You can readily invest in gold without actually purchasing the same. Does this sound next to impossible or far-fetched in reality? The answer is a big NO! You can readily invest in gold through several methods or means.
How to Invest in Gold Without Buying Gold
For purchasing gold physically, you have to venture to the bank or the jewelry store. You will be weighing the gold, ascertaining the overall quality, and look for a proper gold hallmark and karat while paying for the same likewise. You have to also buy gold for at least a few thousand rupees if not more. Even the lightest gold coin will set you back by Rs. 3-4,000 depending upon gold rates. Jewelry will be weighed a lot more as well.
Quantity of the Gold and Making charges
You will have to keep in mind the quantity of gold that you are buying. You cannot keep buying gold in smaller amounts of Rs. 500 or Rs. 1,000 for example, every month. Also, gold is a coveted commodity and hence its safety is of the utmost importance while buying and storing the same at home or elsewhere. Suppose you have gold weighing a certain amount. You will have to pay the making charges for getting it made into jewelry or ornaments. Once you sell the same, you will only get the actual value, losing out on the making charges and additional costs. If gold rates are down, then you will get an even lower rate.
Purity of the Gold
You also have to worry about the purity of gold in this case. Whenever you purchase gold, you should look for the four signs of the BIS Hallmark certification. As a result, this will assure you that the gold that you are buying has been suitably verified. Otherwise, it is easy to put in gold as part of your portfolio in tandem with other non-precious metals and also alloys. This lowers the value of gold investments. The Hallmark ensures that gold has been certified and tested. Suppose you could make an investment in gold without physically buying gold? There are several ways to accomplish this task including gold funds and gold ETFs (exchange-traded funds), gold derivatives, gold receipts, and also e-gold. The latter channel makes it possible for you to buy gold online without any difficulties.
Suppose you have purchased gold coins from a jewelry store. Thereafter, you are on the move and cannot store the same at your place. Hence, you give it to a trusted person to keep it for a particular period. This does not mean that the trusted person owns the gold coins in question. He/she will only store it but you will have the bill stating that you are the rightful owner. While you are traveling, you will have the piece of paper or document which certifies you as the owner of the gold coins although you do not have to worry about the hassles of keeping it physically with you.
Buying Gold without Physically investing in it
A similar thing takes place when you purchase products as investments without physically venturing to buy gold. Gold funds or ETFs will pool money from numerous investors and purchase gold bullion likewise. Depending on the money invested, you will have allotted units of investments. Every product unit will equate to a particular gold unit in grams. Every ETF unit held is supported by gold as a result. Hence, while you will not physically have gold with you, it will be stored by the fund house/firm on your behalf.
Value of your investments by investing in Gold Funds
The value of your investment will be tied to gold prices. Every time they go up, your investment value will also increase likewise. By investing in suitable gold funds, you will be investing in stocks of companies operating in gold and gold-linked activities. Gold mutual funds cover platinum, silver, and other metals in the investment portfolio. The mutual fund manager, on behalf of the asset management company or AMC, will be managing the gold fund, unlike the gold ETFs. They use core trading analysis for purchasing and selling stocks with a view towards scaling up overall returns for all investors. Returns from gold funds are mostly dependent upon market conditions and circumstances to a large extent. Gold mutual funds do away with the risk linked to returns substantially. They ensure this by distributing investments throughout a diverse spectrum of investment choices/options.
These funds work through the diversification principle, i.e. not putting all your eggs in a single basket. Investors will also have to analyze their own risk appetite and specific objectives prior to selecting the right mutual funds. There are umpteen new methods and channels for making gold investments. The investment options which are backed by gold will go a long way towards simplifying the entire scenario. You can keep benefiting from your gold investment without the hassles of verification, buying, storing, and security.