Gold investments: Investors are increasingly looking to invest in the various gold buying options in India such as Gold ETF, Sovereign gold bonds, gold mutual fund schemes, gold coins etc.
Gold Price Today: Gold price in India varies on a daily basis and is even different across cities. Although the price variation may be small, today’s gold price in Lucknow will be different from the gold price in Kanpur. Largely used as a wearable, Indians are one of the largest consumers of gold in the world. Gold has also emerged as an alternative asset class among the Indians for investment purpose. Investors are increasingly looking to invest in the various gold buying options in India such as Gold ETF, Sovereign gold bonds, gold mutual fund schemes, etc. Investors are also seen investing in gold by buying gold coins from banks or on e-commerce websites such as Amazon, Augmont, Paytm etc.
Here, we look at the various gold buying options and also the right way to look at gold prices.
Physical Gold – Jewellery
Buying physical gold is largely in the form of jewellery. The gold price quoted by your jeweller will be largely of 22k as the 24k gold is unsuitable for making pieces of jewellery. Remember, there are making charges and wastage that one has to incur while making jewellery out of 22k gold. Further, the price can be quoted for 1 gram or for 10 gram.
The price of 24k gold can be had from the MCX India website which carries the updated spot price of gold in Ahmedabad. As on October 223, the gold was trading at a price close to Rs 38,173 for 10 gram.
Daily gold prices in India can also be seen on the website of India Bullion And Jewellers Association (IBJA). As on October 23, 22k gold ( Standard gold) was trading at a price close to Rs 35,173 for 1 gram, while Fine Gold (999) which is 24k gold was quoting Rs 38,398 per 1 gram.
Physical Gold – Coins, Bars
If you wish to buy gold coins, there are several places to go to such as banks or post offices. One can also buy gold coins online from e-commerce websites such as Amazon, Paytm, Augmont or from jewellers such as Tanishq, Malabar etc. Gold coins carrying MMTC-PAMP mark signifies the highest quality of gold. MMTC, a government of India undertaking has a joint venture with Switzerland based bullion brand, PAMP SA. To buy MMTC-PAMP accredited gold, one may visit their exclusive retail outlets or buy them online. As on October 21, the price of 10gram Ingot was Rs 43,400 inclusive of taxes. Important to note is that gold coins purchased from banks cannot be returned to them as banks are not allowed to buy them back.
In addition, one can buy The Indian Gold Coin which is the first-ever national gold coin with the Ashoka Chakra on one side and Father of the nation, Mahatma Gandhi, on the other side. The Indian gold coin will be of 24 karat purity and 999 fineness. Currently, they are available in denominations of 5 grams, 10 grams and 20 grams. The Indian Gold coin carries advance counterfeit (Security) features and tamper-proof packaging. These are minted by the Security Printing and Minting Corporation of India Limited (SPMCIL) and hallmarked by the Bureau of Indian Standards (BIS). As on October 18, the prices for 10-gram gold was Rs 41,835 excluding taxes.
If one wants to invest in gold but not in physical form as it leads to additional costs including storage costs, then gold exchange-traded funds ( Gold ETF) may be opted for. Compared to physical gold, Gold ETFs have low costs and price is close to the price of physical gold. Gold ETFs are available on stock exchanges such as NSE or BSE and are traded during the time when the exchange is open. There are several Gold ETFs being traded in the exchange and each of them will have its own market price. The liquidity, however, is low in them and selling huge quantities of units at the right price may be difficult at times.
Some of the Gold ETFs available on NSE are: Reliance ETF Gold BeES, Axis Gold ETF, HDFC Gold Exchange Traded Fund, ICICI Prudential Gold Exchange Traded Fund, Kotak Gold Exchange-Traded Fund, Quantum Gold Fund, SBI Gold Exchange Traded Scheme and UTI GOLD Exchange Traded Fund. As on October 21, each unit of the Reliance ETF Gold BeES was trading at about Rs 3379 on NSE.
Sovereign gold bond (SGB)- New issues
For those not looking to buy physical gold yet exploit the growth potential of gold as an asset class, holding paper gold is preferable. Sovereign gold bond (SGB) is one such investment that can be held in Demat form. SGBs are issued in Tranches by the government at a fixed price intermittently through-out the year. There is a discount for those applying online. This issue is open for a few days and investment can be made during this period. On maturity, which is after 8 years, the gold can be redeemed at the then prevailing price and gains if any are exempt from taxation. During the holding period, SGB investors also get a 2.5 per cent interest per annum.
The Sovereign Gold Bond Scheme 2019-20 – Series VI will be open for subscription from October 21 – October 25, 2019 at a price of Rs 3,835 while for investors applying online the price will be Rs 3,785.
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Sovereign gold bond (SGB)- Listed
Once a specific Tranche closes, a few days later, the issue gets listed in the stock exchange such as NSE. Some of the earlier issues of SGB are quoting at a lesser price than what the new issues may be offering. Accordingly, the holding period of listed bonds may be lower than 8 years as they are already issued in the past. The liquidity in the listed SGB issues is not high hence selling huge qualities of bonds may not be feasible always. If one sells before maturity in the secondary market, capital gains tax may become payable if there is any gain.
As on October 21, the SGB maturing in August 2024 was trading at Rs 3686. Similarly, one can find other previous SGB issues being traded with a lesser maturity and lower prices too.
If you wish to save in gold through mutual funds, there are two types of schemes available. Investment in gold through gold mutual funds is also in paper-form. In some gold funds, the underlying asset is the gold where the price of physical gold reflects the changes in the NAV of the gold fund. In addition, there are gold funds that are actually ‘fund of funds’ as they invest in international funds that have equity shares of gold mining companies as the underlying asset.