GOLD INVESTMENTAND IT'S PROSPECTIVE AMONG INVESTORS

A Project Submitted to
University of Mumbai for partial completion of the degree of

Bachelor of Management Studies

Under the Faculty of Commerce

By
AASTHA JAYESH SHAH

TY BMS/B/21

Under the Guidance of

Mrs. Florence Noah Christian

KANDIVLI EDUCATION SOCIETY’S

B.K. Shroff College of Arts & M.H Shroff College of Commerce
Bhulabhai Desai Road, Kandivali (West), Mumbai- 400067
NAAC Re-accredited ‘A’ Grade (CGPA 3.27) and ISO 9001:2008 Certified

April 2019
 KANDIVLI EDUCATION SOCIETY’S
B.K. Shroff College of Arts & M.H. Shroff College of Commerce
Bhulabhai Desai Road, Kandivli (West), Mumbai – 400067
NAAC Re-accredited ‘A’ Grade(CGPA 3.27) and ISO 9001:2008 Certified

Certificate

This is to certify that MISS. AASTHA JAYESH SHAH has worked and duly completed her
Project Work for the degree of Bachelor of Management Studies under the Faculty of Commerce
in the subject of FINANCE and her project is entitled, “GOLD INVESTMENT AND IT'S
PROSPECTIVE AMONG INVESTORS”under my supervision.

I further certify that the entire work has been done by the learner under my guidance and that no
part of it has been submitted previously for any Degree or Diploma of any University.
It is her own work and facts reported by her personal findings and investigations.

Mrs. Florence Noah Christian

Project Guide

Date of submission:
 Declaration by learner
I the undersigned MISS. AASTHA JAYESH SHAH here by, declare that the work
embodied in this project work titled “GOLD INVESTMENTS AND IT'S PROSPECTIVE
AMONG INVESTORS”, forms my own contribution to the research work carried out
under the guidance of MRS. FLORENCE NOAH CHRISTIAN is a result of my own
research work and has not been previously submitted to any other University for any
other Degree/ Diploma to this or any other University.
Wherever reference has been made to previous works of others, it has been clearly
indicated as such and included in the bibliography.
I, here by further declare that all information of this document has been obtained and
presented in accordance with academic rules and ethical conduct.

MISS. AASTHA JAYESH SHAH

Roll No. 21/B

Certified by

Mrs. Florence Noah Christian

Project Guide
 ACKNOWLEDGEMENT

To list who have helped me is difficult because they are so numerous and the depth is so
enormous.

I would like to acknowledge the following as being idealistic channels and fresh dimensions in
the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me a chance to do this
project.

I would like to thank my college Principal, Dr. Lily Bhushanfor providing the necessary
faciliuties required for completion of the project.

I take this opportunity to thank our Coordinator Mrs. Sweta Mishra, for her moral support and
guidance.

I would also like to express my sincere gratitude towards my Project Guide, Mrs. Florence
Noah Christian whose guidance and care made the project successful.

I would like to thank my College librarian, Mrs. AlkaWadhwana, for having provided various
reference books related to my project.

Lastly, I would like to thank each and every person who has directly or indirectly helped me in
the completion of the project especially my Parents and my peers who supported me
throughout my project.
CHAPTER 1
INTRODUCTION
 Chapter:1 INTRODUCTION TO GOLD INVESTMENT SCENARIO

1.1 Introduction to investment

To invest is to allocate money in the expectation of some benefit in the future. In finance,
the expected future benefit from investment is a return. The return may consist of capital
gain and/or investment income, including dividends, interest, rental income etc. Investment
generally results in acquiring an asset, also called an investment. Investors generally expect
higher returns from riskier investments. Financial assets range from low-risk, low-return
investments, such as high-grade government bonds, to those with higher risk and higher
expected commensurate reward, such as emerging markets stock investments. Investors,
particularly novices, are often advised to adopt an investment strategy and diversify their
portfolio. Diversification has the statistical effect of reducing overall risk.

In the current market scenario of high volatile, rapidly changing market place, various
avenues for investment in gold are creating the confusion among Investors. As per various
studies 16,000 tons of gold is there in Indian households predominantly in the form of
jewelry. There are various alternatives available for investment in gold through options like
jewelry, coins, bullions, ETF, mutual funds, E-gold etc. The present study “An investment in
gold” tries to study forms of gold investment available to investors. The objectives of the
study are to understand the various investment options for investors, factors need to be
aware of and know-how of investing in gold, pros and cons of various forms of investments
and to assist investors in creating awareness about various gold investment options. For the
purpose of the study the primary data and Secondary data has been collected. Primary data
consists of questionnaire and secondary data through website, research papers and
magazines. Based on the research it is found that many investors still prefer jewelry, gold
coins and gold bullion bars forms of investment and prefer to invest in ETF and Futures and
options which gives more profit and easy form of investment.

1.2 Origin of Investment

The Code of Hammurabi provided a legal framework for investment, establishing a means
for the pledge of collateral by codifying debtor and creditor rights in regard to pledged land.
Punishments for breaking financial obligations were not as severe as those for crimes
involving injury or death. In the early 1900s purchasers of stocks, bonds, and other
securities were described in media, academia, and commerce as speculators. By the 1950s,
the term investment had come to denote the more conservative end of the securities
spectrum, while speculation was applied by financial brokers and their advertising agencies
to higher risk securities much in vogue at that time. Since the last half of the 20th century,
the terms speculation and speculator have specifically referred to higher risk venture.

1.3 Types of financial Investment

There are two types of financial investment which are as follows:

Alternative investments
An alternative investment is an investment in asset classes other than stocks, bonds, and
cash. The term is a relatively loose one and includes tangible assets such as precious
metals, art, wine, antiques, coins, or stamps and some financial assets such as real
estate, commodities, private equity, distressed securities, hedge funds, carbon credits,
venture capital, film production and financial derivatives. Investments in real estate and
forestry are also often termed alternative despite the ancient use of such real assets to
enhance and preserve wealth. Alternative investments are to be contrasted with

traditional investments. Traditional Investment

In finance, the notion of traditional investments refers to putting money into well-
known assets (such as bonds, cash, real estate, and equity shares) with the expectation
of capital appreciation, dividends, and interest earnings. Traditional investments are to
be contrasted with alternative investments.
1.4 CONCEPTUAL FRAMEWORK

.1 Gold as an investment

Of all the precious metals, gold is the most popular as an investment. Investors
generally buy gold as a way of diversifying risk, especially through the use of futures
contracts and derivatives. The gold market is subject to speculation and volatility as
are other markets. Compared to other precious metals used for investment, gold has
the most effective safe haven and hedging properties across a number of countries.
As per world gold council, gold demand in India is about to rise 33% by 2020. Gold
has traditionally been considered as an attractive investment in India and its
excellence performance in recent years has substantially confirmed the wisdom of
that tradition.

2 Investment vehicles
 Bars and Coins

Gold Bars are available in various sizes. For example, in Europe, Gold Delivery bars are
approximately 12 kg.The most traditional way of investing in gold is by buying bullion gold
bars. In some countries, like Canada, Austria and Switzerland, these can easily be bought or
sold at the major banks. Alternatively, there are bullion dealers that provide the same
service.

Bars generally carry lower price premiums than gold bullion coins. However larger bars
carry an increased risk of forgery due to their less stringent parameters for appearance.
While bullion coins can be easily weighed and measured against known values to confirm
their veracity, most bars cannot, and gold buyers often have bars re-assayed.

Good delivery bars that are held within the London bullion market (LBMA), a
system which have a verifiable chain of custody, beginning with the refiner and
assayer, and continuing through storage in LBMA recognized vaults. Bars within
the LBMA system can be bought and sold easily. If a bar is removed from the
vaults and stored outside of the chain of integrity, for example stored at home or
in a private vault, it will have to be re-assayed before it can be returned to the
LBMA chain. This process is described under the LBMA's "Good Delivery
Rules".The LBMA "traceable chain of custody" includes refiners as well as vaults.
Bullion products from these trusted refiners are traded at face value by LBMA
members without assay testing. By buying bullion from an LBMA member dealer
and storing it in an LBMA recognize vault, customers avoid the need of re-assaying or
the inconvenience in time and expense it would cost.

COINS

Gold coins is a coin that is made mostly and entirely of gold. Since recent decades, however,
gold coins are mainly produced as gold bullions to investors and as commemorative coins
to collectors. Gold coins are a common way of owning gold. Bullion coins are priced
according to their fine weight, plus a small premium based on supply and demand. Coins
may be purchased from a variety of dealers both large and small. Fake gold coins are
common and are usually made of gold-plated lead. In July 2002, a very rare $20 1933
double eagle gold coin sold for a record of$7,590,020, making it the most valuable coin sold
till date.

Pros of gold bars and coins:

o Gives psychological sense of possession. You hold it and you get a sense of
ownership of the asset.
o You can use it as an ornament or fashion accessory.
o Fair liquidity – You can sell it easily or pawn it to get liquid cash in a jiffy.
o Gift – You can easily gift it to your daughter or any loved ones during
marriage/festivals.
o Gold bars/biscuits have considerable less damage than jewelry.
 Easy purchase option. Just walk into any jewelry store and you can have
Cons of gold bars, jewelry and coins

o Subject to wealth tax. You need to pay 1% of the value of gold you hold each year if
your total wealth is above Rs.30 lacs.
o High making/damage charges – This is one major disadvantage if you buy gold as
ornaments.
o Questionable purity – You can’t possibly predict the purity of gold especially from
smaller jewelers. You have to believe what the jeweler says.
o Storage– Physical gold has to be guarded by you. You need to pay for storage in
lockers at home/bank. There is also the possibility of theft.
o Short/long term capital gains period is 3 years –That is, if you sell gold in less than 3
years after buying, you need to pay capital gains tax which is 10% or 20% without/with
indexation.

 Gold rounds
Gold rounds look exactly like gold coins but they have no currency value. They range in
similar sizes as gold coins and come in 1.55 gram all the way up to 31 grams. Unlike gold
coins, gold rounds have no additional metals added to them for durability purposes and do
not have to be made by a government mint, which allows the gold rounds to have a lower
overhead price as compared to gold coins. On the other hand, gold rounds are not as
collectible as gold coins.

