Gold Investment Explained In Different Forms October 3, 2020 – Posted in: Blog

“Gold is a chemical element with the symbol Au and an atomic number of 79.  Gold is a dense, soft, shiny metal and the most malleable and ductile metal known.”

Gold is a comparatively dense, shiny, yellow metal.  As an element, gold is quite resistant to corrosion (by oxygen, but also many other chemicals).

In ancient times the value of gold had already been discovered.  People took gold to make jewellery and currency.  It is a symbol of wealth, beauty and heritage carrying memories and Cultures.

Gold is always used as a benchmark to determine the value of the underlying currency. Nearly all countries represent the value of their currencies in the form of gold.  From ancient times investment in gold has always been considered as lucrative and rewarding.  Gold probably is the only thing which can be used for personal investment as well as for personal use.

With the advent of trading exchange, it is now not required to make investments in physical gold. The money can be invested in many forms. The Income-Tax Act contains a couple of provisions to deal with the taxability of gold and gold derivatives. 

Once you decide to buy gold, your investment will come in one of the following  forms:


The love for gold among Indians will never fade away.  The yellow metal is traditionally considered as one of the most secured investment options.  However, possessing physical gold can be risky as there are chances of losing it due to theft or occasional carelessness. Those who want to invest in gold but do not wish to possess physical gold we have the following options.


Digital gold provides a transparent means to buy and sell gold digitally.  Investing in digital gold is similar to physical gold and the only exception is that you are not going to get the gold to possess physically.


(i) Investing in digital gold, you purchase 24K 99.9% pure gold digitally.

(ii) You can invest as low as Rs 100 in digital gold. 

(iii) You don’t have to worry about purity, storage, making charges, wastage, and liquidity.   

(iv) Digital gold special is that you can get your holdings exchanged for physical gold and it is delivered.  This option is not available with gold ETFs and mutual funds.


We cannot directly invest in digital gold as you need an authorized third party.  When we place an order for digital gold with your agent, they buy the corresponding amount of gold and place it in a vault on your behalf. 

Likewise, when we wish to sell your digital gold holdings, the agent will sell the gold at the prevailing market price and deposit the amount to your account which can be utilised during your purchase of jewels for the special occasions such as wedding, anniversaries etc..,.  The process is entirely digital and safe.  At no point, the investors are handed physical gold. 

It’s a product offered by vendors and refiners of gold through various platforms, including wallets such as Paytm, Amazon Pay and investment platforms such as Kuvera, Grow and stockbrokers.


An alternate way of owning paper gold in a more cost-effective manner is through gold exchange traded funds (Gold ETF).   Such investments (buying and selling) happen on a stock exchange (NSE or BSE) with gold as the underlying asset.  What’s more, the high initial buying and even selling charges that go into owning jewellery, bars or coins gives an extra edge to the low-cost gold ETF.   The transparency in pricing is another advantage.  The price at which it is bought is probably the closest to the actual price of gold and therefore the benchmark is the physical gold price.

What you need is a trading account with a stock broker and a demat account.  One may either buy in lump sum or even at regular intervals through systematic investment plans . You may even buy 1 gram of gold.


Sovereign Gold Bond is a government bond. It can be converted into Demat form.  Its value is not in rupees or dollars but the weight of gold. If the bond is five grams of gold, then the price of five grams of gold will be the same as the price of the bond.  To buy it, the authorized broker of SEBI has to pay the issue price. At the time of redeeming the bond, the money gets deposited in the investor’s account.  The bond is issued by the Reserve Bank of India (RBI) government.

 (i) A person can buy a bond of minimum value of 1 gram and a maximum of 4 kg in a financial year and the maximum purchase limit for a trust is 20 kg

(iii) Bond’s maturity period is 8 years old. But investors get a chance to exit after 5 years. if you want to remove it, you can remove it after 5 years.

(iii) According to the NSE, these sovereign gold bonds can also be used as collateral while taking loans. Apart from this, these bonds also trade on the NSE.

(iv)Sovereign gold bonds earn a fixed interest of 2.50% every year on the issue price.  This money is automatically deposited in your account every 6 months. 

(v)According to the information given on the NSE website, the Sovereign does not incur any tax on its benefits after 8 years of maturity.  Also, there is no TDS on the interest paid every six months.

(vi) No worries about purity and safety as it can be kept in Demat form, which is quite safe and does not cost anything.

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Buying Limit  Minimum of 0.0005 grams and a   maximum of 50 grams. Minimum value of 1 gram and a   maximum of 4 kg  Minimum 1 Gram. No Upper   Limit
Lock In   NO 8 Years. 

