The Beginner’s Guide to Investing in Gold
Gold, in the heart of Indians, occupies a special place. It is considered both precious and auspicious. It symbolizes wealth, prosperity, and peace. Being liquid in nature, it is universally accepted. It can easily be converted to cash anytime and anywhere in the world. In addition, the metal is believed to have the power to purify anything it touches. That is why many temples have idols made in gold, and devotees offer gold to deities in the temples.
Why Should You Invest in Gold?
In addition to these emotional reasons, various rational reasons invest in gold a great idea. Some of these reasons are listed below:
Barring a few occasions, that too for a short time, the prices of gold have permanently moved northwards. In 1971, 10 grams 24 Karat gold price was at Rs. 193, which in the last 50 years has gone up to about Rs. 49,000. That is an increase of a whopping 25,000%.
While the currencies may rise or fall, the value of gold has always gone up in the long term. Due to this reason, gold is always treated stronger than currency. In the long run, gold has never disappointed its investors. It has maintained its value and enhanced the value of the customer’s investment. In this process, gold has helped investors strengthen their purchasing power. When cash loses its value, gold serves as a hedge against inflation. In times of deflation (decrease in prices), gold can provide real gains in purchasing power.
The real value of gold can be seen in times of crisis. During any emergency, one can quickly sell their gold, convert it into cash, and manage their problem. This makes gold a ‘true friend in need’ for the investors. No wonder gold stands out as the ultimate investment choice.
Popular Ways to Invest in Gold in India
Gold today is one of the most preferred investments in India. There are many ways one can invest in gold. Some of these ways are listed below:
This is the most common way of storing physical gold. Gold is given to investors in the form of coins. The investors get the satisfaction of holding physical gold, which is a feel-good factor for many investors.
One of the purest forms of gold, bullions are 99.5% pure. They are available in various forms like biscuits, bars & ingots.
Women’s love for gold and gold jewelry is no secret. It is considered a highly liquid investment. During times of crisis, one can quickly sell gold jewelry and get cash to fulfill financial needs.
Sovereign Gold Bonds (SGBs)
These are government securities in grams of gold. The RBI sells these bonds on behalf of the Central Government. These bonds serve as a perfect alternative to physical gold & are free from any risk and storage costs.
Gold Mutual Funds (GMFs)
These are Investment funds or commodity mutual funds. These funds hold assets related to gold in the form of bullions. These are highly liquid and highly affordable. Gold mutual funds invest in units of ETFs (Exchange-Traded Funds).
Gold ETFs (Exchange-Traded Funds)
They are used to own gold as an investment unit representing physical gold. One unit of ETF represents 1 gram of physical gold of 99.5% purity. These funds are the best option for diversifying a financial portfolio. Investors, who are aggressive and want to keep track of the actual gold prices, can invest in this.
Gold as a Wealth Preserver in India
Throughout human history, gold has been considered a unique and valuable asset. It is much stronger than currency when it comes to preserving purchasing power. Gold is known to provide financial security and acts as a hedge during inflation and deflation times. Since time immemorial, gold has proved its value as a good preserver of wealth.
How Gold Consumption Patterns Have Changed?
While the craze for gold has remained unchanged over the years, what has changed is the way gold is bought, sold, or even traded. To understand the changing pattern of gold consumption, one needs to delve deeper into the form and reasons gold is purchased.
Consumer spending on gold can be broadly categorized into two categories – regular and lifestyle spending. Everyday spending is what one spends on necessities. In contrast, lifestyle spending includes spending money on gold, jewelry, cars, other luxuries, etc.
Over the last few decades, noticeable changes have taken place in the patterns of consumer spending on gold and its consumption. Some of the significant changes are as follows:
1. The first and the most significant change is in the way gold is bought. Earlier, people used to buy gold in physical form only. That probably was due to a lack of options. Off late, new modes of investing in gold are available, safer, convenient, and profitable than physical gold. As a result, there is a trend towards investing in gold in the ‘non-conventional manners.
2. Investing in physical gold requires a higher investment to start. However, with the non-conventional methods, especially digital gold, one can invest in fractions also. The minimum investment possible is as low as Re. 1.
3. More and more people are gradually getting comfortable with investing in gold without
having the ‘desire’ to hold that gold in physical form.
Reasons for Changing Consumption Pattern
Given below are some of the reasons for this change in consumption pattern.
1. Rise in disposable income
2. Higher aspirations among middle-class people
3. Increased literacy and awareness
4. Change in attitude towards gold in non-physical form
5. Availability of new products and modes of gold investment
6. Easy availability of credit
7. Brand consciousness
With the younger generation getting purchasing power and authority to make decisions, there is a visible shift in the gold consumption pattern. A complete change can be seen in people’s outlook concerning shopping and investment, especially when buying or investing in gold. There is an increased emphasis on quality and convenience, even more than price.
What is Digital Gold?
Digital gold is a simple and convenient way of buying gold online without even struggling with its storage and safety. An investment in digital gold assures you of getting backing for your purchase (each form of gold) by an actual 24 karat physical gold in a safe vault.
In these pandemic hit tough times, where safety protocols and social distancing are becoming the ‘new normal, people avoid unnecessary travel and even touching things. They find it unsafe to move out and buy gold in physical form. In such a scenario, investing in digital gold can be seen as a good opportunity.
Pros and Cons of Investing in Digital Gold
1. One can invest in fragments, with as low as Re. 1.
2. When required, one can quickly sell digital gold.
3. If needed, one can take the physical delivery of the gold to their doorstep.
4. One can always exchange digital gold for physical jewelry or gold coins and bullions.
5. Any purchase in digital gold is entirely safe & secured
1. There is an upper cap of Rs. 2 lakh per day.
2. There is a daily investment limit of Rs 2 lacs on most of the platforms.
3. As of now, there is no efficient government-run regulatory body such as RBI or SEBI to control.
4. Some companies offer storage for a limited storage period, after which one has to either take physical delivery or sell the gold.
How to Trade with OroPocket?
Trading with OroPocket is very simple. One needs to download the OroPocket app, fill in details, upload the KYC form. Once the account is approved, the person can start investing with OroPocket. It’s that simple.
Benefits of Investing With OroPocket
OroPocket is a Blockchain-based platform. That makes all the holdings with OroPocket completed verified and transparent. The customer can independently check the integrity of investment. In addition, there is a team of independent auditors who take physical stock of gold in the digital lockers every day. That is to ensure the 1:1 backing of the assets.
With OroPocket, there are no hidden charges & storage fees. The only fee charged is a transaction fee, which is flat 0.25% of the transaction value—investing with OroPocket means investing in 99.99% pure 24 karat gold and 99.99% pure silver.
To cap it all, OroPocket has a customer-friendly support system, which works 24/7 to answer any queries that you have or any support you need. It is open to all its customers via email and chat 24/7.
To sum up, it can be said that during times of economic uncertainties like today, it is very much advisable to save & invest in gold for a better & secure future.
OroPocket offers trading in digital gold with complete integrity and transparency. The customers get 99.9% pure 24 karat gold. This makes OroPocket a pocket-friendly option for investors.