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Investment Options and Benefits of Gold In India

3 Mins 03 Sep 2022 0 COMMENT


One of India’s most popular investment options has historically been gold. It is possibly the only investment that has held its value over time and never lost its sheen. Inflation protection and portfolio diversification are the two main benefits of investing in gold.

Today, there are numerous possibilities for investing in gold. It is no longer restricted to purchasing gold jewellery, coins, or bricks.

Why should you consider investing in gold?

Safety, liquidity, and profitable returns are the most crucial factors for an investor to build a stable portfolio. Gold is considered a safe haven investment.

Returns on gold investments are visible in line with inflation, regardless of the rate. In short, it is an investment that outperforms inflation. Another essential feature that encourages gold investment is liquidity. Irrespective of the type of investment, gold can be sold easily because there are many takers for it.

How to Make Gold Investments

There are some traditional and contemporary forms of gold investment that you can choose from. Traditionally, investment in gold was limited to buying physical gold in the form of jewellery, coins, bars, or antiques. Investors now have more options for investing, including gold funds and gold ETFs. The Reserve Bank of India also offers Sovereign Gold Bonds (SGBs) as a viable investment option.

The main difference between buying gold through gold ETFs (Exchange Traded Funds) and physical gold is that you don't buy physical gold. Instead of dealing with the inconveniences of storing real gold, the gold you purchase stays in Demat format. Contrarily, gold funds deal with funding investments in gold mining firms. SGBs are a type of bond backed by gold.

Let's take a look at the difference between the fundamental gold investment strategies:

Purchasing Gold ETFs

A Gold ETF is an investment tool that follows the price of the yellow metal and enables investors to profit from it. A Gold ETF can be bought in the way equities are purchased. These ETFs are easily accessible to anyone with a demat account and are traded during open market hours.

The stock exchanges make public information about gold prices available. You may check the gold price in real-time and adjust your trade decisions appropriately. You can plan your entry and exit points better using this information.

Additional read: What is Gold ETF

Acquiring Digital Gold

Purchasing digital gold is the easiest way to invest in gold without dealing with the inconveniences associated with physical gold. Purchasing virtual gold is what is meant by "digital gold." Since several platforms provide this service, buying digital gold online is simple.

You can avoid the problem of figuring out the gold’s purity by purchasing digital gold. There is always a possibility of fraud when purchasing gold from a local market. Digital gold purchased from the aforementioned reputable businesses, on the other hand, has a purity of 99.5 percent, or 24k gold. You can invest your money without hesitation because these companies have government licenses.

Purchasing Gold Bonds

Gold Bonds, also known as Sovereign Gold Bonds or SGBs in India, are government securities that replicate the price of actual gold. SGBs, first introduced in 2015, have grown significantly in popularity as a substitute for real gold investments. These investments have a high level of investor trust because the government issues them.

Additional read: Why Invest in Sovereign Gold Bonds?

Gold Mutual Funds

These mutual funds, primarily invested in gold ETFs, are managed by several asset management companies (AMCs).

Benefits of Gold Investment in India

Portfolio Diversification

Your investment risk will be lower with a diverse portfolio. Include products in your portfolio that do not have a high degree of correlation as you create your savings plan. Investing in gold lowers your portfolio's overall risk and volatility.

Hedge against Inflation

It would help if you considered how inflation might affect your returns while making investments. Investing in gold protects against inflation. The value of a currency decreases due to inflation. In India, inflation can occasionally be higher than interest rates, resulting in a negative net return on investment.

Choose from a Variety of Options

You don't have to buy actual gold to invest in it. You could also decide to make an online gold investment. Other asset classes are available for gold and physical and virtual investments.


Indian culture strongly values gold investments. The appeal of buying gold hasn’t faded even today. Keeping your overall financial objectives in mind, incorporate gold into your investment and savings strategy.

DisclaimerICICI Securities Ltd.( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470. I-Sec is a SEBI registered with SEBI as a Research Analyst vide registration no. INH000000990. AMFI Regn. No.: ARN-0845. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. Please note, Mutual Fund related services are not Exchange traded products and I-Sec is just acting as distributor to solicit these products. I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism.  The contents herein above shall not be considered as an invitation or persuasion to trade or invest.  I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.