Gold Investment for NRIs
Whatever glitters may not be GOLD….but when it comes to GOLD……our Indian eyes glitter…………………………..Just kidding…!!
GOLD had been the favourite investment for all the Indians for centuries, and NRIs have also shown the same enthusiasm of his/her resident relatives and friends when it comes to the yellow metal. It’s still considered to be one of the most safest investment options available in the history of investments, leave aside its emotional & social value in a country like ours. You never have enough of this precious metal. No surprise, India’s household gold reserve is estimated to be about 25000 MTs, with the 2nd highest consumption in the world of about 850 MTs a year.
One noteworthy observation by savvy investors is that, it looks like there is an inverse relationship between the stock market and gold prices.There have been circumstances where the stock markets rise and gold prices fall. Gold prices may also rise in sympathy with the fall in stock prices. The reason lies in the perception of the market by investors. Investors who foresee a bearish market, usually take positions in gold futures to safeguard their investments.
Let us take a look at the different ways for NRIs to invest in GOLD…..
Physical Gold :
Jewellery
You can go traditional way of buying Gold ornaments. While keeping in mind that this is the only investment which you can literally wear on your neck, it comes with some issues as well….
Storing & Safe keeping of large amount of jewellery can be a costly affair
There is always some making charge which is irrecoverable if you want to sell it.
Gold bars & coins
You can buy gold bars & coins from jewellers, banks, non-banking finance companies, and now even e-commerce websites. All the banks nowadays sells world gold council certified gold bars & coins from most of their branch networks. These bars & coins generally comes with an pre embossed certificate of 99.99 % kind of purity. You can simply walk into your bank branch and ask for the gold bars & coins. Just remember that the price in the banks will always be bit higher than the market price. It’s your choice.
Non-Physical or Paper Gold
Gold ETFs
Gold Exchange Traded Funds (ETFs) are simple investment products that combine the flexibility of stock investment and the simplicity of gold investments. ETFs trade on the cash market of the National Stock Exchange, like any other company stock, and can be bought and sold continuously at market prices.
Gold ETFs are passive investment instruments that are based on gold prices and invest in gold bullion. Because of its direct gold pricing, there is a complete transparency on the holdings of an ETF. Further due to its unique structure and creation mechanism, the ETFs have much lower expenses as compared to physical gold investments.
| List of Gold ETFs listed on NSE | ||||
|---|---|---|---|---|
| Issuer | Name | Symbol | Underlying | Launch Date |
| Axis Mutual Fund | Axis Gold ETF | AXISGOLD | Gold | Nov 2010 |
| Birla Sun Life Mutual Fund | Birla Sun Life Gold ETF | BSLGOLDETF | Gold | May 2011 |
| Canara Robeco MF | Canara Robeco Gold ETF | CANGOLD | Gold | Mar 2012 |
| HDFC Mutual Fund | HDFC Gold Exchange Traded Fund | HDFCMFGETF | Gold | Aug 2010 |
| ICICI Prudential Mutual Fund | ICICI Prudential Gold Exchange Traded Fund | IPGETF | Gold | Aug 2010 |
| IDBI AMC | IDBI Gold ETF | IDBIGOLD | Gold | Nov 2011 |
| Kotak Mutal Fund | Kotak Gold Exchange Traded Fund | KOTAKGOLD | Gold | Jul 2007 |
| Quantum Mutual Fund | Quantum Gold Fund (an ETF) | QGOLDHALF | Gold | Feb 2008 |
| Reliance Mutual Fund | Reliance Gold Exchange Traded Fund | RELGOLD | Gold | Nov 2007 |
| Religare Mutual Fund | Religare Gold Exchange Traded Fund | RELIGAREGO | Gold | Mar 2010 |
| SBI Mutual Fund | SBI Gold Exchange Traded Scheme | SBIGETS | Gold | Apr 2009 |
| UTI Mutual Fund | UTI GOLD Exchange Traded Fund | GOLDSHARE | Gold | Mar 2007 |
| Reliance Nippon Life Asset Management Limited | Reliance ETF Nifty BeES | NIFTYBEES | NIFTY 50 Index | Dec 01 |
| Reliance Nippon Life Asset Management Limited | Reliance ETF Nifty 100 | RELCNX100 | NIFTY 100 | Mar 13 |
| Reliance Nippon Life Asset Management Limited | Reliance ETF Bank BeES | BANKBEES | NIFTY Bank | May 04 |
| Reliance Nippon Life Asset Management Limited | CPSE ETF | CPSEETF | NIFTY CPSE Index | Mar 14 |
| Reliance Nippon Life Asset Management Limited | Reliance ETF Dividend Opportunities | RELDIVOPP | NIFTY Dividend Opportunities 50 | Apr 14 |
| Reliance Nippon Life Asset Management Limited | Reliance ETF Consumption | RELCONS | NIFTY India Consumption | Apr 14 |
| Reliance Nippon Life Asset Management Limited | Reliance ETF Infra BeES | INFRABEES | NIFTY Infrastructure | Sep 10 |
| Reliance Nippon Life Asset Management Limited | Reliance ETF Junior BeES | JUNIORBEES | NIFTY Next 50 | Feb 03 |
| Reliance Nippon Life Asset Management Limited | Reliance ETF PSU Bank BeES | PSUBNKBEES | NIFTY PSU BANK | Oct 07 |
| Reliance Nippon Life Asset Management Limited | Reliance ETF Shariah BeES | SHARIABEES | NIFTY50 Shariah Index | Mar 09 |
| Reliance Nippon Life Asset Management Limited | Reliance ETF NV20 | RELNV20 | NIFTY50 Value 20 Index | Jun 15 |
| Reliance Nippon Life Asset Management Limited | Reliance ETF Hang Seng BeES | HNGSNGBEES | HangSeng | Mar 10 |
| Reliance Nippon Life Asset Management Limited | Reliance ETF Liquid BeES | LIQUIDBEES | NIFTY 1 D rate Index | Jul 03 |
| Reliance Nippon Life Asset Management Limited | Reliance ETF Long Term Gilt | RRSLGETF | NIFTY 4-8 yr G-Sec Index | Jul 16 |
| Reliance Nippon Life Asset Management Limited | Reliance ETF Gold BeES | GOLDBEES | Gold | Mar 07 |
Source : NSE
Sovereign Gold Bonds
What is Sovereign Gold Bond (SGB)? Who is the issuer?
SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by Reserve Bank on behalf of Government of India.
Why should I buy SGB rather than physical gold? What are the benefits?
The quantity of gold for which the investor pays is protected, since he receives the ongoing market price at the time of redemption/ premature redemption. The SGB offers a superior alternative to holding gold in physical form. The risks and costs of storage are eliminated. Investors are assured of the market value of gold at the time of maturity and periodical interest. SGB is free from issues like making charges and purity in the case of gold in jewellery form. The bonds are held in the books of the RBI or in demat form eliminating risk of loss of scrip etc.
Source : RBI
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