 Exchange-traded products
Gold exchange-traded products may include exchange-traded funds (ETFs), exchange-
traded notes (ETNs), and closed-end funds (CEFs) which are traded like shares on the
major stock exchanges. The first gold ETF, Gold Bullion Securities (ticker symbol "GOLD"),
was launched in March 2003 on the Australian Stock Exchange, and originally represented
exactly 3.1 gram of gold.

Gold Exchange-traded products (ETPs) represent an easy way to gain exposure to the gold
price, without the inconvenience of storing physical bars.Exchange-traded funds, or ETFs,
are investment companies that are legally classified as open-end companies or unit
investment trusts (UITs), but that differ from traditional open-end companies and UITs. The
main differences are that ETFs do not sell directly to investors and they issue their shares
which are called "Creation Units". Usually, the Creation Units are split up and re-sold on a
secondary market.

ETF shares can be sold in basically two ways. The investors can sell the individual shares to
other investors, or they can sell the Creation Units back to the ETF. In addition, ETFs
generally redeem Creation Units by giving investors the securities that comprise the
portfolio instead of cash. These are similar to mutual funds except that instead of
stocks/bonds they invest in gold.
 Gold ETFs are gaining popularity in India. ETFs started with Rs.100crores and now the
combined Gold ETF in India is near RS12,000crore. Each unit in an ETF represents one
gram of gold.

Pros of Gold ETFs:

 Easy purchase/sell option. Even better than physical gold. You can buy/sell them at the
push of a button.
 No storage problems unlike physical gold. You don’t need to store/carry them.

 No theft issues – The ETFs have secured lockers/storage facility where they are store in
huge volumes just like a bank. Most of them are insured as well.
 Physical backing – For each unit of ETF purchased there should be proportionate gold in
warehouse.
 Regulation – Unlike physical gold, Gold ETFs are regulated by SEBI. SEBI keeps a strict
watch on all fund houses
 No damages/making charges – Probably the single most reason why you want to invest in
Gold ETFs. We make investments to grow our money.
 No wealth-tax liability – If you hold gold as investments via ETF you’re not liable to wealth
tax on gold. However, you have to pay for other assets.
Cons:

 No physical holding/ownership – It’s a non-tangible asset. You can’t feel/use it

 Recurring fund management charges – Each year the fund house typically charges you 1%
of the value of portfolio
 DEMAT is mandatory – A DEMAT account is mandatory if you want to invest in Gold ETFs.
Also the broker may charge you every time you buy/sell units.
 SIP option not available. You have to buy in units/grams. You can’t invest fixed amount each
month.
 Gold Certificates
Gold certificates allow gold investors to avoid the risks and costs associated with the
transfer and storage of physical bullion (such as theft, large bid-offer spread, and
metallurgical assay costs) by taking on a different set of risks and costs associated with the
certificate itself (such as commissions, storage fees, and various types of credit risk).

Banks may issue gold certificates for gold which is allocated (fully reserved) or unallocated
(pooled). Unallocated gold certificates are a form of fractional reserve banking and do not
guarantee an equal exchange for metal in the event of a run on the issuing bank's gold on
deposit. Allocated gold certificates should be correlated with specific numbered bars,
although it is difficult to determine whether a bank is improperly allocating a single bar to
more than one party.

The first paper bank notes were gold certificates. They were first issued in the 17th century
when they were used by goldsmiths in England and the Netherlands for customers who
kept deposits of gold bullion in their vault for safe-keeping. Two centuries later, the gold
certificates began being issued in the United States when the US Treasury issued such
certificates that could be exchanged for gold. The United States Government first
authorized the use of the gold certificates in 1863. On April 5, 1933 the US Government
restricted the private gold ownership in the United States and therefore, the gold
certificates stopped circulating as money (this restriction was reversed on January 1, 1975).
Nowadays, gold certificates are still issued by gold pool programs in Australia and the
United States, as well as by banks in Germany, Switzerland and Vietnam.

 Gold Accounts
Many types of gold "accounts" are available. One of the most important differences between
accounts is whether the gold is held on an allocated (fully reserved) or unallocated (pooled)
basis. Another major difference is the strength of the account holder's claim on the gold, in
the event that the account administrator faces gold-denominated liabilities, asset forfeiture,
or bankruptcy.
 Many banks offer gold accounts where gold can be instantly bought or sold just like any
foreign currency on a fractional reserve basis. Swiss banks offer similar service on a fully
allocated basis. Pool accounts, such as those offered by some providers, facilitate highly
liquid but unallocated claims on gold owned by the company. Digital gold currency systems
operate like pool accounts and additionally allow the direct transfer of fungible gold
between members of the service.

 E-Gold
E-Gold is provided option under NSEL (National Spot Exchange). The gold is bought directly
on your behalf just like ETFs and stored in warehouses.

Pros:

o All advantages of Gold ETF

o Physical delivery possible if required
o No annual recurring charges or fund management charges.
o Gold with physical backing in warehouses.

Cons

o No regulator unlike for Gold ETF.

 Mining companies
Instead of buying gold itself, investors can buy the companies that produce the gold as
shares in gold mining companies. If the gold price rises, the profits of the gold mining
company could be expected to rise and the worth of the company will rise and presumably
the share price will also rise. However, there are many factors to take into account and it is
not always the case that a share price will rise when the gold price increases.
Mines are commercial enterprises and subject to problems such as flooding, subsidence
and structural failure, as well as mismanagement, negative publicity, nationalization, theft
and corruption. Such factors can lower the share prices of mining companies.

The price of gold bullion is volatile, but unhedged gold shares and funds are regarded as
even higher risk and even more volatile. This additional volatility is due to the inherent
leverage in the mining sector. For example, if one owns a share in a gold mine where the
costs of production are $300 per ounce and the price of gold is $600, the mine's profit
margin will be $300. A 10% increase in the gold price to $660 per ounce will push that
margin up to $360, which represents a 20% increase in the mine's profitability, and
possibly a 20% increase in the share price. Furthermore, at higher prices, more ounces of
gold become economically viable to mine, enabling companies to add to their production.
Conversely, share movements also amplify falls in the gold price. For example, a 10% fall in
the gold price to $540 will decrease that margin to $240, which represents a 20% fall in the
mine's profitability, and possibly a 20% decrease in the share price.

To reduce this volatility, some gold mining companies hedge the gold price up to 18 months
in-advance. This provides the mining company and investors with less exposure to short-
term gold price fluctuations, but reduces returns when the gold price is rising.
.3 Gold futures
A gold future is simply a deal to trade gold at a specific amount and price, decided now but
with an agreed settlement day sometime in the future. That means you don't have to pay up
front, except for a sort of deposit amount that stakes your claim as it were. And the seller
doesn't need to deliver you any gold before that agreed upon date either.

A gold futures contract is usually for three months and on the settlement day at the end of
the contract the actual exchange takes place and the buyer pays up, and the seller delivers
the gold. Now most futures traders use this delay to speculate. Both ways, the intention is to
sell or buy back anything they have contracted, before settlement day is reached. At this
point, there only need isto settle any gains and losses. This means they can trade in very
large amounts. They take bigger risks of course but the rewards are much higher. Of course
any losses are magnified also as they have to make good on them if they judge wrong.

i. Types of Gold Derivatives

a. Leveraged-Products

With Leveraged-Products investors can turn a small amount into a huge sum - or into
nothing. Usually (except short selling of options and futures) you can only lose as much as
you invest. But if the gold-price goes into your direction, the performance can be multiplied.
If a Gold Warrant has a leverage factor of 10, the certificate goes +10% for every +1% the
gold-price moves (and vice versa). But if the gold-price goes sideways over a long time, the
certificate will go down due to fees. That's due to a loss of time-value. Hence leveraged-
products are best suited for speculative short term trading ideas and not for long-term
investments.
b. Protection-Products

Protection-products offer a certain capital

protection or limited downside risk. Some of
them offer a 100% capital protection as of expiry,
other just a protection on the first 25% of
downside. After that, you suffer the whole
downside of the gold-price. As a "price" for the
protection the investor is willing to accept a limited upside potential. His maximum return
is defined in advance.

ii. Pros and Cons of Gold Futures

Pros:

o Leverage possible.
o Capital protection possible.
o Profit in sideways markets possible.
o Profit from falling markets possible.

Cons:

o High complexity.
o Issuer risk (in bankruptcy total loss).
o Trading and liquidity limited.
o
.4 Gold Option
An option to buy or sell gold bullion at a future date at a set price is known as GOLD
OPTION. The date (delivery date), quantity and price (strike price), are all
predetermined. The option is just that, a right, and is therefore not an obligation on the
part of the investor to either buy or sell the gold.

A call option gives the right, but not the obligation, to buy gold at a specific price for a
certain amount of time (expiry). The price at which you can buy gold is called the strike
price. If the price of gold rises above your strike price before the option expires, you
 make a profit. If the price of gold is below your strike price at expiry, you lose what you
paid for the option, called the premium.

Put options give the right, but not the obligation, to sell gold at a specific price (strike
price) for a certain amount of time. If the price of gold falls below the strike price, you
reap a profit of the difference between the strike price and current gold price
(approximately). If the price of gold is above your strike price at expiry, your option is
worthless and you lose the premium you paid for the option.

Advantages and Disadvantages of investing in gold.

Advantages:

 Gold as an asset class is pretty much unrelated to the movement in broader market and
hence provides true diversification in your portfolio.
 Gold is generally also used as hedge against inflation and socio-economic unrest. At the end
of day currencies have value as long as there is strong government support to them.
 Gold has historically easily beaten inflation and in the long run should continue to the same.
 We have some diversification if the market becomes extremely volatile, which is likely, to be
in the future.
 The best reason to treat gold as an investment is that its value tends to stay stable over
time, and will increase during times of economic stress.
 In general, when the stock market is going down, commodities like gold and silver are
increasing in value. This provides a "hedge" to balance your overall investment portfolio.
Disadvantages:

 Gold in itself doesn't create any value. There is no intrinsic value of a gold bar.
 Predicting movement in gold price is extremely hard and hence it’s difficult to estimate
risk / volatility in your portfolio if it has a lot of gold.
 It doesn't generate return, in stable economic environment, its value is hardly realized.

