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The inflationary pressure seen in the economy, tumbling stock market, sub-prime mortgages, diminishing value of rupee against dollar, slower economic recovery, etc are few reasons, diverting the interest of investors towards safe heaven gold. Not only investors but also nations consider gold as a safe option to make investment in. Gold is considered the most useful instrument that can help during the period of crisis. There are various ways through which one can invest in gold through electronic mode.
The gold has a quality of 99.9% that means, is of good quality. Gold ETFs eliminates the risk factor which is involved when purchased from outside. The main advantage is that, you do not have to worry about its storage and safety issues as that is required in physical gold. They are also very liquid as, can be easily bought and sold. Another advantage is it doesn’t require lot of investment. It’s highly tax efficient in comparison to physical gold. You have to keep physical gold for 3 years to claim long-term tax benefits whereas, in case of gold ETFs its just 1 year. Kotak Gold ETF, UTI Gold ETF, and Reliance Gold ETF are few examples of gold ETF.
This allows investors to buy gold in dematerialized form and the trading hour being 10 A.M- 11.30 P.M. It allows investor to buy 1 unit of e-gold which is parallel to 1 gm of gold and the purity is 995. You have to open your own demat account from the list of depositories. The list is available at NSEL website. One may sell the e-gold and get the cash back or take physical delivery from NSEL de- materialization centres. Right now the centres are in Mumbai, Delhi and Ahmadabad. Anyone interested for some other details relating to e-gold can refer site, http://www.nationalspotexchange.com/NSELUploads/Trading_Doc/2010/Circular041_2010.pdf.
Yet you have another option to invest in gold, Gold FoF (Fund of Funds). The fund invests in various gold ETFs. Its NAV is the weighted average of the NAV values of the various ETFs that the fund of fund comprises of.
Finally to conclude, gold seems to be bullish in the near future but do consider your own factors before investing. Return from gold is purely the outcome of price escalation and not from dividend or bonuses and is purely driven by market sentiments.
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