India's gold imports surge to $46.14 bn in FY22 on higher demand
The surge in gold imports during the last financial year contributed to the widening of the trade deficit to USD 192.41 billion, against USD 102.62 billion in 2020-21 .
India is the world's second-biggest gold consumer after China. The imports are largely driven by the jewellery industry. The gems and jewellery exports during 2021-22 grew by about 50 per cent to about USD 39 billion.
India's current account deficit widened to USD 23 billion or 2.7 per cent of the GDP in the October-December quarter, according to the RBI data. Gold imports in volume terms stood at 842.28 tonnes in April 2021 - February 2022.
I am sure you all must have God surprised with this Figures , India's Love for Gold is not new ! Every Indian family has witnessed this since past many many years , in the old days of Kings & queens . But now this Same factor has caused Impacts on the GDP deficit . As seen In the above data most of the Gold Imports are getting utilised for the jwellery Industry .
In most cases we Buy jwellery for specific occasions like Marriages, Anniversary , Birthday etc . Many times its weared for very limited days and maximum time this gold is kept in lockers or cupboards drawers . So it doesn't contributes to Countries economy in any ways , This was on of the reason for launching Sovereign Gold Bonds
In this article i am sharing 3 ways of investing in Digital Gold ,
Option 1- Exchange traded Gold Funds
The First and old way of investing in Gold is through the exchange traded Mutual funds that are based on the gold . The working of these funds is similar to the normal equity funds.Gold ETFs are units representing physical gold which may be in paper or dematerialised form. One Gold ETF unit is equal to 1 gram of gold and is backed by physical gold of very high purity.
They are listed and traded on the National Stock Exchange of India (NSE) and Bombay Stock Exchange Ltd. (BSE) like a stock of any company. Similar to any other company stock, and can be bought and sold continuously at market prices.When you actually redeem Gold ETF, you don’t get physical gold, but receive the cash equivalent. Trading of gold ETFs takes place through a dematerialised account (Demat) and a broker, which makes it an extremely convenient way
Purity & Price: Gold ETFs are represented by 99.5% pure physical gold bars. Gold ETF prices are listed on the website of BSE/NSE and can be bought or sold anytime through a stock broker. Unlike gold jewellery, gold ETF can be bought and sold at the same price Pan-India.
Advantages of Gold ETFs- are ideal for investors who wish to invest in gold but do not want to invest in physical gold due to the storage hassles / doubt about purity of gold and are also looking to get tax benefits. There is no premium or making charge . Also one can purchase as low as one unit (which is 1 gram). some more benefits are -
Purity of the gold is guaranteed and each unit is backed by physical gold of high purity.
Transparent and real time gold prices.
Listed and traded on stock exchange.
A tax efficient way to hold gold as the income earned from them is treated as long term capital gain.
No wealth tax, no security transaction tax, no VAT and no sales tax.
No fear of theft - Safe and secure as units held in Demat. One also saves on safe deposit locker charges.
ETFs are accepted as collateral for loans.
No entry and exit load.
TO SELL / REDEEM GOLD ETF? You need to have Demat Account
Option 2 -Sovereign Gold Bonds
The sovereign gold bond (SGB) scheme was a unique initiative of the government of India and launched in 2015 with the aim of reducing the demand for physical gold in India. More over You get interest of 2.5% per annum (earlier it was 2.75%) was offered. So the Sovereign Gold Bond Scheme has 2 streams of income. One is the interest part and other is the capital appreciation in the Gold .
Features of SGBs or Gold Bonds in India:
These bonds are issued by Reserve Bank India on behalf of the Government of India.
The Bonds will be restricted for sale to resident individuals, HUFs, Trusts, Universities and Charitable Institutions.
The Bonds will be denominated in multiples of gram(s) of gold with a basic unit of 1 gram.
The tenor of the Bond will be for a period of 8 years with an exit option after the 5th year to be exercised on the interest payment dates.
The minimum permissible investment will be 1 gram of gold.
The maximum limit of subscription shall be 4 KG for individual, 4 Kg for HUF and 20 Kg for trusts and similar entities per fiscal (April-March) notified by the Government from time to time. A self-declaration to this effect will be obtained. The annual ceiling will include bonds subscribed under different tranches during initial issuance by Government and those purchased from the Secondary Market.
