Gold Price rises 350 times in 50 years. Best ways to invest in Gold in India


We have often heard our mothers and grand-mothers say how much gold has appreciated in the past few years. And all these facts shared by our ancestors are actually true.

The price of Gold has appreciated massively and has grown more 350 times in the past 50 years. The price of Gold in 1966 was Rs. 83.75 only for 10 gms of Gold which has now grown to more than Rs. 30,000 in 2016 and continues to rise.

Factors which impact Gold Price

Here are some of the important factors which impact the price of gold. The following list is not exhaustive and only talks about the important factors.

  1. Supply of Gold:

Gold is not something which can be produced or manufactured. It is a natural resource and only very few countries across the Globe have such natural resources and therefore the supply of gold is limited. As the supply of gold is limited, any increase in demand for Gold pushes the price of Gold upwards.

  1. Inflation and Strength of Currency

The rate of inflation has a direct impact on the price of Gold. If the inflation is high, the purchasing power of a currency starts goes down and people prefer to invest in Gold so as to safeguard their money.

  1. Govt Reserves

The Central Banks of all the Countries keep a good chunk of their reserves in the form of Gold. When the Central Banks start buying Gold – the prices tend to go up and when they start selling Gold – the price of gold sees a downtick.

  1. Festive Season and Wedding Season

A lot of gold is used in Indian Weddings and many a times also is a factor which leads to an increase in the price of Gold. Similarly, many people invest in gold on Dhanteras, Navratris etc which may also lead to an uptick in the price of Gold.

  1. Global Crisis

Whenever there is any global crisis or even an expectation of a global crisis, people tend to shift to a safer source of investment. Some examples of global crisis are War like situation, Recession etc.

Best ways to invest in Gold

If you think that buying gold jewellery is a form of investment in Gold – then I beg to differ in this regard. When you buy jewellery – you pay making charge on jewellery which is a substantial amount. Similarly, when you will sell jewellery – again you will receive a price slightly lower than the market rate.

Moreover, many a times – jewellery consists not only of gold but of other precious metals as well. These other precious metals may or may not appreciate.

Although the price of jewellery is also expected to appreciate in the longer run, but you will certainly get a higher return if you invest directly in core gold rather than making investment in jewellery.

The following are considered some of the best ways to invest in Gold:-

  1. Investment in Physical Gold – Buying Gold Coins and Bars

Investment in Gold Coins and Bars is considered as one of the best options of making investment in Gold. There is no big making charge to be paid in this case and what you invest in this case is Core Gold.

You can buy Gold Coins and Bars from any jeweller or Bank. You can even buy these gold coins online and they would be delivered to your residence.

What is Gold ETF

  1. Investment in Paper Gold – Gold ETF, Gold Mutual Funds, e-Gold etc

If you don’t wish to hold gold in physical form, you can also invest in e-gold in the form of Gold ETF, Gold Mutual Funds, e-Gold etc. When you buy Gold in Paper form – you would be buying it at the current market price of gold and you when you sell it – you will receive the prevalent market price of gold at the time of sale.

By making an investment in Paper Gold, you would not be required to go through the hassles of buying physical gold and keeping it safe. Moreover, you would not be required to pay any making charge at the time of purchase nor would there be any deduction at the time of sale.

Although there are a lot of benefits of buying gold online, Indians still prefer to invest in physical gold as it gives them a comfort that they have received the gold. Physical gold gives a sense of ownership as you can touch and feel your asset.

We would still advise everyone that if holding physical gold gives you a sense of satisfaction and comfort – you may go ahead and buy gold coins and bars. But, please don’t think of buying jewellery as an investment in gold as the returns in case of investment in jewellery are always lesser than investment in gold coins.

A Personal Finance enthusiast, Karan is the founder of and loves to discuss about Money related matters.