Indians have always had a deep love for gold. Gold’s emotional worth has only risen in recent decades, and wise investors know it’s a terrific hedge against inflation and stocks. Investing in gold to diversify assets is not new. In recent years, it has become an increasingly popular asset class for  investors who are looking to diversify their portfolios and protect their wealth against inflation and market volatility.

The price of gold is influenced by several factors, including geopolitical uncertainties, economic conditions, and supply and demand factors. It is important for investors to stay up to date with these factors regularly to make informed investment decisions. Investors can participate in gold through
multiple ways, each with its own advantages and disadvantages:

1. Physical Gold: Gold is a tangible asset that has intrinsic value and is considered a safe-haven asset during times of economic uncertainty. It is also a globally recognized currency that has been used as a medium of exchange for thousands of years. One of the most common ways to invest in gold as an asset class is to buy physical gold in the form of bars, coins, or jewelry. However, this can be expensive due to the transaction costs, purity concerns, and storage fees
   involved. Moreover, physical gold is subject to the risk of theft or loss and may require insurance and security measures.
2. Gold ETF: An alternative approach is to invest in gold through exchange-traded funds (ETFs). Gold ETFs are passive investment instruments listed on the stock exchanges, enabling investors to invest in gold without worrying about storage, purity, and theft. Gold ETFs track the price of
   gold and reflect its performance. On the other hand, they come with ancillary costs such as management fees, potential exit loads, and tracking error. Tracking error is the difference between the return of the ETF and the return of the underlying asset (gold).
3. Sovereign Gold Bonds (SGB): SGBs are government-backed bonds that are issued by the Reserve Bank of India (RBI) on behalf of the Ministry of Finance. They offer a unique tax advantage: the interest income from these bonds is taxed according to the investor’s tax bracket, but if the SGBs are held until maturity, the capital gains are exempt from taxation. Hence, from a tax perspective, SGBs can be an efficient medium of investing in gold. As SGBs are government-backed bonds, there is no need to worry about storage, purity, theft, etc. However, they have an
   8-year lock-in period to avail of tax-free capital gains, which may limit the liquidity and flexibility of the investment. Also, they are available only to individual investors and not for corporates.
4. Gold Structured Product: A structured product is a packaged investment strategy that can have a variety of underlying assets, such as an index, commodities, currencies, gold, or a basket of stocks. It may even include a combination of debt, equity, and commodities. The majority portion of the investment is locked to safeguard the capital, while the remaining is put into high- yield instruments to clock gains of the underlying asset. One of the important features of such a product is capital preservation. Most structured products operate on a simple principle: allow investors to participate in instruments that yield better returns. This is a great way for investors to participate in gold without worrying about other things.