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Future of Gold Investment in India Explained

Searching… gold rate in Guwahati, gold price in Mumbai, gold price in Jaipur, gold price in Bhopal…!

Does it seem you are interested in gaining comprehensive insights into the scope of gold investment in India?

Well, then you’ve come to the right place! This article deals with some vital aspects associated with the future of gold investment in India.

Before looking at the factors associated with the scope of gold investment in India, let us have a general overview of investing and not investing in gold.

Why Do You Invest In Gold?

One more time, it has been observed, experienced, and proven that gold is the most secure form of investment around the globe. No wonder, even in today’s world, wherein there are several lucrative investment options available, gold remains the most popular form of investment.

But why is it so? Aren’t other investment options like mutual funds investment, stock markets, etc. equally or arguably more beneficial than gold? Yes, they are!  But, perhaps these investment options would not render the security on return on investments that gold does.

We have a retrospective for the reasons to invest in gold. The volatile nature of the investment market has resulted in paper currencies losing their value and thus depreciating the market to a large extent. Despite such a situation, gold maintained its position, thus securing the interest of its investors. Let us look at some more reasons for investing in gold.

  • Handy Against Inflation: Gold is treated as a hedge against inflation. Regardless of the market downfall or, the way a particular currency fares in the market, gold offers some relief to these unforeseen circumstances.
  • Consistent Appreciation of Rates: Over the past decades, there has been consistent appreciation in gold prices. This gives investors the purpose to invest in gold.
  • Gold Reserves: Usually, central banks of many countries try and refrain from selling gold and aim at enhancing the gold reserves. Thus gold is observed to be a reliable source of investment.
  • Long-Term Investment: Some people are influenced by conventional forms of investment, such as long-term investments. For such people, the consistent appreciation in gold prices forms another reason for investing in gold.

Why Should You Not Invest in Gold?

Conventional investors positively advocate the future of gold investment, but experts also look at the flip side of the coin. Here are some reasons experts believe, why one should not invest in gold.

  • Interest: Investing in gold does not offer any interest. It is an unproductive asset, as it does not earn anything. Plus, it does not generate any regular income, as against real estate or stocks.
  • Economic Growth: Experts believe that gold does not contribute to economic growth.
  • Less Competitive Returns: At times, the returns may not be with the ones gained out of the real estate or shares.
  • Threats: Unlike virtual wealth, possessing physical gold is associated with the fear of burglary.
  • Making Charges: Incurring making charges while purchasing gold as jewelry is another reason for not investing in gold.
  • Deduction on En-Cashing Gold: En-cashing gold reserves call for a reduction of around 5-10% done by the jeweler.
  • No Tax-Advantage: Gold does not offer any tax advantage as the other forms of investments would offer.
  • Impurity: Impurity in gold is another vital factor that discourages people from investing in gold. What you actually get may not be what you were committed to in the first place!

The Future of Gold Investment in India

Okay… are you still searching…. gold price in Kolkata, gold price in Guwahati, gold price in Bhopal….? Yes, now let us get the gist of our discussion!

India is passionate about gold. And, not just passionate, but emotional about it too! These emotions are derived from the family values and traditions that have been observed and practiced in India for a long. Having said so, what could be the future of gold investment in India? Does India qualify as a safe market for gold investments? Let’s check this out.

Is Investing in Gold in India a Good Idea, or Is Not Investing in Gold in India a Good One?

The de-monetization event that took place in November 2016 and the subsequent announcements that happened made many people revisit their plans to invest in gold in India.

Theoretically, gold prices or gold sales were supposed to increase, post-de-monetization. However, gold prices and gold sales dropped considerably.

Back then, gold in bank lockers was next on the government’s list. However, as indicated in the announcement made by the Union finance minister, gold that was purchased or inherited legitimately without dodging the stipulated taxes was to remain safe. Despite this, buyers evinced little or no interest in buying gold.

Undoubtedly, this series of events largely affected the future of gold investment in India.

What is in Store Today for Gold Investors in India?

The new gold policy that the government plans to formulate may cheer gold investors in India. This is expected to happen through the gold policy to be formulated, as indicated in the finance budget 2018 announced by the Union Finance Minister of India.

Some of the actions that are expected to encourage gold investments are,

  • Gold Monetization Scheme: The re-vamping of the gold monetization scheme will allow people to open hassle-free gold deposit accounts. Experts believe that gold monetization will encourage gold investments in India and should prevent liquid money from being spent on physical gold.
  • Rural Gold Sales: The budget aims at reviving the rural economy and increasing farmers’ income. Experts and traders believe that this will help increase gold sales in rural areas, as; farmers would have some money in hand to invest in gold.
  • Goods and Service Tax: Currently, the GST on gold is 3%. Traders all over the country were widely anticipating a tweak in this percentage. However, the GST on gold remains the same. This provided a sigh of relief to the gold traders.

At this point, the overall picture looks positive. But, you may expect to gain more clarity on the market with the passage of time and changes that may take place.

Gold is an investment and, as with all forms of investment, gold investment too should be solicited. Hence, it is always better to seek consultation from experts in the trade and gain better insights into market trends. Happy Investing!

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