 Since the value of a piece of gold jewelry comes from the artistic workmanship, you may
have a little more trouble getting your money out of a piece of gold jewelry than a bar of pure
gold. The value of the metal content is never negotiable, but the artistic value often is.
.5 Influencing factors of Gold price
Like most commodities, the price of gold is driven by demand and supply including demand
for speculation. Most of the gold ever mined still exists in accessible form, such as bullion
and mass-produced jewelry, with little value over its fine weight and is thus potentially able
to come back onto the gold market for the right price. At the end of 2006, it was estimated
that all the gold ever mined totaled 158,000 tones.

Given the huge quantity of gold stored above-ground compared to the annual production,
the price of gold is mainly affected by changes in sentiment (demand), rather than changes
in annual production (supply). According to the World Gold Council, annual mine
production of gold over the last few years has been close to 2,500 tones. About 2,000 tones
goes into jewelry or industrial/dental production, and around 500 tones goes into retail
investors and exchange traded gold funds.

Following are the influencing factors of Gold price:-

o Central banks
Central banks and the International Monetary Fund play an important role in the gold price.
At the end of 2004 central banks and other official organizations held 19 percent of all
above-ground gold as official gold reserves. The ten-year Washington Agreement on Gold
(WAG),limits gold sales by its members to less than 500 tons a year. In 2009, this agreement
was extended for a further five years, but with a smaller annual sales limit of 400 tones.

Although central banks do not generally announce gold purchases in advance, some, such
as Russia, have expressed interest in growing their gold reserves again as of late 2005.In
early 2006, China, which only holds 1.3% of its reserves in gold, announced that it was
looking for ways to improve the returns on its official reserves. Some bulls hope that China
might reposition more of its holdings into gold. Chinese investors began pursuing
investment in gold as an alternative to investment in the Euro after the beginning of the
Eurozone crisis in 2011. It has since become the world’s top gold consumer as of 2013
It is generally accepted that the price of gold is closely related to interest rates. As interest rates
rise the general tendency for the gold price is to fall, and as interest rates dip, for gold price to
rise. As a result, gold price can be closely correlated to central banks via the monetary policy
decisions made by them related to interest rates.

It has in fact been found that the price of gold can be influenced by a number of
macroeconomic variables. Such variables include the price of oil, the use of quantitative easing,
currency exchange rate movements and returns on equity markets. IMF still has a balance of
2814.1metric tons of gold.
o Jewellery and industrial demand
Jewelry consistently accounts for over two-thirds of annual gold demand. India is the
largest consumer in volume terms, followed by China and the USA. Industrial, dental and
medical uses account for around 12% of gold demand. Gold has high thermal and electrical
conductivity properties, along with a high resistance to corrosion and bacterial
colonization. Jewelry and industrial demand have fluctuated over the past few years due to
the steady expansion in emerging markets of middle classes aspiring to Western lifestyles,
offset by the financial crisis of 2007–2010.

o Gold jewellery recycling

In recent years the amount of second-hand jewelry being recycled has become a
multibillion-dollar industry. The term "Cash for Gold" refers to a service for people to earn
cash by selling their old, broken, or mismatched gold jewelry to local and online gold buyer.

However, there are many companies that have been caught taking advantage of their
customers, paying a fraction of what the gold or silver is really worth, leading to distrust in
many companies.

o War, invasion and national emergency

When dollars were fully convertible into gold via the gold standard, both were regarded as
money. However, most people preferred to carry around paper banknotes rather than the
somewhat heavier and less divisible gold coins. If people feared their bank would fail, a
bank run might result. This happened in the USA during the Great Depression of the 1930s,
leading President Roosevelt to impose a national emergency and issue Executive Order
6102 outlawing the "hoarding" of gold by US citizens. There was only one prosecution
under the order, and in that case the order was ruled invalid by federal judge John M.
Woolsey, on the technical grounds that the order was signed by the President, not the
Secretary of the Treasury as required.

Reasons to invest in gold

There are various reasons why people, especially Indians, invest in gold to meet their financial
goals. However, there are those that invest in gold for the wrong reasons.

By doing this, they end up with an unsuitable investment product which can put their financial goals
in jeopardy. Here are five right reasons why one should have gold in their investment portfolios.

1. Hedge against inflation

When inflation rises, the value of currency goes down. Over the long term, almost all major
currencies have depreciated in value relative to gold. Therefore, people tend to hold money in the
form of gold. In times when inflation remains high, especially when it is in high double digits, over a
longer period in the economy, gold becomes a hedge against inflationary conditions.

2. Tangible asset
Gold is one of the few assets that is tangible, and thus, it creates a perception of safety among
investors. Purchasing gold is much easier compared to purchasing other tangible assets such as real
estate. Also, because of this feature, while assets stored digitally are prone to hacking and other
misuse, gold is free from such concerns. However, it does come with its own risks. So, be mindful of
them.

3. For portfolio diversification

It is believed by some economists that gold is a highly effective portfolio diversifier due to its low to
negative correlation with all other major asset class

However, some suggest that there is evidence that when equities are under stress, in other words,
when shares are falling rapidly in value, an inverse correlation can develop between gold and
equities. Gold protects one's portfolio from volatility because the factors, both at the macro-
economic and micro-economic fronts that affect the returns of most asset classes do not
significantly influence the price of gold. For a given level of returns from a portfolio, the risk or
volatility can be reduced by adding gold to it.

4. Provides liquidity
At the time of need, investments in gold can be liquidated much faster than other physical assets
like real estate. Unlike many other assets there is no lock-in period in gold investments except for
sovereign gold bonds. The redemption amount in case of physical gold will, however, depend on the
purity of the gold, denomination and other factors including the market price.

In the case of the paper gold, the market price on the redemption date determines the redemption
amount. When short of funds, one may also take loans against gold.

5. Geo political factors

Gold usually does well during geopolitical turmoil and the current crisis over Korea's nuclear
capability has boosted the prospects of the yellow metal. Prathamesh Mallya, Chief Analyst, Non-
Agri Commodities and Currencies, Angel Broking writes here, "Gold prices have been trading in
$1,300-1,360 for 2018 despite the rolling geo-political uncertainties. Although the tensions have
eased, $1,300 will act as a psychological support. On MCX, Rs 31,000 will act as a good support in
the domestic market, Crises such as wars, which have a negative impact on prices of most asset
classes, have a positive impact on gold prices since the demand for gold goes up as a safe haven for
parking funds."

.6 Investment strategies
i. Fundamental analysis
Investors using fundamental analysis analyze the macroeconomic situation, which includes
international economic indicators, such as GDP growth rates, inflation, interest rates,
productivity and energy prices. They would also analyze the yearly global gold supply
versus demand.

The performance of gold bullion is often compared to stocks as different investment

vehicles. Gold is regarded by some as a store of value (without growth) whereas stocks are
regarded as a return on value (i.e., growth from anticipated real price increase plus
dividends). Stocks and bonds perform best in a stable political climate with strong property
rights and little turmoil Since 1800, stocks have consistently gained value in comparison to
gold because of the stability of the American political system. This appreciation has been
cyclical with long periods of stock outperformance followed by long periods of gold
outperformance. In the long-term, gold's high volatility when compared to stocks and
bonds, means that gold does not hold its value compared to stocks and bonds:

ii. Technical analysis

As with stocks, gold investors may base their investment decision partly on, or solely on,
technical analysis. Typically, this involves analyzing chart patterns, moving averages,
market trends and/or the economic cycle in order to speculate on the future price.

iii. Using leverage

Bullish investors may choose to leverage their position by borrowing money against their
existing assets and then purchasing gold on account with the loaned funds. Leverage is also
an integral part of buying gold derivatives and unhedged gold mining company shares.
Leverage or derivatives may increase investment gains but also increases the
corresponding risk of capital loss if/when the trend reverses.
iv. Taxation
Gold maintains a special position in the market with many tax regimes. For example, in the
European Union the trading of recognized gold coins and bullion products are free of VAT.
Silver and other precious metals or commodities do not have the same allowance. Other
taxes such as capital gains tax may also apply for individuals depending on their tax
residency. U.S. citizens may be taxed on their gold profits at 15, 23, 28 or 35 percent,
depending on the investment vehicle used.

.7 INVESTING IN GOLD OR INVESTING IN REAL ESTATE

People tend to remain confuse whether to invest in gold or in real estate. These day the
government is literally printing out money as id it grows on tree. Printing money at this rate is
bound to cause inflation at some point. This inflation will cause the price of gold to rise
substantially. It is also a known fact that gold never loses it styles. This means that gold seems
to never lose its positions as one of the top investments for individuals.

Gold has been used for currency, investing, and many other purpose and seems as if it will be
the preferred method of payment in the near future. The US dollar will eventually become
nearly worthless as inflation starts to peak. Almost everyone involved in investing know that
gold will increase over the next few years but nobody really knows how much. Gold can be
purchased right now but it usually comes with a 5-6% dealer markup cost. No discounts exist
for gold, and as soon as it is purchased the only way it will make money is through increases in
price. Real estate is another option for an investment. A real estate wholesaler only has to put
ten dollars down and they can profit five to ten thousand dollars, once they assign a contract to
someone else. Investing in rental property will provide a steady cash flow. This is much
different from gold because gold is considered as a dead weight. An investment in real estate
will provide a constant flow of cash coming in whereas gold is considered dead weight because
it does not bring in a steady income. The thing about real estate is that much like gold it is a
physical asset. This mean that when inflation hits home real estate will rise in price just the
same as gold would. Real estate will almost certainly provide a steady influx of cash with
investments in rental properties or other properties of that nature. Gold will yield profit as well
but it is considered dead weight because once it is purchased nothing can really be dome to
cause it to bring in a steady flow of cash.

Gold is safe in the sense that it never really depreciates in value and provide a safer long-term
investment. Any form of investment will have its own amount of risk involved. Awareness,
knowledge, and perfect clarity regarding specific individuals own personal requirements are
what will really determine which option is better between gold and real estate. Both the
investment option has the potential to provide pretty lucrative returns.

