You can buy gold in the real world or online. As an investment, gold can be held in the form of jewellery, coins, bars, bullion, and so on.

  • Here are some big reasons why it’s not a good idea to buy real gold:
  • Design and production costs make things more expensive to buy.
  • Due to the need for security and insurance, you may have to pay to store your things.
  • Selling is hard because there could be contaminants, and you need certificates of origin and purity.
  • If you don’t want to be limited by physical gold, you can choose digital gold, such as Digital Gold, Gold ETFs, Gold Mutual Funds, and Sovereign Gold Bonds.

Each of these ways to invest is briefly explained below:

Digital Gold

You can buy this in increments of 1 gram from several apps. ETFs that buy and sell gold Traded Funds are traded on stock exchanges like shares. Their main assets are physical gold and shares in companies that mine and refine gold. It would help if you had a Demat (Dematerialized) Account to buy Gold ETFs.

Gold Mutual Funds

These are mutual funds mostly invested in Gold ETFs and managed by different asset management firms (AMCs).

Sovereign Gold Bonds

The Reserve Bank of US regularly puts out these bonds, which can buy at both public and private sector banks with good reputations. Even though the returns are backed by the  US government and tied to the price of gold, there is no physical gold as an underlying asset.

There Are Several Ways To Invest In Gold

The word “availability” refers to how easy it is for an investor to buy a certain investment and whether or not there are any rules that make it hard for them to do so. Buying Digital Gold, Gold ETFs, and Gold Mutual Funds through official channels is usually easy.

In this way, sovereign gold bonds are a little different because they are given out by the Bank every one to two months and can usually be bought for five days. We’ll talk about that in a bit. In addition to availability, which affects how easy it is to invest, you should consider how easy it would be to sell your investment or liquidate it.

Options For Investing In Gold

Physical gold, digital gold, exchange-traded funds, and gold mutual funds are all considered liquid investments because they are easy to buy and sell. Even though the current maturity of sovereign gold bonds is eight years, this does not always mean that the investment needs to be kept until maturity. There are two options to get your money out of your bond before it matures.

One, you can cash in the bond before the end of its lock-in period, which is five years. If you want your money back before the five years are up, you can list your Sovereign Gold Bond on the secondary market, also called the stock market, and sell it.

You can do this whenever you wish for the first six months after the certificate is issued. Because this secondary market doesn’t have a lot of buyers, you might have to sell your bonds for less than the price of gold on the market.

Bonds can be used as collateral for a loan if you want to get money out of your investment without selling it too soon. For example, the  Bank of US lets people borrow up to 35% of the value of Sovereign Gold Bonds as security for loans. 

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