Changing face of Gold Investment!

Gold the most precious metal of all, is also a popular form of investment for majority of Indian by heart. Last year Indian government approves new Gold Bond and Gold Monetization scheme to reduce metal's demand in physical form. Investors can make the most out of its appreciating value potential without going through the hassles of physically possessing it by purchasing different investment instruments i.e., Gold ETFs, Gold Futures etc. Purchasing this form of investment with added advantages are easy to sell as they are held in electronic form and lesser risk of theft.

Usually Indians living abroad have the tendency to buy this bullion in raw form and take back on each home coming visit. However, this became difficult recently after the Indian government put strict controls and import duty on gold. Reducing import of Gold is one target of the scheme. Indian Government is expecting the scheme will reduces country's reliance on the import of gold over the years and put it to productive use. According to estimates, India paid $34.32 billion to import around 930 tons of gold in the year ending March 2015. The existing custom rules allow Indians coming to India to bring in around (Rs.50,000) worth of gold if they are male or (Rs.100,000) if they are female. Carrying gold over this limit is subject to import duty. Also this duty free allowance is only for gold jewelry and not for gold in raw form. Currently duty charge is four per cent of notified value if of gold bars bearing serial number, weight and manufacturer's name and ten per cent if of any other kind of gold, including jewelry. The objective is to make it difficult to carry gold so many would prefer to buy it in India to avoid the hassles at the port of entry.

To make the scheme popular, the draft gold monetization scheme provides for incentives to the banks, while individuals and institutions can deposit as low as 30 gm of gold, while the interest earned on it would be exempt from income tax as well as capital gains tax, as reported in the Indian media. It’s still too early to say if this will affects gold being imported to the country and if NRIs, who want to buy gold in bigger amount, will opt for this option and not risk custom duties at the Indian airports.

The traditional form of investing in gold is slowly making way for other ways to invest in gold, particularly gold futures. Of course, it is the best way to invest, as you could be saving money and charges like locker rents.