Risks On Investing in gold

 It is not an essential commodity. People cannot eat gold. Gold investment does not provide any
current income like dividend or rental as in Stocks or real estate where investors can reap the
rewards of their investment without having to sell their asset. Besides when an investor purchases
gold, attention needs to be given to how the gold will be safely stored. Storing gold coins in one's
house is the equivalent of putting money under one's mattress: It is not a safe place to keep it.
Some investors use safe deposit boxes (available at some banks) to store gold. Other investors
purchase gold in a manner that does not require taking delivery on the gold. For instance, a gold
exchange traded fund enables the purchase of gold without having to take possession of gold.

Smart Ways to Invest in Gold in India:

There are so many ways to invest in gold such as: YŸ

 Futures and options,

 Exchange Traded Funds (ETF)

 coins and bars,

 Gold Accumulation Plans (GAP)

 Gold Funds

 E gold

Gold Futures:

Gold futures contracts are binding commitments to make or take delivery of a species quantity
and purity of gold, on a prescribed date, at an agreed price. The initial margin or cash deposit
paid to the broker is only a fraction of the price of the gold underlying the contract.

Exchange Traded Funds (ETFs):

Buying Gold ETF is purchasing gold in electronic form. You buy them just like you buy stock of
any company from your broker. Gold ETF makes it easier for you to invest in gold. Each Gold
ETF unit that you buy is roughly equal to the price of 1 gm of gold.

Gold Coins And Gold Bars:

You can invest in gold coins and bars, by buying them from your jeweler or from the bank. Gold
coins are mass produced; they are available at very competitive prices compared with similar
size bars. Gold coins are almost universally recognized, they are also easy to resell.

Gold Accumulation Plans :

Gold Accumulation Plans (GAPs) are similar to conventional savings plans in that they are based on
the principle of putting aside a led sum of money every month. At any time during the contract term or
when the account is closed, investors can get their gold in the form of bullion bars, coins, jewellery or
cash.

Gold Funds:

Gold fund of funds is a solution meant for investors who wish to invest in gold but do not have a demat
account. It aims to generate returns by investing in units of gold ETF. It works like any other open-
ended mutual fund scheme.

E-Gold:

You can invest in e-gold just as you invest in shares. The e-gold is held in electronic form or demat form,
just like shares. One unit of e-gold is equal to 1 gram of gold.

Return on gold investment

Is it profitable to invest in gold?

This investment proved remarkable from 2006 to 2011.During that time span Gold has given
average return of 29% per annum which was any day better than other investment options.

However, the long term average return on gold investment is less than 10% p.a.

As one can say technically or ironically but history always repeats itself. Therefore, we may once
again observe the similar less than 10% appreciation pattern in gold prices in near future.

Still, if you want to invest in Gold and cannot resist yourself from the temptation then these are few
tips on how to invest in gold correctly!

1) Jewellery buying

Our age-old and traditional way of investment is jewellery buying where one can buy gold
ornaments, bars or coins. However, it has its own disadvantages, total buying cost involves heavy
making charges (it can be 10 to 20% of total cost).However, when you try to sell the same piece to
same jeweler, he will buy it below market rates and deduct those making charges from the total
price of your jewel.

2) Investment in Gold coins and bars

Investment in gold coins and bars is also a better option over jewel buying. You need to decide on
‘Where to buy gold coins or bars?”. You should buy gold bars and coins only from jeweler. Banks
also sell gold coins or bars. Then why do we advocate for buying god bars and coins from jewelers?
To answer this question you ask yourself “How to sell gold coins or bars?” or “Where to sell gold
coins in India?”
Banks sell gold coins and bars, but they cannot buy it back. Whereas, the jewelers can buy back the
gold coins from you.

How to invest in Physical Gold?

The point 1) and 2) could have proved that it is better to invest in the physical gold by way of gold
coins or bars sold by the jewelers. In the next points 3) and 4) we will discuss about the paper gold
investment options in India.

3) Gold ETF:

What is Gold Exchange Traded Fund?

Gold exchange traded fund is a type of mutual fund which in turn invests in gold and the units of
this mutual fund scheme is listed in the stock exchange.

How to invest in Gold ETFs in India?

You need to buy Gold ETFs from the stock exchange by way of opening a demat account and
trading account. You have to pay brokerage fee (which is generally between 0.25% to 0.5%) for
buying and selling of these Gold ETFs. You will have to further pay 0.5 to 1 % charges as fund
management charges.

4) Gold Fund of Funds:

What is Gold Fund? Gold fund is a Fund of Fund which will invest in Gold ETFs on behalf of you. Best
part here is that you do not require holding any demat a/c here.

Then how to invest in Gold Mutual Funds? Just like investing in other mutual fund schemes. As this
is like any other mutual fund scheme, SIP investment in gold is possible through these gold funds.

Still buying Gold fund of fund is little expensive option, as you have to pay
1) Annual management charges for the underlying Gold ETF
2) Annual management charges of Gold FOF Scheme .

5) Equity based Gold Funds:

Here these funds are directly not investing in Gold but investing in the companies, which are related
to the mining, extracting and marketing of the Gold. Besides, its performance is purely dependent
upon the performance of the fund house and the equities they are investing.
 In the other 4 options, your investment performance will be directly linked to the price movement
in gold.

However, investment in these funds is suitable for investors with high-risk appetite.

 As these are equity-based funds, equity risk is there.

 There are no listed companies in India associated with Gold. Therefore, these funds trade in
international market and quiet susceptible to currency-risk apart from gold-risk and equity based
risk.

Therefore after assessing or weighing pros and cons of each gold investment option, one can
conclude that Gold ETFs and Gold Funds are safest, profitable and most preferred options among
the various alternatives.

How much to invest in Gold?

5% to 10% of your over assets can be invested in gold. If you invest more in gold, remember in the
long term return on gold investment is less than 10% p.a.

Is it right time to invest in gold?

Many times I have faced questions similar to “When to invest in gold?” or “Should I invest in gold
now?” There is no right or wrong time to invest in gold. You need to invest in gold for long term
( 5+yrs). It is better to stagger your investments over a period of time to average out the cost of
purchase.

How to start investing in Gold online?

You can start investing in gold online either by investing in gold ETF or by investing in gold funds.
Gold funds can also be bought online just like investing in other mutual funds online.

The above compilation on different methods of investing in gold could have given you more clarity
about investing in gold. Clarity is power when comes to taking investment decisions.
.8 Comparison of investments
INVESTMENT IN GOLD OR INVESTMENT IN BONDS

Which is safer: investing in gold or investing in bonds?

This depends heavily on whether one is considering government bonds or corporate bonds.
For reason of simplicity, one can assure that government bonds are being considered.
Taking example of US, one can understand the stability of such bonds when one realizes
that any currency in circulation is backed by the federal government. Though the US is
heavily in debt, this currency still retains its value because the US dollar is the standard in
many parts of the world. Anything that the federal government backs including bonds can
be counted.
The value of gold, like the most precious mineral, fluctuates on the law of the invisible hand,
also known as demand and supply. The fact is that the value of gold has increased far more
than the value of bond. Gold has enormous stability but its value is depended on many
economic variables. Bonds, on the other hand, can be counted on to be worth their value
upon maturation.

In another way gold and bond can be differentiated. The value of gold is depended on many
economic factors but retains its value quite well. In fact, the value of gold steadily or
sometimes rapidly increases with each passing year. This may be due to its wide range of
characteristics which make it a very efficient electrical conductor, a treatment for
inflammation in the body, but particularly its rarity. There is very little supply compared to
demand. This problem will get worse over the next few decades, resulting in very likely
increases with a relatively stable value. In other words, gold will go up but will likely not go
down in price. In bonds, however, in , in some years yield a higher return than gold if the
inflation rate suddenly spikes. If the decision to invest in bonds over gold is made.That
bonds are probably the best way to retain the value of an individual’s financial resources
during inflation periods.

Overall, it is in one’s best decision to consider which is more desirable: safe and high return.
Gold is the way to go if one is willing to take a minor risk for a good return. If safety is the
key, however, governments bonds are perhaps the safest investment vehicle one can
 use when planning for retirement, saving money to start a business.

Gold or stocks or mutual funds

No one asset outperforms others consistently over time. In the past one year, equity mutual funds
and government securities gave higher returns than other assets. Over 10 years, it's gold that beats
all other asset classes. For consistent long-term gains, put your eggs in several baskets.

Of course, returns is only one of the three criteria to look for before investing--safety and liquidity
are the other two. Government securities, the safest investment option, matched returns from
equity funds last year. But this is a rare occurrence.
.9 MYTHS OF GOLD COIN AS AN INVESTMENT
There are at least a dozen ways for investors to put their money into the gold market. Besides
the stocks of gold-mining companies, consumers can choose to purchase gold bullion bars,
bullion coins, and numismatic coins, invest in gold options or ETFs, jewelry, scrap gold or gold
accounts. Anyone considering gold coins, often marketed as “rare” gold coins or numismatic
gold, should be aware of the many myths that exist about this kind of investment. Here are the
most common ones:

Myth #1 – Rare gold coins are just like gold bullion.

Fact: Nothing could be further from the truth that bullion prices track the spot price of gold
very closely and bullion has no value other than its metallic worth. Rare coins are entirely
different animals. Much of their value is tied to the rarity and market worth of the fact that they
are collectible coins. The country of issue, year minted, and denomination are vitally important
for assessing their value at any given time.

Myth #2 – Rare gold coins are likely to increase in price astronomically because they are
rare, and are made of gold.
Fact: Gold coins can increase in value, but retail markups are so high that unless you purchase
huge lots or are an expert numismatist are much more likely to lose money by purchasing rare
gold coins

Myth #3 – Gold coins are an investment in the precious metals market.

Fact: Gold coins, rare or not, are primarily a numismatic (coin-collecting) investment. This is a
world dominated by long-time experts, many of whom are licensed, certified coin dealers. Yes,
gold coins are made of gold, but the bulk of their resale value has to do with their worth as a
collectible, much like rare works of art.

Myth #4 –gold coins are a smart investment because they cannot be confiscated by the
U.S. government.

