Next to China, the largest consumer of gold in the world is India. Unlike the rest of the world that deals mostly in the investment of the precious metal through the purchase of notes and funds, in India, the most common form of investment is the purchase of the physical metal. Many of those who can afford to purchase it in small amounts on a regular basis. As a result, over time their collection of gold grows and increases in value.
When one wants to sell their gold collection, they simply wait until there is turmoil in the economy because many of the others tend to horde the precious metal causing it to skyrocket. Once the value has increased substantially more than the prevailing rate, it is time to sell their gold. This can be a great way to make money through gold investment but it is also a very risky way that could end up costing you money instead.
There are many options when it comes to gold investment in India today. First there is the physical investment which includes items like jewelry, coins, bars and plates. Jewelry is the first and most common method of investing in the precious metal. However, the preferred method is to purchase coins bars and plates. The reason for this is due to the SBI’s Gold Deposit Scheme which allows you to deposit your metal with the SBI in exchange for an annual interest rate. Of course you will have to leave your gold with SBI for three to five years.
Then of course there are the non physical forms of gold investment in India which have been growing in popularity in recent years. The most popular form of investment is known as the Gold Mutual Fund. When you invest in a fund, your money is pooled together with other investors in order to increase the firm’s buying power.
The fund manager is a broker who oversees all investments of the fund’s money. They may buy into gold mining, refining, recycling as well as jewelry companies. However, in most cases they invest in Gold ETFs who handle the diversified investment into the companies that deal in gold.
It is also possible to invest into Gold ETFs or exchange traded funds on your own rather then going through a fund. However, there is no diversification as fund managers invest in multiple funds simultaneously while this can be a bit difficult for the individual investor. It is important to remember that ETFs are not intended for long-term investing as they tend to lose value over time. This is why it is usually better to invest with a mutual fund instead and let them handle the purchasing and selling of shares in the ETFs.
It is important that before you make any final decision in how you plan on investing your money, you take the time to research all of your options. When you learn as much as you can about the various forms of gold investment in India, along with the process of buying, selling and even refining of the precious metal, you can make a well-informed decision regarding your investment. Always learn as much as you can before you make any decision as this will reduce the risks associated with your investment.
Also be careful because there are several known scams out there today. These businesses and people have the sole purpose in life to steal your gold away from you and leave you with absolutely nothing. They promise you high interest rates if you deposit your bars coins and plates with them, but then run off with the valuable metal. If anyone says that they can get you more then 1% for your investment, then be very careful if you choose to deal with them as most banks and even the SBI only offers you a 1% per annum interest rate for any gold deposited with them. Most ETFs as well only pay out 1% on average per year in returns.Dan Craig