How to Invest in Gold in India?

· Gold acts as a safe haven investment – Whenever there is economic or political uncertainty, gold investments increase in value. This is because historically gold has been an ideal investment option to preserve and grow wealth during periods of economic uncertainty like political turmoil, wars, etc. This mind set continues to this day which increases the demand for gold investments during periods of uncertainty.

Gold is a hedge against inflation – Inflation causes the value of paper currency to decrease with time but this is not the case with gold. Historically gold prices have kept pace with and even exceeded inflation in the long-term. This is a key reason why investing in gold will ensure that your investment will keep pace with rising inflation and grow your wealth in the long term.   

Gold ETFs (Exchange Traded Funds) are traded on stock markets like equity shares and their price can change in real-time. Gold ETFs are available in the form of units and they hold gold bullion or stocks of companies involved in mining and/or refining gold as their underlying asset. Gold ETF units can be stored in your Demat account and are a great way to invest in gold indirectly.

What’s more, Gold ETFs in India are typically low-cost liquid trading instruments, which means you can buy or sell them at any time with minimal transaction, fund management or brokerage fees. All you need is an active Demat account to start investing in gold using Gold ETFs.  

Gold mutual funds or Gold Funds offer another excellent alternative to investing in gold in its physical form. Gold Funds are a type of mutual fund that primarily invest in Gold ETFs, so the price of Gold Fund units are indirectly linked to the market price of gold. In India, Gold Fund units can be purchased from Mutual Fund houses and offer an easy way to invest in gold as an asset class without actually owning it. The basic goal of Gold Funds is to generate wealth by utilizing gold's potential to beat inflation and create wealth in the long term.

In this era of technology, if you are looking to invest in gold online in India, you can buy gold digitally starting with an amount as low as Rs. 100. Buying digital gold or paper gold online is simple and can be done through multiple mobile platforms like Freecharge and PayTM using online banking or UPI.

Once you have purchased digital gold, the seller will send you an invoice of the purchase. The company from which you purchase digital gold keeps the gold in a secure vault.

You may sell or purchase digital gold from the convenience of your own home, and in times of emergencies, you can even convert it into instant cash as per the applicable market rate. However, many companies offering digital gold have a capping of Rs. 2 lakhs per investor PAN. No such cap is applicable if you are purchasing Gold ETFs or Gold Funds.