although they do not enjoy much popularity in India, they are very popular among international investors.

3) Gold Accumulation Plans (GAP): One can also buy gold online via mobile wallets such as Paytm, PhonePe, and under the Gold Rush plan of the Stock Holding Corporation of India. These gold buying options are offered either in association with MMTC-PAMP or SafeGold or both.

4) Buying/selling gold on futures/options platform: This is purely from a trade perspective, wherein one wants to trade in gold by keeping margins in their accounts and benefit out of the price volatility.

5) Investing in Sovereign Gold Bonds issued by the Government of India: In a bid to turn gold into a productive asset in India, the government introduced Gold Monetization Scheme (GMS) on 5th November 2015 to help one earn interest on the unused gold lying idle in bank lockers.

Since gold constitutes the major imports for the Indian economy and the major outflow of foreign currency, gold bond scheme introduced by the Government of India will be key for the investors who want to diversify their portfolio in gold.

“Although there are several ways one can buy gold, Indian consumers are fond of buying physical gold as the safest option. However, the restrictions, lockdowns and other measures due to the pandemic have dented physical demand for gold in India,” says Prathamesh Mallya, AVP – Research Non-Agri Commodities and Currencies, Angel Broking Ltd.

Sovereign gold bonds have a tenor of eight years, with investors having the option to exit after the fifth year on interest payment dates. The redemption price will be the simple average of the closing price of gold on the previous three days. In addition, they are traded on the stock exchange with investors having the option to sell, though liquidity is low.

In that case Gold Accumulation Plans seem to be the safest bet. Here’s how they work:

Mobile wallet providers like Paytm, PhonePe, Googlepay, etc. have started offering digital gold. These digital players are selling gold in collaboration with MMTC-PAMP. Some of them have collaborated with SafeGold.

“SafeGold is a digital platform that has tied up with various mobile wallet apps allowing customers to buy, sell and receive vaulted gold from as low as Re 1. Both MMTC-PAMP and SafeGold offer gold of 24KT. However, in terms of fineness, MMTC-PAMP offers gold of 99.9 percent purity whereas SafeGold offers 99.5 percent purity,” informs Mallya.

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