GOLDEN OPPORTUNITY

There are many ways to invest in gold, but each of the available options comes with its share of benefits and pitfalls

- Narayan Krishnamurthy

There is something about gold that makes Indians chase the yellow metal. Although gold purchase is often tied to auspicious sentiments, it is often bought for its safe-haven tag. Over the years, the debate over the financial benefit of buying gold has resulted in several ways through which one can invest in it other than buying it in physical form. There is financial prudence when investing in gold, unlike buying physical gold, which is fraught with risk of theft. As an investment, gold can act as a hedge against inflation and finds its way into the investment basket of many Indians as an asset class to invest.

Today, gold ETFs, gold mutual funds, and the sovereign gold bonds are all financial instruments that provide investors with the choice of investing in gold. Given the need for gold in Indian families, especially at the time of weddings and other important festivals, gold has found itself as an asset class in which people invest for consumption more than gold as a hedge against inflation. For instance, instead of accumulating physical gold in the form of bars, coins, or jewellery, financially savvy investors see the virtues of investing in paper gold (see Various Hues of Gold).