You must know about investing in metals like gold, silver

Ways for Investment in Gold

 1. Gold Jewellery

 2. Bars, coins & biscuits 

 3. Gold ETFs and fund of funds 

 4.  E-gold

 5. Stocks

 6. Gold Futures

Gold and silver no longer propel the big fat Indian wedding. It's just not about decking up the bride with jewellery. More and more Delhiites are buying these expensive metals purely for investment purpose. It's become more like their bank fixed deposit with the markets bullish on the bullion. Now, it's no longer about the shining necklace or the ornate earring: it's all about the sleek gold biscuit or a silver bar.

Jewellers in the capital say demand for solid gold has gone up ever since price of 10gm gold rose to Rs 20,000.

Gold does not carry much risk at least in India, as we hardly see deflation in the real sense. Even when the official figures where showing negative inflation (deflation) during the last year, the actual prices of food items were increasing. This was reflected in the gold prices too.

The real risk with buying gold is in the opportunity cost of investing in other avenues that can actually give higher returns.

Gold scores the highest in terms of liquidity, compared to all other investments. At anytime of the day and any day gold could literally be converted to cash. Banks would give you a jewellery loan. (Remember though that many banks do not give loans on coins, including their own).

Gold suffers capital gains tax as per the IT act. So it is better to ask your jeweler for the bill. Close to 90% of the gold jewellery traded in India is unbilled. This is a serious problem for those who look at gold as an investment. Only the branded jewelers would automatically give you a bill. At other places ask for one.

 With the emergence of Golf ETFs the convenience to hold gold for the short term has increased many folds. Instead of holding cash for the short term, one can today make investments in Gold ETFs.

To conclude;

Gold has proved itself time and again to be the perfect hedge for inflation. But to look at it as a hedge avenue, Indians are yet to consider this market actively as the purchases continue to be dominated by jewellery.

Gold only beats inflation. It fares poorly when compared to real estate or shares when compared on the basis of real inflation adjusted returns.

Any serious investor, however, is advised to have a certain percentage of investment in gold to hedge inflation.