Gold is highly valued due to its ability to generate inflation-beating returns over the long term. It retains its value while providing liquidity during a financial emergency. Besides its cultural significance during festivals and social events at home, people invest in gold to create wealth as its prices appreciate over time.

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People usually buy gold as jewellery items, but coins, bars, exchange-traded funds (Gold ETFs), gold mutual funds, sovereign gold bonds (SGBs), etc., are preferred options for seasoned investors. Also, investing in gold can help you navigate the market in times of uncertainty when other assets could fumble due to the fear of losses. Gold prices may fall, too, but they usually recover quickly. So, if you plan to invest in gold, here are a few investment avenues to consider.

Digital Gold

Digital gold offers an alternative to physical gold, allowing customers to buy the yellow metal online and store it in an insured vault. The minimum amount for digital gold is one rupee. Unlike physical gold, digital gold eliminates issues like its purity, safekeeping, storage, and visiting gold dealers or jewellery stores, making it an ideal alternative. With internet/mobile banking, users can invest in gold anytime, anywhere.

Physical Gold

India has a well-organised gold market, which determines its price daily. People buy physical gold for various social occasions and festivals like Dhanteras or present it as gifts for birthdays, anniversaries, etc. For those skeptical about digital gold investments, physical gold is the most trusted option as it can be bought in forms like jewellery, bullion, bars, etc. It gives them the satisfaction of owning their investment in a physical form.

Gold ETF

A Gold ETF is an exchange-traded fund (ETF) that tracks the domestic physical gold price and invests in gold bullion. These passive investment instruments represent physical gold in units. One Gold ETF unit is equivalent to 1 gram of gold and is backed by high-purity physical gold. Gold ETFs combine the flexibility of stock investment with the simplicity of gold investments. Like stocks, they are listed and traded on the National Stock Exchange of India (NSE) and Bombay Stock Exchange Ltd. (BSE). Gold ETFs can be bought and sold continuously at market prices. Gold ETFs are traded electronically via a dematerialised account (Demat) and a broker. Gold ETFs also have lower expenses than trading in physical gold.

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Gold Mutual Funds

Gold mutual funds invest in gold reserves or companies, either directly or indirectly. They typically buy stocks of gold-mining companies and syndicates or physical gold. These investments are based on units. The value of these funds is directly dependent on the price of gold. Gold funds can also serve as a hedge against economic shocks. Many diversify their portfolios with gold assets to protect themselves from market fluctuations. Gold mutual funds aim to generate wealth and provide a cushion against market volatility. Long-term investments in gold can yield significant returns.

Sovereign Gold Bonds (SGB)

Sovereign Gold Bonds are a safe and secure way to buy digital gold. They are issued by the Reserve Bank of India on behalf of the Indian government and are denominated in grams of gold with a tenor of eight years. With an assured interest of 2.50 per cent per annum, these bonds are denominated in grams of gold. The exit option is available from the fifth year. An individual can own as little as one gram of gold to a maximum of four kilograms of gold.