By Dr. Renisha Chainani, Head-Research, Augmont Gold For All
Various forms of investing in Gold in India are discussed below. Gold Futures were introduced in 2003 and Gold ETF in 2007. While SGB and Digital Gold were introduced in 2015. All the forms of gold investment have various advantages and disadvantages, it purely depends on the investor investment horizon and risk-taking ability to choose the form of investment.
Difference between is discussed below:
| Digital Gold | Sovereign Gold Bond | Gold ETF | Gold Futures | ||
| 1. | Trading Hours | 24*7*365 | Primary Market – when RBI opens tranches 5-6 times a year.
Secondary market – Weekdays – 9 am to 3:30 pm |
Weekdays – 9 am to 3:30 pm | Weekdays – 9 am to 11:30 pm |
| 2. | Gold backing | 99.9% 24K gold | 99.5% gold | 995 fineness gold | 995 fineness gold |
| 3. | Minimum Investment | As low as Re 1 | 1 gm of Gold | Rs 1000 | Rs 500 |
| 4. | Lock-in Period | None | 5 years | None | None |
| 5. | Maximum Holding Period | 5 years | 8 years | None | Contract period expiry |
| 6. | Ease of Purchase | Can be invested online through authorised partners such as popular e-wallets and other platforms. | Primary Market – Can be bought from banks,
Secondary Market – Traded on Stock Exchange |
Traded on Stock Exchange | Traded on Commodity Exchange |
| 7. | Extra Charges then cost | None | None | Annual AMC Charges 0.5-1% | Mark to Market Margin |
| 8. | DEMAT Account Required | No | Yes | Not compulsory | Yes |
| 9. | KYC | Very Minimal KYC up to Rs 2 lakhs investment | Detailed KYC | Detailed KYC | Detailed KYC |
| 10. | Regulated by | Independent Trustees | RBI | SEBI | SEBI |
| 11. | Market Liquidity | Highly liquid | Illiquid | Highly liquid | Highly liquid |
| 12. | Redemption option in Physical Gold | Yes | Yes after 8 years | No | Yes, after contract expiry |
Similarities :
- GST Payment – 3% GST is levied on buying gold in any form.
- Delivery and Making Charges – While opting for delivery of gold in physical form, the investor has to pay delivery and making charges.
- Taxation — Gains on gold assets held for less than 3 years are taxed at the investor’s marginal tax slab rate. Gains on investments with a holding term of more 3 three years are taxable at 20% with indexation benefit.