How to Do Gold Trading Online in India

The November 2016 demonetization move by the Government of India brought the world gold market to a grinding halt. However, the various political initiatives underway and in the pipeline are expected to strengthen the Indian economy and increase transparency in the gold industry, which in turn is projected to give a solid boost to gold demand, says a report by the World Gold Council.

Why Trade Gold Online?

The two most important reasons for gold trading online in India are:

  • This precious metal is a good hedge against inflation: The ROI on gold maps to the inflation rate.
  • Gold is a great way to diversify a highly-volatile portfolio: Gold prices have a negative correlation with the stock market.

Ways to Gold Trading Online in India

E-Gold:

Also known as paper gold, this can be traded on the National Spot Exchange. These are most popular amount active traders who purchase smaller quantities and sell immediately when gold prices rise.

Gold ETFs:

These are Gold Exchange Traded Funds and are similar to mutual funds. They are funds that invests in gold, while the units of the fund are listed on the stock exchange. One can invest in Gold ETFs on the stock exchange by opening demat and trading accounts. The minimum quantity one can trade is 1 gram. The buying and selling of Gold ETFs would involve brokerage fee and fund management charges. Despite these charges, online trading in Gold ETFs is considered as the most cost effective way of investing in this precious metal.

Gold Fund of Funds:

A Gold FOF invests in Gold ETFs on your behalf. Therefore, you do not need to open a demat account, but would need to pay fund management charges for the Gold FOF scheme as well as the underlying Gold ETF. A SIP, or Systematic Investment Plan, is possible in this case, wherein the SIP allows you to invest a predetermined amount into gold at regular intervals, which may be weekly, monthly or quarterly. This is perfect for those who wish to invest relatively smaller amounts.

Equity-Based Gold Funds:

These are also like mutual funds, but instead of investing in directly in the precious metal, these invest in companies that are in the gold industry, like gold mining. Being equity-based, these gold funds come with a higher degree of risk, while offering opportunities for higher returns.

Sovereign Gold Bond Scheme:

This was launched by the government to discourage the purchase of gold jewelry and bars and divert the funds into investments that would contribute to the economy. Available in denominations of 5, 10, 50 and 100 grams of gold, these bonds offer interest on the investment you make. So, one benefits from the interest as well as the appreciation in value (with increase in gold prices. These bonds can be purchased from any bank, NBFC (non-banking financial companies), post office or an NSC (National Saving Certificate) agent.

The two most popular ways of gold trading offline in India are buying gold jewelry and purchasing gold bars and coins.

So, there you go. All the best!

About the author

Mani Karthik

Hi, Mani Karthik here. Having lived in USA, India & Middle East, and worked for big MNC's to startups, I have a lot to share with you. My aim is to help people, by sharing everything I've learned in life. Here's my full story. Connect with me on FacebookInstagram, Twitter or WhatsApp (+001-408-489-4785). This blog is read today, by more than 300K people world over and made me 22 Lakh Rupees! Here's my guide on how you can start a blog like this and make money from blogging. :)

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Who is Mani Karthik?

Having lived in USA, Middle East and India, worked for small and big companies including MNCs and Startups, I’ve learnt so much in life, that I love sharing it with ya’ll. This blog is read today by more than 300,000 people every month and I love helping them!

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