New Delhi. With investors getting attracted to invest in gold and silver with the record rise in prices, experts say that among the various investment options available, gold and silver ETFs (exchange traded funds) are a better option. The reason for this is investment in gold and silver with less amount, no hassle regarding its maintenance and high liquidity i.e. redemption facility with low transaction charges. He also says that if you value precious metal physically, gold/silver coins/biscuits are better for investment. Since buying jewelery involves paying for making it, it is not a better option.
It is noteworthy that so far this year, gold has increased by 82 percent while silver has increased by 175 percent. In Multi Commodity Exchange (MCX), gold was Rs 76,772 per 10 grams on January 1, which reached Rs 1,39,890 per 10 grams on December 26. Whereas silver was Rs 87,300 per kg on January 1, which increased to Rs 2,40,300 per kg on December 26.
About Investment Options Mehta Equities Ltd. Rahul Kalantri, Vice President (Commodities), said, “Gold and Silver ETF is a better option among the various options available for investing in precious metals. This is because it is an easy way to invest without the hassle of storing gold or silver. “It also provides immense liquidity.”
However, he also said, “When it comes to investing in gold or silver, it does not matter in what form you hold it. It basically depends on your knowledge and most convenient means of purchase. Ultimately, each person’s choice will vary depending on his or her individual goals, usage requirements and investment horizon.”
Anand Rathi Share & Stock Brokers Ltd. Naveen Mathur, Director (Commodities & Currencies), said, “Among the various investment options available, Gold/Silver ETFs are by far the best investment option. This is because of the benefits like low denomination of units available for investment, no maintenance costs, guaranteed purity through the underlying ETF, high liquidity and low transaction costs.” Gold/Silver ETFs are investment funds that are traded like shares in the stock exchanges. In this, one can invest in precious metals without physically purchasing gold or silver. They physically hold bullion (gold/silver) or related assets and track fluctuations in their prices. Investment can also be made in this through mutual funds. Investing in gold can be done by physically purchasing the precious metal, through ETFs, futures and options or through mutual funds.
According to analysts, each option has its own advantages and disadvantages, so it is important for investors to assess which option suits their goals. Asked about the pros and cons of buying physically precious metals, Kalantri said, “If you value physically precious metals, gold and silver coins/biscuits are better. These provide direct ownership and act as a strong store of value, but involve maintenance, insurance costs and low liquidity.
In response to a question, he said that since buying jewelery involves paying the cost of making it, it is not a better option. Regarding investing through futures and options trading, Kalantri said, “These are suitable for experienced investors who are looking for short-term opportunities or want to ‘hedge’ to reduce risk, but they are more risky.”
Responding to another question, he said, “Digital gold is becoming popular mainly due to its convenience, low investment amount, ease of buying and selling and app-based seamless access. This traction is particularly strong among younger investors, who prefer technology and are more comfortable with digital assets than traditional physical gold. In this, investors can start with a very small amount and there is no problem regarding its maintenance or purity.
“However, digital gold is not a SEBI regulated product,” he said. These are typically offered by private platforms where the gold is held with third-party ‘vault’ managers, which carries risks. “Given the regulatory risks, we advise investors to invest in gold or silver only through products regulated by SEBI (Securities and Exchange Board of India),” Kalantri said. Overall, analysts say, taking a diversified approach across these options provides investors with safety, liquidity. and growth potential can help create a balance between
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