New Delhi: If you are tracking gold prices then the yellow metal has touched a high in May at ₹48,000 per 10 gram. Globally, gold prices remain attractive also emerged as one of the best performing asset classes. The precious metal has given a return of 11 per cent (in rupees terms), as per the data from the World Gold Council as on 9 April, compared to a correction of over 25 per cent in equities as on 13 April 2020, according to a Mint report. ALSO READ: Domestic Gold Prices Decline To ₹46,072 Per 10 Gram, Silver Slips To ₹48,127 Per Kg


The metal has drawn investors because it is often seen as a hedge against inflation. Here are ways in which you can invest in gold.

Gold ETFs and funds

You have the option to invest in gold exchange-traded funds. Typically, mutual funds offer exchange-traded fund (ETFs) that invest majorly in physical gold with each ETF unit typically representing 1gm of gold. The custodian bank hold the equivalent physical gold which is valued periodically, as per the Securties and Exchange Board of India’s (Sebi) guidelines. The performance of gold ETF is seen against the domestic price. The returns from the scheme should ideally match that of the benchmark. However, there are variations in the returns due to difference in cash holdings and the costs in managing the fund.

ETF investors need to open a Demat account into which the units are credited and a trading account with a broker to buy and sell the units after the new fund offer for the ETF closes. Since it may be a constraint so mutual funds have been offering gold funds that are mandated to hold the units of gold ETFs. Here you can buy units of the gold funds, just like any other mutual fund, and these funds invest in the units of the gold ETFs to give investors similar exposure to gold.

Sovereign gold bonds

You can subscribe to these bonds which are issued by the Reserve Bank of India (RBI) on behalf of the government. Typically, the bonds are denominated in multiples of 1gm of gold; and you can invest up to 4kg. The bonds are listed on NSE and BSE and investors can buy and sell the bonds on the stock exchange after the subscription period is over at the current market price. The sovereign gold bond scheme was launched in 2015  with a view to curb the demand for physical gold and transfer a part of the domestic consumption into financial savings. The third tranche of gold bonds of this fiscal (2020-21) opened for subscription on Monday and will close on June 12.

Physical gold

Mostly, gold is held in the form of jewellery, coins, and bars. Remember, cost of jewellery includes the making charges, which is deducted when you sell it off. This can be as high as 15 per cent of the price of gold.

Should you invest in gold?

Even as the precious metal makes for a good asset class for diversification, especially in economic upheavals and times like this. It has also performed well compared to other asset classes such as equities and debt. However, the exposure to the metal has to be limited according to experts. Most experts suggest not to invest more than 15 per cent of the assets in gold as the yellow metal offers some stability to your portfolio’s returns at a time when other asset classes may be performing bad. Financial experts suggest that buying ETFs at a high premium may not be right as the rally is propelled due to the short-term supply disruption.