In case of joint holding, the investment limit of 4 KG will be applied to the first applicant only.
The price of the Bond will be fixed in Indian Rupees on the basis of a simple average of the closing price of gold of 999 purity, published by the India Bullion and Jewellers Association Limited for the last 3 working days of the week preceding the subscription period. The issue price of the Gold Bonds will be ₹ 50 per gram less for those who subscribe online and pay through digital mode.
Payment for the Bonds will be through cash payment (up to a maximum of ₹ 20,000) or demand draft or cheque or electronic banking.
The Gold Bonds will be issued as Government of India Stock under GS Act, 2006. The investors will be issued a Holding Certificate for the same. The Bonds are eligible for conversion into demat form.
The redemption price will be in Indian Rupees based on the previous 3 working days simple average of the closing price of gold of 999 purity published by IBJA.
Bonds will be sold through Commercial banks, Stock Holding Corporation of India Limited (SHCIL), designated post offices (as may be notified) and recognised stock exchanges viz., National Stock Exchange of India Limited and Bombay Stock Exchange, either directly or through agents.
The investors will be compensated at a fixed rate of 2.50 per cent per annum payable semi-annually on the nominal value.
Bonds can be used as collateral for loans. The loan-to-value (LTV) ratio is to be set equal to the ordinary gold loan mandated by the Reserve Bank from time to time.
Know-your-customer (KYC) norms will be the same as that for the purchase of physical gold. KYC documents such as Voter ID, Aadhaar card/PAN or TAN /Passport will be required. Every application must be accompanied by the ‘PAN Number’ issued by the Income Tax Department to individuals and other entities.
The interest on Gold Bonds shall be taxable as per the provision of the Income Tax Act, 1961 (43 of 1961). The capital gains tax arising on redemption of SGB to an individual has been exempted. The indexation benefits will be provided to long term capital gains arising to any person on transfer of bond.
Bonds will be tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI.
To know more about Gold bonds - You can check this Article -
Some advantage of SGB are -
1 - No need of maintaince in terms of Having locker for storing
2 - You get Fixed interest paid for the defined period
3 - You can get loan against it easily
4 - You can buy in Demat/Paper*Form (* Readers are requested to check the latest options )
5 - Available from 1 Gm onwards
Option 3 Digital Gold
There are few providers offering Digital Gold in india . You can choose the one on your own , Just to give you the idea we have mentioned MMTC-PAMPs details
Digital gold is a new age investment instrument that allows you to invest in 24 Karat, 999.9 purest gold, which is then stored in MMTC-PAMP’s secure vaults under your ownership. If you wish to take possession of the same, you can redeem digital gold for 24 Karat, 999.9 purest gold coins and gold bars .
How it works ?
You can buy gold of a fixed value or weight at live market rates.Pay through your preferred online payment option such as UPI, cards, or netbanking.Your account is updated instantly, and can be accessed 24/7.Incase you chose to not sell the gold, you can request for a doorstep delivery of your gold in the form of coins or bullion. Note: Delivery fees are applicable.You can choose to sell your gold digitally itself to MMTC-PAMP whenever you want.You can gift digital gold to your friends & family to celebrate any special occasion.
Some of the key advantage you get are -
Buy 999.9 / 24K purest gold anytime, at your convenienceAs an LBMA-accredited gold and silver refinery, gold prices are linked to international market rates available 24-hours a day, 365-days a year.
The gold you buy online is allocated as physical gold under your direct ownership and stored within fully insured, certified vaults located on our highly secure premises.
Choose from our wide range of highest purity gold bars and coins
Resell your stored Digital Gold to MMTC-PAMP at the current live market price. Receive the resale value via Direct Bank Transfer.
The only Digital Gold Provider to offer 999.9 (24K) pure gold.
About The MMTC- PAMP -
MMTC-PAMP India Pvt. Ltd. is internationally recognized as an industry leader for bringing global standards of excellence to the Indian precious metals industry.
A joint venture between Switzerland based bullion brand, PAMP SA, and MMTC Ltd, a Government of India Undertaking,
Now you know there are Good ways of investing in Gold , You can choose the option which suits you more . We request you the check all the details before investing in any of them .
*The views expressed here are of the author's, and shared here only for the information purpose