 Exit option After 5 th year

Special Benefit (i)Get capital gains and interest   income.

 (ii) used as a collateral to get   loans

 Buy and sell anytime on an     exchange platform.
DrawBack No  instant returns Low liquidity Sometimes low volume on   trading platforms.


SGB and Gold ETF, both paper-gold, are cost effective as there is no entry cost in SGB while costing for gold ETF could be around 1 percent.

SGB will  benefit those who want to invest in gold for a longer period as its maturity is after 8 years, although the lock-in ends from the fifth year.  However, gold ETF provides much better liquidity than SGB.  Owing units is much easier than SGB as it’s entirely online in case of ETFs.  The risk of owning, holding also doesn’t exist in both.

The big difference is on the taxation front. Gains in SGB on redemption are tax-exempt but gains in Gold ETFs after 3 years are subject to 20 percent tax post indexation.

The only disadvantage with gold ETFs is that its units won’t earn the additional interest of 2.5 per cent per annum like you would get for SGBs.



Indians certainly cherish possessing gold.  But owning it in the form of jewellery has its own concerns about safety, high costs, and outdated designs.  Then there are the ‘making charges’, which could prove to be a costly affair.  The making charges on gold couple rings as wall as any other  jewellery, which is typically high in case of special designs which are irrecoverable.

If you are wondering on how much gold to keep at home, you can read to get a clear view on home much gold you can hold at home.


Gold bars are a lucrative idea for those who have money to invest and are looking to invest in a form that not only offers long term benefits but is also easy to liquidate. The highlights of investing in a gold bar are:

  • Negligible making charges.
  • You can invest in gold bars for your family’s financial security, with the intention of eventually converting bars into jewellery or liquidating them when an emergency arises.
  • If you are looking for a long term investment and want to put it in physical gold then gold bars are a suitable tool.
  • Easy to liquidate and straightforward to sell which makes gold bars very accessible to all kinds of investors.
  • Remember that lower ticket sizes may be easier to sell while a larger ticket size assures minimum wastage – depending on your investment goal, you can make a decision.

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Gold or jewellery savings schemes come in two forms.  A typical one allows you to deposit a fixed amount every month for the chosen tenure.  When the term ends, you can buy gold (from the same jeweller) at a value that is equivalent to the total money deposited, including a bonus amount. This conversion is done at the gold price prevailing on maturity. In most cases, the jeweller adds a month’s instalment at the end of the tenure as a cash incentive or may even offer a gift item.


Forms Of Gold                Pros               Cons
Jewellery   (i) Convenient form of purchase.


  (iii)Used for traditional purposes.

   (i) Making Charges.

   (ii) Safety issue.

   (iii) Locker charges

Bullion Bars  (i) Easier form of investment.

  (ii) Purity (minimum loss of value)

  (i) Safety issue.

  (ii) Locker charges

  (iii) May be expensive for small Investors.

Gold Coins  (i) Moderate loss of value.

  (ii) Lower denominations make it affordable to buy.

  (i) Safety issue.

  (ii) Locker charges

  (iii) Some making charges are involved.

Saving Schemes  (i) Safety assured.

  (ii) Option to take repayment in gold or cash if possible.

  (i) Returns are very low.

  (ii) Minimum investment quantity can put off retail investors.


Gold coins can be bought from jewellers, banks, non-banking finance companies, and now even e-commerce websites. The government has also launched ingeniously minted coins which will have the National Emblem of Ashok Chakra engraved on one side and Mahatma Gandhi on the other.  The coins are available in denominations of 5 and 10 grams while the bars will be for 20 grams.


The Indian Gold Coin and Bar will be of 24 karat purity and 999 fineness carrying advanced anti-counterfeit features and tamper-proof packaging.  All coins and bars will be hallmarked as per the BIS standards.  These coins are distributed through designated and recognised MMTC outlets and through specified bank branches and post offices.  MMTC also offers a transparent ‘buy-back’ option for Indian Gold Coin through its own showrooms across India. 

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AuGrav (Au-Gold, Grav-To Etch, to Engrave) Strongly believes that any Jewel should be a natural extension of yourself.  It could be as simple as your Names, to your Fingerprints, your Voice Waves, or anything that describes your Persona.  To create a piece that will be worn by only 1 out of 7 billion people on earth, Get In Touch with us.  Our Jewelry experts have all ears to listen to your story and suggest creating a masterpiece.


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