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How to Buy Gold?

Updated on April 20, 2024 , 14117 views

Gold has always caught attention amongst investors as one of the best investing avenues. Also, historically, Gold Investment has proved to be a hedge against Inflation, due to which investors are more inclined towards buying gold.

But today, Investing in Gold is not only limited to buying ornaments or jewellery, it has expanded today with many more options. With the advent of technology and development in financial markets, one can buy gold through various other means with benefits like safety, purity, no making charge, etc. In this article, we will study different options to buy gold.


Top 6 Ways to Buy Gold

1. Gold Coins and Bullion

Buying gold in the form of bullion, bars or coins is generally considered to be one of the best ways to buy gold, especially for those who want to buy physical gold. Gold bullion, bars and coins are made with a purest physical form of gold. Later, one can cast the gold coins and bullion into intricate shapes (as it is done to make jewellery out of pure gold). Gold coins are available in different sizes. The usual size of coins is of 2, 4, 5, 8, 10, 20 and 50 grams. Gold bars, coins and bullion are of 24K (carats), and these can be kept safely in Bank lockers or any other safe place.

2. Gold ETFs

A gold ETF (Exchange Traded Fund) is an instrument that is based on gold price or invests in gold bullion. Gold ETFs is traded on major stock exchanges and they track the gold bullion performance. When the gold price moves up, the value of the exchange-traded fund also rises and when the gold price goes down, the ETF loses its value. Gold ETFs allow investors to participate in the gold Market with ease and also offer transparency, cost-Efficiency and a secure way to access the gold market. Investors who wish to invest, can buy Gold ETFs online and keep it in their Demat account. An investor can purchase and sell gold ETFs on the stock exchange.

3. Gold Funds

One of the other ways to buy gold is through gold funds. Gold Funds are Mutual Funds which invest in stocks of companies engaged in gold mining and production. Under this method, the returns are dependent on the equity of the companies invested and the performance of the fund. Investing in gold funds is simple and doesn’t require a Demat account.

Best Gold Mutual Funds to Invest 2024 are

FundNAVNet Assets (Cr)3 MO (%)6 MO (%)1 YR (%)3 YR (%)5 YR (%)2023 (%)
SBI Gold Fund Growth ₹21.7857
↓ -0.26
HDFC Gold Fund Growth ₹22.3891
↓ -0.14
Axis Gold Fund Growth ₹21.8127
↓ -0.13
Aditya Birla Sun Life Gold Fund Growth ₹21.8864
↑ 0.08
Nippon India Gold Savings Fund Growth ₹28.6352
↓ -0.23
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 22 Apr 24
*Above is list of best Gold'funds having AUM/Net Assets above 100 Crore. Sorted on Last 3 Year Return.

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4. Gold Jewellery

Gold jewellery and ornaments have always been the traditional way to buy gold. However, this has its own pros and cons. The total cost of the ornament may involve heavy making charges(called premium), which may be about 10%-20% of the total cost. However, when one tries to sell the same ornament, the value obtained is only of the weight of gold, making charges paid earlier do not fetch any value.

5. E-Gold

In the year 2010, National Spot Exchange (NSE) introduced E-Gold in India. E-Gold allows investors to invest in gold with much lower denominations (1gm or 2gm) than physical gold. It is more convenient to buy and sell e-gold. Like we buy physical gold from shops and banks, we can buy e-gold electronically on the internet from the exchange. E-gold can be converted into physical gold at any moment of time. One of the benefits of investing in e-gold is that there is no holding cost of having the E-gold.

6. Gold Futures

Gold Futures refer to a deal in which an individual agrees to take delivery of gold at a determined date by making an initial payment, with the complete payment to be made as per the agreement. This trade is based on speculation, with an element of high risk involved. Gold Futures are traded on the MCX and the price of gold futures track gold prices. Gold Futures are risky investments, as one has to settle the contract, even if they make a loss.

How to Invest in Gold Mutual Funds Online?

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  2. Complete your Registration and KYC Process

  3. Upload Documents (PAN, Aadhaar, etc.). And, You are Ready to Invest!

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1. Why is investing in gold important?

A: When you want to diversify your investment Portfolio, you must select certain safe and sure investments to produce good returns. One such investment is gold, which can be in the form of physical gold or gold ETFs.

2. Why do investors prefer gold ETF over physical gold?

A: There are numerous reasons for Investing in Gold ETFs, and the foremost of these is that it offers excellent liquidity. You can quickly liquidate your investment of gold ETFs for cash. However, liquidating your physical gold can prove to be quite complicated. The second most important reason is that you can purchase precisely the number of ETFs you want to purchase. Still, while purchasing ornaments fixing the exact value or weight might not be possible.

3. What is the most common physical gold investment?

A: The most common physical gold investment is the gold bullion. This is in the form of a gold bar or gold coin. The bullions are usually manufactured by companies involved in gold mining. Bullions or coins are made of pure 24K gold and are usually kept in the lockers or owners. These are not gold ornaments.

4. Is investing in gold ETFs safe?

A: It offers complete transparency and ownership rights. Although you cannot see anything like physical gold, but you will be the actual owner of gold on paper corresponding to the ETF value.

5. What are gold mutual funds?

A: Gold mutual funds work like any other mutual funds, but the stocks and shares held in the particular MFs will belong to gold mining, transportation, and other related business. This is another form of gold investment.

6. Do I need a DEMAT account to invest in gold MFs?

A: No, you do not require a DEMAT account. You can invest in gold funds by purchasing these directly from the respective fund house. You can also purchase any number of gold ETFs.

7. Do I need a DEMAT account to invest in gold ETFs?

A: Yes, you will need to open a DEMAT account. If you already have an account, then you can use it to purchase gold ETFs from respective fund houses.

8. What are the gold futures?

A: Gold futures are investments made when an individual agrees to accept delivery in gold on a down payment disbursement. This investment depends on speculation, which conjectures the future price of gold. Thus, gold futures are considered to be risky investments.

All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
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