Buying Gold this Dhanteras? 3 alternatives before you invest in yellow metal | Diwali 2022

Buying Gold this Dhanteras? 3 alternatives before you invest in yellow metal: Diwali, the festival of lights, is just around the corner. It's that time of the year when everyone dives deep into the festivities. Everyone eagerly looks forward for the arrival of this festival. For some, it's meeting with friends, relatives and for kids it might be firecrackers, vacations and enjoyment.

However, for a lot of people it's also about GOLD on the auspicious occasion of Dhanteras which is falling on October 22 this year. 

India is one of the largest consumers of gold and silver in the world. We just love to buy gold. No matter what's the occasion Dhanteras, Diwali, Akshaya Tritiya, marriages, people will find any reason to gift the precious yellow metal. 

Gold has been traditionally one of the safest modes of investment in India, however, there are other options other than the physical gold that you might want to invest in.

Let's have a quick look 

Sovereign Gold Bond (SGB)

SGBs are government securities denominated in grams of gold. In simple words, they are substitutes for holding physical gold. The benefit of investing in SGBs is that the quantity of gold for which the investor pays is protected, since he receives the ongoing market price at the time of redemption. The bonds are considered superior alternative to holding gold in physical form as it reduces the risk of theft. Although, there may be a risk of capital loss if the market price of gold declines. but the investor does not lose in terms of the units of gold which he has paid for.

Gold ETF

When many were busy buying physical gold, smart people used the other way round in parking their funds in Gold Exchange Traded Funds (ETFs) as part of their portfolio rebalancing strategy. In short, gold ETFs are units representing physical gold which may be in paper or dematerialised form. One gold ETF unit is equal to 1 gram of gold and is backed by physical gold of very high purity. They combine the flexibility of stock investment and the simplicity of gold investments.

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Gold funds

They are a type of mutual funds that directly or indirectly invest in gold reserves.

Sheetal Ranka from Rare Jewels - A Ranka Legacy said, “It is suggested to include Gold Mutual Fund, Gold ETF, and Sovereign Gold Bonds for portfolio diversification and to average out the portfolio performance in times of economic crisis." "Physical gold can be part of personal consumption, but from an investment avenue, one should consider the options mentioned above," she added.

These are some of the options you might consider this time on the auspicious occasion of Dhanteras as owning physical gold comes with additional costs such as making charges, retail premiums, storage concerns, and lower buyback value.

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