Fact: No gold can be confiscated by the U.S. government. Long ago, this was true, but times
(and laws) have changed. Even in a huge international crisis it is doubtful the government
would even want to do this because U.S. currency is no longer backed by gold. The government
is as likely to “confiscate” gold as they are silver, cars, golf balls and toothpicks

Myth #5 – Gold coins are very liquid and can be sold at any time.

Fact: Gold coins are anything but liquid and average investors often have great difficulty selling
them. This myth is commonly repeated by people who have no idea about the way gold
investment works. Rare coins are very similar to expensive paintings or collectible jewelry,
both of which can be near impossible to sell unless a willing buyer appears.

Myth #6 – Gold coins are easy to store.

Fact: In one sense, yes, gold coins are easy to store. Literally, the statement is true, but
practically speaking, it is not. Sure, you can toss your newly-purchased “rare” gold coins into a
drawer and forget about them, but that puts them at great risk of theft. To go about it the right
way, you’ll need to insure them first, and then store them in a safe deposit box, not at home.
Additionally, coins can actually melt in a fire, or can easily be found by high-tech thieves who
routinely use metal-detectors to locate “hidden” caches of coins and bullion.

Myth #7 – Investors can master the rare coin market by reading a few articles online or
in a book.
Fact: Professional numismatists, many of who have spent decades buying and selling rare coins
of all kinds, will be the first to say that the rare gold coin market is complicated, volatile and
calls for a depth of knowledge that cannot be acquired in a few hours, days or weeks. Investors
who want to become collectors of gold coins might get good advice by speaking to a coin dealer
they trust. But one needs to remember that rare coins are a collector’s game, not an investor’s.

Myth #8 – Rare gold coins are never a good investment.

Fact: If one has the advice of a trusted numismatist who knows the rare gold coin market, gold
coins can be a way to invest. This type of investor would need to realize that the activity is akin
to buying a valuable work of art, and further understand that a very long hold time is typical in
order to make a profit.

Myth #9 – Rare gold coins at auctions and sales are genuine because they’ve been
minted by national governments.

Fact: One should only purchase rare gold coins from a licensed numismatist or trusted coin
dealer. Online selling is rife with fake coins that are gold on the outside and lead or some other
filler on the inside. Buying gold coins online from one of the big auction sites is like purchasing
an expensive new car, sight unseen, from a remote seller who only sends you a photograph.

Myth #10 – Gold coins are a smart investment because, in a jam, they can be used as
money, at their face value.

Fact: If a seller ever tells you this, you should immediately run away and not look back. The
denominated value of most gold coins is usually about one percent of the value of the gold in
the coin itself. To consider using a rare gold coin (or any gold coin) as money is an idiotic
concept.

People who want to buy rare gold coins need to know exactly what they’re doing, or have the
advice of someone who does. Even a small lot of rare gold coins can cost many thousands of
dollars, are not very liquid, and can significantly decrease in value rather rapidly. For those who
are dead-set on entering the rare gold coin market, the advice of an experienced professional
numismatist or trusted coin dealer is essential.
INVESTMENT STRATEGIES
FUNDAMENTAL ANALYSIS
Investors using fundamental analysis analyze the macroeconomic situation, which includes
international economic indicators, such as GDP growth rates, inflation, interest
rates, productivity and energy prices. They would also analyze the yearly global gold supply
versus demand.
GOLD VERSUS STOCKS

Dow/Gold Ratio 1968–2008

The performance of gold bullion is often compared to stocks as different investment vehicles. Gold
is regarded by some as a store of value (without growth) whereas stocks are regarded as a return on
value (i.e., growth from anticipated real price increase plus dividends). Stocks and bonds perform
best in a stable political climate with strong property rights and little turmoil. The attached graph
shows the value of Dow Jones Industrial Average divided by the price of an ounce of gold. Since
1800, stocks have consistently gained value in comparison to gold in part because of the stability of
the American political system.[57]This appreciation has been cyclical with long periods of stock
outperformance followed by long periods of gold outperformance. The Dow Industrials bottomed
out a ratio of 1:1 with gold during 1980 (the end of the 1970s bear market) and proceeded to post
gains throughout the 1980s and 1990s.[58] The gold price peak of 1980 also coincided with
the Soviet Union's invasion of Afghanistan and the threat of the global expansion of communism.
The ratio peaked on January 14, 2000 a value of 41.3 and has fallen sharply since.
One argument follows that in the long-term, gold's high volatility when compared to stocks and
bonds, means that gold does not hold its value compared to stocks and bonds:

To take an extreme example [of price volatility], while a dollar invested in bonds in 1801
would be worth nearly a thousand dollars by 1998, a dollar invested in stocks that same year
would be worth more than half a million dollars in real terms. Meanwhile, a dollar invested
in gold in 1801 would by 1998 be worth just 78 cents. [59]

USING LEVERAGE
Investors may choose to leverage their position by borrowing money against their existing
assets and then purchasing or selling gold on account with the loaned funds. Leverage is also
 an integral part of trading gold derivatives and unhedged gold mining company shares (see gold
mining companies). Leverage or derivatives may increase investment gains but also increases
the corresponding risk of capital loss if the trend reverses.
CRYPTO CURRENCIES
Some of the economic mechanics of gold have been compared to those of crypto currencies.
For example, they are both scarce, fungible and do not come attached to debt. Nick
Szabo created a digital currency call "bit gold" that mimicked some features of gold. [60]
Some crypto currencies and services are backed by gold.

Overview of the gold market

Rising market volatility, global economic uncertainty and geopolitical unrest have increased
interest in gold as both a short and long-term investment. In fact, during 2009, world
investment in gold is estimated to have more than doubled from 2008 levels .i The world gold
market is active, with annual demand averaging 4,034 tonnes ii over the 10 years ending
December 31, 2009. Key market participants include: Mining companies and producers,
including scrap merchants and recyclers 1. Bullion banks, which may offer services such as
physical gold purchases and sales, hedging and risk management, inventory management for
industrial users and consumers, and gold deposit and loan instruments 2. Central banks, such as
the US Treasury, which hold gold bullion as a reserve currency 3. Professional and private
investors, such as large hedge and mutual funds, day traders on futures exchanges, and retail-
level coin collectors, and 4. Commercial and industrial users, such as the jewellery, electronics
and dental industries. Virtually all the gold that has ever been mined still exists today in one
form or another. It is estimated that existing ‘aboveground’ stocks of gold (gold that has already
been mined) amounted to 165,000 tonnes at the end of 2009, spread across multiple sources as
shown in Figure 1. Jewellery and central banks have historically been the largest stores of gold.
However, private investments, through physical bullion and investment products, have become
increasingly important. Indeed, during 2009, investor demand exceeded jewellery demand for
the first time since 1980.

.10 Gold Investing Scams.

Last year may not have been gold’s best year, but it was quite an interesting year for gold
investing fraud. Smooth-talking scammers have existed since the serpent convinced Eve to take
a bite of the forbidden fruit, and a quick Google search reveals dozens, if not hundreds, of gold
scams perpetrated upon innocent investors who wanted nothing more than to buy gold coins
or bars to insulate themselves from the high-inflation, near-zero interest rate environment in
which we live.

a) Non-Delivered Shipments
The no delivery gold investing scam is very simple. The investor is contacted by a supposedly
reputable gold dealer, but in many cases rogue thieves use similar names and telephone
numbers as actual investment companies. If the investor bites, the scammer will send out an
invoice, confirmation email and maybe even a welcome packet. The gold, however, never
arrives.

In a twist on this scam, under-delivery has been reported. In other words, someone might open
a new gold investing company (or at least own some gold) in order to lower investors’ guard.
Once a large sum of money has been sent, some metals may be delivered to the unsuspecting
investor, but the discrepancy is either disputed by the “dealer” or an excuse, typically
something about insurance limits on shipping large volumes across state line, is given.
Oftentimes, investors’ willingness to wait for weeks or months gives the fraudster enough time
to scam a few more people and slink away into the night, or at the very least to turn the gold
scam into a Ponzi-scheme in which the first victims are refunded money using funds from
newer targets.

One shocking example of the no delivery gold scam recently appeared on Fox News. A Newport
Beach, California gold dealer slowly started to take longer and longer to fulfill clients’ orders.
Finally, clients started to complain that metals were being under-delivered or not delivered at
all. The next thing the clients knew, nobody was answering the phone or returning emails. By
March 2014, over 1,000 customers had filed claims totaling over $40 million.

b) Bait & Switch Scam

The “bait-and-switch” gold investing scam is not one that originates in Nigeria, nor is this scam
use by “fly by night” rogue brokers. In fact, at least three gold dealers in California alone have
been busted for this scam in the last few years. Its working is as follow:

An irresistible offer is made to potential investors via telephone, television, radio or other
advertising outlet. The common “bait” is an offer to buy gold at 1% over cost, or something
similar. When the investor tries to purchase the gold as advertised, however, the broker starts a
high-pressure sales routine that is packed with psychological tricks used to confuse consumers.
By the end of the call, the investor has purchased very rare coins and has paid a very high
premium. Oftentimes, the gold broker will not specify the type or quantity of the coins, and
many times will not give a per-unit price. This is illegal, and that’s why district and city
attorneys from New York to California are cracking down on dealers who advertise
investments that they have no intention of selling.

