Consider gold as a versatile investment tool that can help you come closer to a race win for your wealth. Market conditions fluctuate, and as a result, businesses, and their value change as well; in fact, companies and their stocks may come and go. But the value of gold, on the other side, stays forever!
Gold has gained a lot of momentum among investors due to its strong returns compared to other types of investments. Due to qualities such as high liquidity and offering a hedge against inflation if held for lengthy periods of time, gold as an asset class finds its way into portfolios. Retail investors should undoubtedly allocate part of their funds to gold. Gold is widely used to owing that it is the most prevalent form of gifting.
Some of the ways you can hedge your portfolio by investing in gold like Physical gold, Gold Exchange Traded funds, Gold Mutual Funds and Sovereign Gold Bonds etc.,
Physical Gold : This is the most common method of gold investment. The purity of gold purchased storage and safe custody are the obstacles faced in this approach.
Gold Exchange Traded Funds: This is a financial form of gold that’s an alternative to physical gold. As a result, there is no need to be worried about quality or storage. However, you need a demat account to sell these ETFs, which are sold on exchanges.
Gold Mutual Funds: The mechanism of holding varies between an ETF and a fund. The former is held directly through a demat account on an exchange, while the latter is held through a mutual fund that invests in an ETF.
Sovereign Gold Bonds: These bonds are launched by the Government of India. These bonds also have a fixed interest rate that is not affected by fluctuations in gold prices. However, these bonds have lock-in period effect when compared to other types. As a result, liquidity is not as significant as it is with mutual funds.
Gold, as an investment, consistently provides decent growth over time. In the last 20 years, gold has shown positive growth.
- Silent Performer: Gold has long been considered to as a “store of value” due to its distant and scarcity. ‘Gold – steady and silent performer’. In times of economic, market, or political uncertainty, gold has performed significantly better over time.
- Balancer: When other asset classes, particularly those tied to the stock market, experience volatility, gold often comes in as a safe haven investment with consistent performance. This inverse relationship between gold’s price and the performance of other asset classes can help you balance your portfolio.
- Emergency Fund: Gold is a highly liquid asset since it trades in large volumes. This means that gold may be easily monetised in times of need to create a much-needed emergency fund.
Gold in a better and variety form
Buying gold has many benefits, but it also has certain drawbacks, such as manufacturing costs, storage expenses, liquidation prices, and authenticity issues.
Now it is time for invest in digital gold!
A digital gold purchase is an online gold purchase that is instantly credited to your digital gold wallet. The drawbacks of physical gold can be overcome by using digital gold to boost the demand for gold in your portfolio.
Ease of liquidity —When selling real gold, authenticity tests are performed, and most jewellers provide lower than market rates, i.e., a lower selling price than the purchasing price.
-Digital Gold can be traded at real-time pricing, 24X7, and liquidated instantly. This implies you can not only buy but also sell hassle-free.
Cost-effectiveness and Adaptability – Physical gold is usually available in gram multiples – 1gm,2gm,5gm,10gm and so on. To invest in gold and multiples thereof at today’s pricing, you’ll need a minimum of Rs.5,000.
-The price of digital gold is ‘affordable to all.’ It is available in extremely small amounts, starting at Rs.100. SIP option is also available for ‘Digital Gold’.
-This allows digital gold to be used for a variety of purposes, including self-purchase, investing, and gifting, even if you don’t have the funds to acquire many grams of physical gold.
Safety – Physical gold has long been viewed as a “store of value,” emphasizing its safety and security. However, there is always the fear and risk of physical loss or theft.
-Again, digital gold is a step ahead in this regard; most companies insure the digital gold, which is already safely stored on your behalf by third-party vault providers.
Physical gold’s validity is frequently questioned, depending on the veracity of the selling jeweler. Purity varies from city to city and from jeweler to jeweler.
– Digital gold is certified 24k gold with a purity of 99.99 percent, it eliminates these issues about authenticity.
If you’ve purchased gold, you’ll have to keep it safe. Many people end up using bank lockers for this purpose. That’s an extra expense, and it’s a recurrent one, that you’ll have to pay in addition to your gold purchases.
–Zero holding costs – there is no holding charges with digital gold: you can keep it in your digital wallet, and your supplier keeps it safe in a vault for you.
Keep in mind that when comparing digital gold to physical gold, digital gold takes the lead since it provides all the advantages in addition to the key benefits, that make gold a worthwhile investment.
The gold market and the economic crisis During the Global Financial Crisis (GFC), institutional investors frequently asked about the time it takes hedge fund and private equity managers to exit all of their positions, according to WGC report. Liquidity concerns were ranked as one of the top three determinants of long-term allocation decisions by 42 percent of investors polled by Greenwich.
However, due to the pandemic and inflation fears, the gold market has seen a significant increase in recent months. During the COVID pandemic, gold rate went up to previously unheard-of highs, demand for gold ETFs and actual gold increased. For a long time, gold has been seen as a portfolio diversifier and a hedge to provide long-term positive returns.
Digital gold wins all the way!