This is a very good question and the reason for that is that youngsters and millenniums don’t see too much value in gold. Most of them don’t even wear it on occasions and only invest in it because they have seen their parents and grandparents do the same.
So, for a person who’s only investing in gold, he/she can choose among various other options:
- Gold exchange-traded funds (ETFs)
- E-gold
- Sovereign gold bonds
- Gold funds and equity-based gold funds
Gold ETFs: These are open-ended mutual fund schemes that invest only in gold. One unit of ETF is equal to one gram of gold and vice versa and the minimum you can purchase is one unit. Like a stock, you can buy or sell these ETFs on the stock exchange
E-gold: Launched by NSEL, e-gold is an electronic way to buy the yellow metal. The main difference between a gold ETF and e-gold is that an investor owns gold directly in e-gold, but he/she owns it via the asset management company in case of a gold ETF.
Gold funds and equity-based gold funds: Gold fund is the fund of fund (FoF) scheme that has been launched as a part of mutual funds where the investments are made on gold ETFs. Though slightly expensive than gold ETFs, equity-based gold funds are mutual fund schemes where investments are made on stocks that are issued by the companies involved in extraction, mining, marketing and processing of gold. These funds come with some inherent risk, so low-risk appetite investors should stay away from gold funds.
Sovereign gold bonds: Launched by the government of India, Sovereign Gold Bonds, or SGB, offer investors to purchase gold in a non-physical form. By purchasing an SGB, you remove the hassle of making charges and the worry of keeping the gold safe.