A textbook case of the bait-and-switch gold investing scam occurred in California. A gold dealer
aggressively marketed a “buy gold at 1% over cost” campaign to senior citizens, and
encouraged them to call immediately to take advantage of the sale. Once on the phone, brokers
coerced these elderly investors into buying very rare and expensive coins. The Californians
finally cracked down on the company, putting them out of business. However, since this was the
third Californian dealer to suffer the consequences of scamming the elderly since 2011, many
believe the scam could again rear its ugly head in due time.

c) Leveraged Precious Metals Investing Scam

When you want to make an investment in any securities and you don’t have enough money and
you are thinking to borrow a loan with even high interest rates, a trap which can be set up by
frauds to gain money from you. It may work in the following way:

i. You receive a call about some “highly confidential” or insider information about a “can’t
miss,” short-term rise in the future price of gold, silver or platinum. The people who are
more likely to fall for such a scam probably don’t have a lot of discretionary money lying
around to invest, so the “broker” instructs you to borrow the funds to make the
investment.

ii. Surprise, surprise! The gold broker also represents a financing company. You take out a
hefty loan with a high interest rate, because, hey, you’ll be rich once the metal’s price
skyrockets next week.

iii. Even if the company is legitimate, they won’t ship the gold to you until your loan is paid
off. If the price of the metal in which you invested falls, you end up with even more debt.
If the company is nothing more than a sham, then they might continue trying to collect
loan payments from you or they might simply disappear.

iv. Borrowing money for an investment is not a good idea for household investors. If you’re
having money flow problems, then investing through financed gold is not the answer.
Sadly, thousands of investors each year fool themselves into thinking that financed gold
and silver is a good idea.
 v. The Sun-Sentinel paper in Florida reported recently that seven precious metals
businesses caused clients to lose over $54 million in just the last 18 months, all because
of leveraged, or financed, gold investing scams.

11 BREXIT EFFECTS ON GOLD

Gold rates surged to its highest in the past three years, after the results of BREXIT referendum.
Bullion India experts evaluate ‘the BREXIT effect on gold market’, to give the investors an idea
of how the British exit from the European Union will affect gold rate in India over the coming
months.

a) Increased Uncertainty

As U.K. voted to exit from the European Union there is an air of global uncertainties that is
bound to raise the gold rates in the current calendar year. Historically, gold has always been the
favorite commodity that investors seek in times of an economic crisis. Hedging against gold will
come into play as investors rushed to grab safer assets like gold over equities and other risky
assets, creating an unruly demand for the rare and precious metal.

b) Price Rise

Experts believe that as dollar strengthens, the price of gold is likely to rise. The increased
economic uncertainty due to the outcome of the BREXIT vote may encourage more investors to
pile on gold, increasing almost 4.7% since the day before BREXIT vote. For those investing in
the gold market India, it seems to be the right time and place to invest for prominent short
term benefits.

c) Rise in Bullion Purchase.

Bullion India Experts predict a strong and continued influx into the gold market India,
accelerated by the overwhelming uncertainty that investors are facing. The purchases of
Bullions like gold coins by small investors have already seen a tremendous rise in the months
near the vote on the BREXIT referendum, and could accelerate further, in India and Globally.
Gold in its undying popularity is a superior and liquid asset. It has been known to provide
investors with a hedge against the uncertainty in the market, mainly in the times of economic
or political turmoil.
d) Conversion influence

The difference in the price of gold in India due to conversion cost and fall of the local currency
rupee over the dollar may impact the prices of gold further. In India, the rise in gold rates may
shy away buyers for a short period, however, the buying trends have always remained
undeterred when it comes to the people’s favorite yellow metal. BREXIT effect on gold market
has open.

12 GOLD SCHEME
i. Gold Monetization Scheme
The Gold Monetization Scheme was launched on 5 th November by the Prime Minister
NarendraModi. The scheme is designed to help you earn interest on your unused gold lying
idle in bank lockers. The Gold Monetization Scheme is basically a new deposit tool to
ensure mobilization of gold possessed by various families and institutions in India. It is
expected that the scheme would turn gold into a productive asset in India. This new gold
scheme is a modification of the existing Gold Deposit Scheme (GDS) and Gold Metal Loan
Scheme (GML), and it would replace the existing Gold Deposit Scheme, 1999.

 Deposit allowed under Gold Monetization Scheme 2015

An investor can deposit gold for short, medium and long terms under the Gold
Monetization Scheme. The scheme would allow an investor to deposit gold in Short Term
Bank Deposits (SRBD) and Medium and Long Term Government Deposit (MLTGD). The
tenure of a Short Term Bank Deposit is 1-3 years. The Medium and Long Term Government
Deposits can be opened for 5 -7 years and 12-15 years respectively. The Short Term Bank
Deposit would be accepted by individual banks on their own account. But the Medium and
Long Term Government Deposits would be accepted by banks on behalf of the Government
of India based upon notification issued by the Reserve Bank of India.

 Gold Monetization Scheme Eligibility

All residents Indians can invest in this new Gold Monetization Scheme. 2015.
 Key features of Gold Monetization Scheme

The Gold Monetization Scheme comes with the following features:

 The scheme accepts a minimum deposit of 30gm of raw gold in the form of a bar,
coin or jewellery.
 There is no maximum limit of investment under this scheme.
 The scheme allows premature withdrawal after a minimum lock-in period. However,
it charges penalty for such withdrawals.
 All designated commercial banks would be able to implement the Gold Monetization
Scheme in India.
 The scheme would offer interest at 2.50% per year which is higher than previous
rates offered on gold investments.
 The short term deposits offered by Gold Monetization Scheme can be redeemed in
either gold or in rupees at current rates applicable at the time of redemption.

 Benefits of investing in Gold Monetization Scheme


By investing gold in the Gold Monetization Scheme 2015, an investor can enjoy the
following benefits:

 You would earn interest on your idle gold which would add value to your savings.
 The scheme would benefit the country by reducing its gold import.
 The schemes offer flexibility.
 You can withdraw your investment/gold as and when you need it.
 You can start your investment with as low as 30gm of gold.

A portion of the gold collected through the Gold Monetization Scheme can be sold or lent to
RBI for minting of gold coins and sale. Thus, the gold deposited through this scheme will be
re-circulated in the country to help reduce gold imports. Gold being the most precious asset
of the country, the Government of India aims to use it for the purpose of nation building and
strengthen the country’s economy.

ii. Sovereign Gold Bond Scheme

 The government of India recently launched a Sovereign Gold Scheme to provide an
alternate option when it comes to owning gold. This scheme aims to reduce the demand for
physical gold, thereby keeping a tab on gold imports and utilizing resources effectively.
With the Reserve Bank of India issuing these gold bonds, it brings in transparency and
trust, providing an avenue wherein people can own gold without having to worry about its
storage or safety.In essence, a Sovereign Gold Bond is a government issued security which
represents a certain weight of gold. Owning a gold bond of a certain weight is akin to
owning that quantity of gold, albeit in a different form.

 How does Sovereign Gold Bond Scheme operate?

Under the Sovereign Gold Bond Scheme, the Reserve Bank of India will issue the bonds on
behalf of the Government of India. The bonds will be sold at post offices and banks and
issued in denomination of gram. They will issue these bonds on payment of money. Later
on, the bonds will be connected to the price of gold. Investors have to pay the bond price in
cash. From one person, the Sovereign Gold Bond Scheme would accept a minimum
investment of 2 gm gold and a maximum investment of 500 gm in a single fiscal year. The
bonds will pay a yearly interest of 2.75% to investors. Interest would be paid semi-annually
based on the initial value of investments issued for the year 2015-16.

 Eligibility for Sovereign Gold Bond Scheme

 Indian resident – This scheme is open only to Indian residents, with the Foreign
Exchange Management Act of 1999 formulating the eligibility criteria.

 Individuals/groups – Individuals, associations, trusts, HUFs, etc. are all eligible to

invest in this scheme, provided they are Indian residents. Under the scheme, one can
jointly invest in bonds with other eligible members.

 Minors – This bond can be purchased by guardians or parents on behalf of minors.

 Features and Benefits of Sovereign Gold Bond Scheme

Some of the unique features and benefits of this scheme are mentioned below.

 Gold denomination – These bonds will be issued in multiple weight

denominations, starting from 1 gram onwards, providing flexibility in terms of
purchasing gold which suits the needs of an individual.

 Format – One has an option to hold these bonds either in paper or DEMAT form,
whichever is convenient to an individual.

 Flexibility – Investments in this scheme are flexible, with one having an option to
choose the amount he/she wishes to invest.

 Interest – Investments in this scheme are eligible to earn interest every year.

 Safety – There is no need for storage or safety of gold under this scheme, as the gold
isn’t physically given to an investor immediately.

 Purity – Since it is backed by the government, one is assured of purity of gold when
they invest in the scheme.

 Maturity – This scheme has a maturity period of 8 years.

 Gift/transfer – Investors can choose to gift or transfer these bonds to others,

provided they meet the necessary eligibility criteria.

 Premature withdrawal – Premature encashment of these bonds is allowed after 5

years of issue.

 Loan collateral – Investors can use these bonds as collateral against loans.

 Application – The application process is simple and fast, with banks and post
offices permitted to provide this service.

 Payment modes – One can opt to purchase these bonds through multiple payment
modes, with cheque’s, cash, DDs or electronic transfer accepted.
  Nomination – This scheme has a provision for nomination, adhering to the rules of
the land.

 Tradable – Investors can trade these bonds on stock exchanges, subject to

notifications of the Reserve Bank of India

 Sovereign Gold Bond Scheme Interest rate

The government has fixed an interest rate on this scheme, with all investors eligible to earn
an interest on their investment. The current interest rate stands at 2.75% per annum, with
this interest paid every six months. This interest rate can be changed by the government as
per its policies.

 Risk associated with Sovereign Gold Bonds

Gold is traditionally a very safe investment, and typically the risk associated with Sovereign
gold bonds is very low. However, given the fact that gold rates depend on market
performance, any drop in gold rates could put the capital at risk, which would be the case
even if one owned physical gold. Regardless of market rates, an investor should take solace
in the fact that the amount of gold he purchased doesn’t change.

 Maximum /minimum amount of investments under Sovereign Gold Bond Scheme

Sovereign Gold Bonds are issued in denominations of 1 gram of gold and multiples of it. The
gold scheme accepts a minimum investment of 2 gm and a maximum investment of 500 gm
form a single person in a fiscal year.

iii. Indian gold coin

India Gold Coin is one of the three new gold schemes launched by the Government of India on 5th
November, 2015. The major motive behind the launch this gold scheme is to encourage investment
in gold and use this yellow metal for the country’s economic growth. These new gold schemes are
expected to cut down India’s gold import.

