Understanding Different Forms of Gold: Choosing the Right Type for Your Investment

Date of Published: September 13, 2023

Gold investment is considered a valuable investment option for centuries now. Therefore, it’s crucial to understand the different forms of gold available in the market and the factors to take into account while selecting the most suitable form for your investment. When it comes to investing, there are various types of gold investment options available. Let’s discuss them step by step.

Types of gold

There are two types of gold available in the market – Physical and Digital gold.

Physical Gold

Physical gold refers to tangible gold in the form of bars, coins, or jewellry that you can hold and possess physically.

Gold Bars

The rectangular blocks of pure gold are referred to as gold bars or bullion. They are available in various sizes and weights. They are available in small bars to larger ones weighing several kilograms. It is one of the cost-effective options for investing in gold as it has a lower premium compared to others.

Gold Coins 

Gold coins are minted pieces of gold that come in various sizes, weights, and designs. They are a popular investment option and can be bought from government or private entities. 

Gold Jewellery

We Indians, especially women buy gold jewellery to wear. Investing in gold jewellery is a common practice in India. Gold jewellery holds cultural, emotional, and financial significance. The gold purchase sees an upward swing on occasions like weddings, Diwali, etc. 

Digital Gold

Digital gold refers to intangible gold in the form of Gold ETFs, Gold mutual funds, Sovereign gold bonds, etc. that you can’t hold and possess physically.

Gold ETFs

Gold Exchange-Traded Funds (ETFs) are investment funds that trade on stock exchanges and aim to track the price of gold. Investing in gold ETFs provides the convenience of buying and selling gold just like stocks, without the need for physical storage.

Sovereign Gold Bond

The Reserve Bank of India (RBI) launches Sovereign Gold Bonds (SGB) every year. These bonds provide a secure and reliable method of investing in gold. SGBs offer a compelling option for those seeking an alternative to investing in physical gold coins with an attractive annual interest rate of 2.50% and a lock-in period of 8 years.

Gold Mutual Fund

Gold mutual funds (MFs) function similarly to stock mutual funds. They pool funds from multiple investors to invest in gold reserves either directly or indirectly.

Gold Future and Options

Investors have the option to invest in gold futures contracts but it involves speculating on the future prices of gold. This particular investment avenue requires a higher level of knowledge and risk tolerance than the other different forms of gold.

Gold Mining Company Stock

Investors can invest in the gold industry through gold mining companies. This investment option combines the benefits of both gold investment and traditional stock investment and provides a way to participate in the gold sector.

Gold Weight Measurements

Gold is measured in different units therefore it’s crucial to understand these gold weight measurements while investing in gold. Here is some common weight measurement of gold:-

Troy Ounce (ozt)

It is a standard unit for the gold weight measurement. One troy ounce is equivalent to approximately 31.1 grams.

Gram (g)

The gram is a widely used metric unit for gold weight measurement. It is often used to measure smaller quantities of gold.

Gold Purity Levels

When you are going to purchase gold, it’s important to consider the gold purity level. Here are some commonly used purity levels:-

24k gold

This is one of the purest gold forms of gold. It is highly malleable and has a bright yellow color.

22k gold

22K gold contains 91.7% gold and 8.3% other metals, such as copper or silver, which add strength and durability.

18k gold

18K gold contains 75% gold and 25% other metals. It is a popular choice for fine jewellry, and balancing durability.

Conclusion 

Gold investment is the best investment to diversify your portfolio and use it as a hedge against inflation. But investing in gold requires a lot of personal needs and wants consideration before dumping your money in it. There are different gold investment options, you should choose those only that fit your needs and desires. But as you enter the world of gold investment, it’s worth considering companies like Value Gold. They provide comprehensive services to assist customers in buying and releasing pledged gold. Their expertise in the gold market differentiates them from the large crowd. Make sure to reach out to them in case of any need!