Gold Shares - A Smart Investment Choice

Key Highlights:

• Gold acts as a hedge against inflation, and gold shares Gold company shares of gold ETFs are a prudent way of investing in gold
• There’s no risk of theft with gold shares
• Gold ETFs offer high liquidity and transparency

Indians love gold, and that is a universal truth. According to a report by the World Gold Council, gold demand in India touched 136.6 tonnes in the January-March quarter of 2024. Gold prices, too, have seen a significant surge, surpassing ₹ 70,000 per 10 grams. While investment in physical gold has generally been the norm, investing in gold shares is an alternative and better way to invest in the yellow metal.

Source: Livemint, and Republic Word

What are gold company shares?

Gold shares or gold stocks refer to shares of companies involved in the refining, marketing and mining of gold. Owning gold stocks exposes you to the precious metal without physically owning it. Note that the value of gold shares is closely tied to the price of gold.

Advantages of investing in gold shares

Investing in gold shares gives you the following advantages:

• Growth potential

Investing in gold shares can boost wealth creation. As their prices are closely linked to the price of gold, they often experience a surge when gold prices increase. When it happens, it adds to your wealth.

• No risk of theft

Unlike physical gold, which runs the risk of theft, there’s no such thing with gold shares. This is because they are held in electronic format.

• Hedge against inflation

Since time immemorial, gold has been a hedge against inflation. It has held on to its value even when the cost of living has gone up. Investing in gold shares can protect your money’s purchasing power from falling prey to inflation. Also, gold is considered a safe haven during uncertain times. If markets get shaky, gold shares can provide stability to your portfolio.

• Investing in gold shares through gold ETFs

Gold ETFs (exchange-traded funds) are a prudent way to invest in gold shares. Gold ETFs are passively managed mutual funds that invest in standard gold bullion with 99.5% purity. They track domestic gold prices and are available only on stock exchanges. You need a Demat account to invest in them. Source: MoneyControl

Benefits of gold ETFs

Investing in gold shares via ETFs brings the following advantages:

• High liquidity

Gold ETFs are highly liquid. As they are traded on stock exchanges, you can easily buy and sell them like stocks.

• Transparency

Pricing transparency is another major advantage of gold ETFs. You can easily monitor gold prices and the performance of your holdings.

• Affordability

Gold ETFs are highly affordable. Because of their low acquisition costs, you can easily buy them even with a limited budget. Also, unlike physical gold, which includes making and storage charges, gold ETFs incur lower expense ratios.

Invest in Gold ETFs with the Golden Opportunity Basket

The Golden Opportunity basket from Kotak Securities Basket investing platform allows you to invest seamlessly in gold ETFs and gain exposure to this asset class. Investing in this basket allows you to allocate funds in various ETFs conveniently on the go. Click here to know more.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their research and consult with financial professionals before making any investment decisions. Read the full disclaimer here.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Brokerage will not exceed SEBI’s prescribed limit. The securities are quoted as an example and not as a recommendation. SEBI Registration No-INZ000200137 Member Id NSE-08081; BSE-673; MSE-1024, MCX-56285, NCDEX-1262. For compliance T&C and disclaimers, Visit bit.ly/ksecdisc