The India Gold Coin is a part of the Indian Government’s gold monetization program, and it is
the first ever national gold coin produced in India bearing the image of Ashok Chakra minted on
it. The coin is currently available in denominations of 5gm, 10 gm and 20gm . Almost 15,000
coins of 5gm, 20,000 coins of 10 gm and 3,750 gold bullions will be made available in the
Indian gold market soon. These coins are currently available only at designated outlets of
Metals and
 Minerals Trading Corporation of India (MMTC). Going forward, banks and post –offices
will also sell the India Gold Coin.
 India Gold Coin Pricing

At the time of launch, the India Gold Coin was priced at Rs2500 for 5 gm, Rs5,000 for 10
gm and Rs10000 for 20 gm. But, the above-mentioned rates were revised immediately
after its launch. The revised rates on India Gold Coin are –

 For a 5gm coin – Rs14,376

 For a 10gm coin – Rs28,465
 For a 20gm coin-Rs56,713

 Key Features of India Gold Coin

The India Gold Coin comes with a host of attractive features. Listed below are the main
features of it:

 The coin is equipped with advanced anti-counterfeit feature and tamper proof
packaging to avoid duplication.
 The India Gold Coin is made of 24 karat gold.
 It is hallmarked by BIS or made as per BIS Standards.
 The coin is available in denominations of 5gm, 10gm and 20gm.

 Benefits of investing in India Gold Coin

below are the benefits offered by India Gold Coin:

 The India Gold Coin has easy liquidity. It can be easily sold as and when you need
money.
 Considering insatiable demand for gold in India, the India Gold Coin is expected
to draw more value over the time.

 Why invest in Gold?

• Wealth protection: Gold is used as a portfolio diversification strategy to
mitigate risks, reduce volatility and provide insurance against tail-risks.
• Wealth accumulation: Although more often a strategy associated with Silver,
the investor’s long term view is that prices will go up and there are profits to be
made.

• Currency collapse: There are those investors who are certain the fiat monetary
systems will collapse and that real Gold and Silver will be needed to purchase
goods and services. There is a significantly larger base of investors who do not
feel this will actually occur, yet buy Gold as an insurance policy.

• Collectors: Some investors prefer coins that contain a “collectible value” over
and above the bullion content. The bullion content provides a valuation floor
based on spot prices. The collectible value is determined by supply and demand
forces. o A coin is currency and is minted by a government mint. Most coins
begin as a bullion item, meaning the value of the coin is only the value of the
metal content and nothing more. However, over time, some coins will also take
on “collectible” value over and above the metal content. This is often referred to
as numismatics or semi-numismatics. o Common Gold coins include the
American Eagle, American Buffalo, Canadian Maple Leaf, Austrian Philharmonic
and the South African Krugerrand, which was the first modern Gold coin.

• New Investors: This category is especially important in the U.S. because there
are so many people investigating Gold for the first time. These new investors
have read about it and heard about it but do not know enough to have
formulated a reason to buy. Financial advisors generally view Gold as a wealth
protection strategy. Gold provides stability for a portfolio, much like an insurance
policy, since its low correlation to the equity markets makes it an excellent
diversification asset to help mitigate risks. Advisors prefer alternative assets, like
Gold, that have a low correlation to stocks and are highly liquid.
CHAPTER 2 RESEARCH
METHODOLOGY
 2.1 RESEARCH METHODOLOGY

Formulating the research problem

To understand the investment made in gold by customers and dealers.

Unit of analysis Gold

Characteristic of interest Investment in gold

Time boundary April’16 to August’16 (5 months)

Environmental condition Normal

Hypothesis
A supposition or explanation (theory) is provisionally accepted in order to
interpret certain events, and to provide guidance for further investigation. A
hypothesis must b proven right or wrong, and must be capable of refutation. If it
remains unrefuted by facts, it is said to be verified .

HO = THE INVESTMENT MADE IN GOLD IS NOT SAFE.

H1 = THE INVESTMENT MADE IN GOLD IS safe

Sources of Data
There are two types of Sources of Data i.e. Primary Data which is collected through
Questionnaire Interview etc. & Secondary Data are collected through websites, newspapers, e-
book etc.
There are two types of Sources of Data i.e. Primary Data which is collected through
Questionnaire Interview etc. & Secondary Data are collected through websites, newspapers, e-
book etc.

4.1 Objectives of the research

o To analyze the distribution of global gold demand

o To study the safety of investment made in gold.

o To study the popularity of various schemess introduced by government of India.

o To study purchase of gold

o To study preference of purchasing gold over securities

o To study importance of gold purchase

4.2 Limitations of the research

1 ) The sample size is limited to 100 consumers

2 ) Non probability sampling is used which may lead to Error.
3 ) Not enough money and time to understand the research.
4) Geographical limitations.
5 ) Lack of co-operation from respondents.
4.3 IMPORTANCE OF THE STUDY

i. The study will benefit various parties. Investors will be aware of the different types
of gold investments available out there, how these instruments have performed over time,
what economic factors influence the performance of gold and how investing in gold will
affect their portfolios.

ii. Policy makers such as reserve/central banks normally keep gold as a reserve asset.
The International Monetary Fund is the largest holder of gold globally and held 90.5 million
ounces (2,814.1 metric tons) of gold at designated depositories at end February 2012
which amounted to $160.1 billion at market prices as at February 29, 2012 (International
Monetary Fund, 2012). Locally the South African Reserve bank monitors the gold market.
This research will help the bank to understand better the value of the gold they keep and
the extent to which that value is affected by various macroeconomic factors, and thereby
inform better their policy formula.

iii. Companies that are based on gold such as gold mining companies will benefit from
this study in different ways. For example, they can see how the performance of gold has and
will affect company’s financial performance and the creation of value for shareholders.
CHAPTER 3
REVIEW OF LITERATURE
3.1 INTRODUCTION

A literature review is a text of a scholarly paper, which includes the current knowledge
including substantive findings, as well as theoretical and methodological contributions to a
particular topic. Literature reviews use secondary sources, and do not report new or
original experimental work.

Large number of studies on the investors’ perceptions about investment in gold has been
carried out during the past decades. Some of the reviews about investment in gold are
summarized below:

1 Ratner and klein (2008) in their study examined the value of holding gold to US
investors from 1975 – 2005 and concluded that there is some material benefit to investing
in gold over the long term

2 Dr Jalpathakkar sheenamgogia and vatsaliamanjunathan in their article “An

Empirical study on Gold Investment Range Among Professionals “published in international
journal of research and management pointed out that different avenues of gold investment
available in the market and also tried to find out the awareness and attitude towards the
alternative methods of gold investment among the selected investors in the pune region.

3. Dr M Nishad Nawaz (June 2013) in his article “Study on various forms of gold
investment” He highlighted the need for encouraging investment in new gold alternatives.
He ensure that gold becomes tradable and generates revenue rather than lying idle as a
dead investment.

 Hiller etal (2006) in his article he analysed the roles of gold, silver and platinum in
the capital market and also found that portfolios which contain precious metals
perform better than standard equity portfolio. . According to Hillier et al. (2006),
literature that investigates the role of gold in financial markets can be roughly
classified in to five different areas with varying degree of overlap; role of gold as a
hedge, diversification properties of gold, market efficiency of gold, relationship of
 gold to macroeconomic factors, and characteristics of gold production (Hillier et al.,
2006, p. 98). These five areas were narrowed down to three areas in a later study by Lucey
(2013, p. 12):

o Economic and financial aspects of gold

o Gold as a currency and its historical use

o Nature and impact of gold mining on the environment and on society

Despite being delineated, these three areas are interconnected and directly or
indirectly influence each other. As an example, gold as a currency and its historical
use affect the demand for gold and therefore the price of gold, which is a dominant
factor in financial aspects of the metal. This in turn pushes forward the need for gold
mining in an aggressive way and thereby the consequences for the environment and
on society (Dooyema et al., 2012). Literature relevant for this study is written in the
main area of “Economic and financial aspects of gold”, which include the
subcategories; Gold as a The role of gold in an investment portfolio hedge, safe
haven and diversifier. Even though there is a considerable body of early literature
written in these areas, recent academic literature that examine the area of gold as a
diversifier is rather scarce. 3.2.1 Gold as a hedge and safe

4. Mohdsaleem and Matloobullahkhan (2013) in their article “The overview of gold

ETFS and its various positive features “Published in the International Journal of Marketing,
Financial services and Management Research they tries to explain comparative study of
Gold ETFSs v/s Physical gold and it also give focus on Gold ETFs as a strong and attractive
investment option for the investor. Gold ETFs gives extra leverage to its users in terms of
the profit.

Ms k Sudhai, Ms. R. Buvaneswari, Ms. P. V. Pothigaimalai, Ms. N. Subasri (2014)

in their research paper” A Study on Investment Pattern Investors of Jewellery at
Pattukkottai Town” Published in the International Journal of Engineering
research,2014, Observed the investment pattern of investors in jewellery and the
investment decisions are driven by number of factors such as income of the family,
 economic conditions, tax considerations..etc . The study concluded that the investors
are ready to invest in the long term and less risky product because they are aware
about consequences of short term investment plan.

5. Rakhi Arora and Rajni Sofat (2008) 48 says risk and return are the two inseparable
parts of an investment strategy. They have direct relationship between them: higher the
risks, higher are the returns and vice versa. The very basic consideration of an investor
while investing the money should be how to maximize the returns and what are the risks
involved in investing in a particular instrument.

