There were several reasons which pushed gold prices upward this year including US trade war with China, fear of recession and weakened US dollar. With easing of trade worries, gold prices are going into a tailspin and have already lost around 9 percent from their all time highs only a month ago. This offers a good buying opportunity to investors who want some exposure to the safe haven.
“This is a good buying opportuity for those investors who have been waiting to invest in the safe haven for some time now. The prices have now corrected, so investors can consider getting some exposure to this precious metal,” says Deepak Aggarwal, a Delhi-based chartered accountant and financial advisor.
How to invest?
Those who want to invest in gold to capitalise on possible spike in future, it is recommended to invest in digital gold. Wealth advisors recommend not to invest in physical gold since it is seen as consumption and not investment because it entails storage cost and making charges, thus offsetting a part of gains. “Those who want to invest in gold should opt for gold ETFs to avoid spending on making charges and storage cost,” says Sridharan S., founder of Wealth Ladder Direct.
In case of gold ETFs, however, investors are entitled to keep all the gains with them.
What are gold ETFs?
A Gold ETF is an exchange-traded fund (ETF) that aims to track the domestic physical gold price. They are passive investment instruments that are based on gold prices and invest in gold bullion.
The Gold ETFs are units representing physical gold in dematerialised form. One Gold ETF unit equals 1 gram of gold and is backed by physical gold of very high purity. Gold ETFs marry the flexibility of stock investment and the convenience of gold investments.
Gold ETFs are listed and traded on the National Stock Exchange of India (NSE) and Bombay Stock Exchange Ltd. (BSE) like a stock of any company. Gold ETFs can be purchased and sold at market prices.
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