Domestic Jewellers expect a strong demand during this week, with a sharp rise in the sales during the season. However, buying physical gold is not the only option available to the investors.
With the 2022 Akshaya Tritiya demand and the triggers of inflation, geopolitical concerns and fear of recession, gives a spark of hope for gold, said NS Ramaswamy, Head of Commodities,
According to the market experts, investors can put their money in the yellow metal via multiple alternatives, depending upon the size and duration of their investments.
Analysts suggest that buying digital gold is a better option over buying physical gold. An investor has several options to choose from as per their investment horizon and risk appetite, they added.
If one is looking at gold solely for investment, it would be better to invest digitally or in paper form, said Sugandha Sachdeva, VP-Commodity and Currency Research at Religare Broking.
“They save one from the hassles of owning physical gold, which involves purity concerns, finding adequate storage, along with hefty making charges,” she added.
Market experts suggest the sovereign gold bonds (SGBs) are the one of the best instruments available for digital investment in gold, if the investors have a long term view on them.
They provide the additional benefit of interest income of 2.5 per cent per annum, along with the tax exemption on capital gains if held till maturity with no counterparty risk, said Kapoor.
Gold ETFs are another attractive option for those who plan to invest large sums or trade at regular intervals as they offer easy liquidity and have no fixed tenure. However, a Demat account is required to trade in gold ETFs.
Investors can also choose to invest in gold via the mutual fund route and start their allocations through systematic investment plans (SIP) to reap the benefit of rupee cost averaging through the SIP route.
While decoding the love of Indian investors for the yellow metal, Prithviraj Kothari – MD and CEO –
Bullions suggested the investors should choose the form of gold according to the investment horizon.
“If the investment horizon is very long-term, say 10-15 years, the best way to invest in gold is to purchase physical gold bars and coins”, Kothari said. “If the investment horizon is between 5-8 years, one should invest in SGBs.”
Investors should opt for digital gold for medium term, if their investment horizon is up to 3 years and short term investors can bet on gold ETFs, he added. “He suggested investors enter the F&O segment of bullion, only if their view is very short, say up to 3 months.”
One should however enter gold derivative contracts only after gaining a prior understanding as they entail high risk, cautioned Kapoor from Religare Broking.
Overall, as gold prices have corrected from the recent highs, it is an opportune time to invest in any of the preferred modes for gaining exposure to gold, said the market participants unanimously.