The government has discontinued the Sovereign Gold Bond Scheme (SGB). Due to the rise in gold prices in the last few years, it had become difficult for the government to continue this scheme. The price of gold in the global market has crossed 2,800 per ounce.
Recently it reached 2,830 dollars. In India too, the price of gold had reached Rs 84,900 per 10 grams. The reason for this is said to be the tariff policy of US President Donald Trump. Commodity experts say that given the uncertainty in the global economy, the rise in gold is expected to continue.
After the closure of the Sovereign Gold Bond ( SGB ) scheme, now the only options left for investing in gold are Gold ETF and Gold Mutual Fund . Investments can be made in both of these in the secondary market. If needed, you can easily sell the investment. Investing in both of these options is easier than investing in physical gold, because in these you do not have to worry about the purity of gold.
Gold ETF
Gold ETF tracks the prices of physical gold. This means that the prices of gold ETF fluctuate according to the fluctuations in gold prices. The value of gold ETF is based on the price of gold. This is because gold ETF invests its money in physical gold. The value of one unit of gold ETF is equal to one gram of gold.
Gold ETFs are listed in the stock markets. Therefore, investing in them is safe. They also have good liquidity. A demat account is necessary to invest in gold ETFs. Apart from this, there is an entry load on investing in gold ETFs. There is an exit load on selling.
Gold Mutual Fund
Gold mutual funds are open-ended funds that invest in units of gold ETFs. Every gold mutual fund has a fund manager who takes investment decisions. The units in a gold mutual scheme have a net asset value (NAV). Since the assets of a gold mutual fund are managed by a fund manager, its returns can be higher than the returns of gold in the long term. The expense ratio of a gold mutual fund is slightly higher than that of a gold ETF.
One can invest in Gold Mutual Fund with less money as compared to Gold ETF. This makes it easier for retail investors to invest in it. A demat account is also not required to invest in Gold Mutual Fund. According to Value Research, the one-year return of Gold Mutual Funds is 29.45 percent.
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