Literature reviewed have shown that while investing in gold there are so many options
available to investors for their investment. Investors have the right to decide the pattern of
investment whether long term or short term. By investing in gold the investors can
diversify their risk
3.14 Gold price chart of last 40 years

1976– RS 432 1986– RS 2140 1996– RS 5160 2006– RS 8400

1977– RS 482 1987– RS 2570 1997– RS 4725 2007– RS 10800

1978– RS 685 1988– RS 3130 1998– RS 4045 2008– RS 12500

1979– RS 937 1989– RS 3140 1999– RS 4230 2009– RS 14500

1980– RS 1330 1990– RS 3200 2000– RS 4400 2010– RS 18500

1981– RS 1800 1991– RS 3466 2001– RS 4300 2011– RS 21020

1982– RS 1645 1992– RS 4334 2002– RS 4990 2012– RS 26380

1983– RS 1800 1993– RS 4140 2003– RS 5600 2013– RS 29820

1984– RS 1970 1994– RS 4598 2004– RS 5850 2014– RS 28900

1985– RS 2130 1995– RS 4680 2005– RS 7000 2015– RS 26550

As the above table shows,

1 The gold price in 1976 was Rs. 432 which has increased by 20% in the 1985 i.eupto
Rs.2130

2 In 1995 the price has increased up to Rs.4680

3 The gold price in 1976 was Rs. 432 which has increased by 20% in the 1985 i.eupto
Rs.2130

4 In 1995 the price has increased up to Rs.4680

5 From 1997 the prices are falling up to rs.4725

6 In 2003 there is again a rise in price of gold to Rs. 5600

7 In 2015 the price has reached up to Rs. 26550

From the above data it can be recommended that gold prices are rising consistently, so it is
recommended that investment made in gold is completely beneficial and safe.
 STATISTIC

This statistic shows the distribution of global gold demand in 2017,

sorted by industry sector. In that year, slightly over nine percent of the
global gold demand was by the electronics industry. The jewelry
industry was responsible for the largest part of the global demand of
gold.
Above is a large percentage change illustration of how various national
currencies have lost value to gold bullion in this 21st Century Gold
Rush thus far.
 CHAPTER 4: DATA
INTERPRETATION AND
ANALYSIS
4.1 DATA INTERPRETATION

1. INVESTMENT IN GOLD

a) Yes

b) No

22%

78%
Yes

No

According to survey taken, I have found that 78% of total people surveyed are interested in
gold investment. 22% are not interested in gold investment as they may be interested in
other securities like equities, bonds, etc., maybe they wanted to earn quickly.
2. purchase of gold

a) Yearly

b) Two yearly

c) Five yearly

24.24%

52.23% Yearly

Two yearly

23.23% Five yearly

From the above graph it is clear that 52.53% purchase gold yearly. Around
23.23% people purchase gold once in two years and the rest 24.24% people
purchases gold once in 5 years.
3 DO YOU PREFER TO PURCHASE GOLD OVER SECURITIES

a) Yes

b) No

38%
62%

Yes

No

Around 62% people prefer investment in gold over investment in securities

and rest of 38% of people believe that investment in securities is more
beneficial. They believe that investment in gold is not profitable in comparison
with other securities.
 4. A REAL ASSET (gold) IS ALWAYS AVAILABE WITH YOU

a) Yes

b) No

27%

73%
Yes

No

According to the above presentation, 73% of the population want to preserve a real asset
i.e. Gold and rest 27% sees no interest in having a real asset i.e. Gold.
5. TYPE OF INVESTMENT THAT PROVIDES YOU SAFETY OF YOUR CAPITAL

a) In gold

b) In equity shares

c) Others

27%
51%

21% In gold

In equity

Others

Above pie chart states that 51% of people sees safety in investing in gold, other 21% feels
investment in equity shares is safe and remaining 27% finds safety in other investment
vehicles.
6.QUANTITY OF GOLD PURCHASE IN A YEAR

a) Less than 5 grams

b) More than 5 grams but less than 25 grams

c) More than 25 grams

Among 100 respondents 27% of people buys more than 5gm of gold, 54% buys more than
5gm but less than 25gm and remaining 19% buys more than 25gm of gold with reference to
one year.

19% 27%
More than 5 gms

More than 5 gms but less than

25gms
54% More than 25gms
7. WHAT MADE YOU TO INVEST IN GOLD

a) For investment purpose

b) To diversify risk

62%
37%

For investment purpose

To diversify risk

Above pie chart shows that 62% buys gold for investment purpose and other 37% invests
in gold to diversify risk.
8.HOW IMPORTANT IS IT TO INVEST IN GOLD
a) Less important

b) Moderate important

c) Extremely important

16%%
36%

Less important
48%
Moderate important

Extremely important

According to the responses 16% of population says that it is of less important to invest in
gold and vice-versa for 36% of respondents. Remaining 48% states that it is moderate
important to invest in gold.
9. ARE YOU AWARE OF THE FOLLOWING SCHEMES

a) Gold monetization scheme

b) Sovereign gold bond scheme

c) Indian gold coin scheme

d) Not aware

10%

30%
30%

gold monetization scheme

30%
Sovereign gold bod scheme

Indian gold coin

not heard

The above pie chart interprets that gold value attracts 63% of population and gold price
attracts rest 37% of population.
 10. IN WHICH WAY WOULD YOU LIKE TO INVEST IN GOLD

a) Gold bars

b) Gold coins

c) Gold jewelry

21%

52%
27%
Gold bars

Gold coins

Gold jeweler

According to the above data 21% choose gold bars, 27% choose gold coins and remaining
52% choose gold jewelry as an investment.
CHAPTER 5:
CONCLUSION AND FINDINGS
5.1Finding of the study

The data were analyzed using statistical tests that have been described earlier and the
results drawn based on these tests are given below:
36 per cent of investors preferred option of investing in gold is jewellery, 16 per cent
and 20 per cent in gold bullions and gold coins, only 2 per cent investors are aware of gold
certificate and futures and options, gold mutual fund, e gold and ETF are very marginally
preferred form of investment.
26 respondents invest or purchase in jewellery due to convenience and prefer a
constraint in investing in gold is making charges.
80per cent of respondent preference to invest in gold bullion due to purity of gold and
80per cent feels the gold bullion bars will be available with 10 gm and above which may not
suitable for all types of investors.
60 per cent of respondents prefer to invest in gold coin due to easily available and 20 per
cent feels moderate loss value and available in lesser denomination. 44 per cent feels gold
coins are not safe involves some making charges and storage charges.

 94 per cent of investors feel that investment in ETF is very easy form of investment as it
does not require physical form and require proper knowledge to gain access to the market.
60 per cent of respondents feel that mutual funds are professionally managed and give
more advantage and profit and also feel it is very risky due to market uncertainty.
futures and options due to high exposure and less margin and feels that future and
options are high risky form of gold investment it may erode your capital in few seconds.
 There are more number of people who are interested in gold investments rather
than other securities
 There 52.53% purchase of gold yearly, around 23.23% purchase of gold once in two
years and rest 24.24% purchases gold once in 5 years
 51% f people sees safety in investing in gold, other 21% feels investment in equity
shares is safe and remaining 27% finds safety in other investment vehicles
 According to the responses 16% of ppulation says it is less important to invest in
gold, 36% says itis important and remaining 48% states it is moderate important to
invest in gold.
 According to the data collected 21% chooses gold bars , 27% choose gold coins and
remaining 52% choose gold jewelry as an investments.
5.2 CONCLUSION

Gold is a good investment. It’s a sound investment. More importantly, gold-as an

investment-offers you tangible wealth that you can hold in your hand and that has

intrinsic value based on

it’s weight, and practical usage. Inflation erodes the value of the Dollar year after year,
whilst gold remains one of the single best investment options, year after year after year.

REGAL ASSET have remained a leading name in investment options due to their sheer
quality and range of their gold, silver and platinum which is sought after by US investors
in particular. Use them as a model for what to look for in any gold investment dealer and
you cannot go wrong.

Investment in gold, be it as coins, gold bullion bars or as limited edition proof coins, has
historically been proven to work as a solid and stable financial strategy that can proof
your wealth against any financial storm. Today there are a staggering array of investment
options for anyone looking to increase his or her wealth substantially, and most, if not all,
come with a varying element of risk. Gold is the least risky option over time, and while
gold prices can dip, this is always a short-term “Blip” if you will, with gold always
rebounding strongly to reach even greater highs. Gold has always increased consistently
in value, and remains strong when confidence in paper currency falters.

The beauty of investing in Gold, is that it is imminently attractive to buyers, and is as good,
if not better, as cash, but unlike cash, gold has never been undermined by inflation. Paper
money has no value other than that decided by various financial mechanisms: gold holds
value not just as currency but with a wealth of practical applications too numerous to
detail. Suffice to say, gold is not just a pretty hunk of metal but a valuable component of
industry, from scientific, to medical, and beyond.

By choosing to invest in gold, you are choosing to allow your assets to keep pace with future
developments, rather than allowing their value to hinge on the past. Your wealth will grow-
built on developing and innovation, rather than conservation. By taking steps to keep your
financial portfolio as a current concern, you take steps to secure your future in a very relevant
way
From the above data it can be recommended that gold prices are rising consistently, so it is
recommended that investment made in gold is completely beneficial and safe.

BIBLIOGRAPHY AND ANNEXURE

www.sbcgold.com
www.alternativeinvestmentcoach.com

www.telegraph.co.uk

www.smh.com.au

www.moneycontrol.com

www.gold-traders.co.uk

www.macrotrends.net
APPENDIX
1)INVENTMENT IN GOLD

A)YES

B)NO

2)PURCHASE OF GOLD

A)YEARLY

B)TWO YEARLY

C)FIVE YEARLY

3)PREFER TO PURCHSE GOLD OVER SECURITIES

A)YES

B)NO

4)A REAL ASSET {GOLD} ALWAYS AVAILABLE WITH YOU

A)YES

B)N0

5)TYPE OF INVESTMENT PROVIDES YOU SAFETY OF YOUR CAPITAL

A)IN GOLD
B)IN EQUITY SHARES

C)OTHERS

6)HOW MUCH QUANTITY OF GOLD YOU PURCHASE IN A YEAR

A)LESS THAN 5 GRAMS

B)MORE THAN 5 GRAMS BUT LESS THAN 25 GRAMS

C)MORE THAN 25GRAMS

7) WHAT MADE YOU TO INVEST IN GOLD

A)FOR INVESTMENT PURPOSE

B)TO DIVERSIFY RISK

8)IMPORTANCE TO INVEST IN GOLD

A)LESS IMPORTANT

B)MODERATE IMPORTANT

C)EXTREMELY IMPORTANT

9)ARE YOU AWARE OF THE FOLLOWING SCHEMES

A)GOLD MONETIZATION SCHEME

B)SOVEREIGN GOLD BOND SCHEME

C)INDIAN GOLD COIN SCHEME

D)NOT AWARE
10)WOULD YOU LIKE TO INVEST IN GOLD IN WHICH WAY

A)GOLD BARS

B)GOLD COINS

C)GOLD JEWELRY