Gold as An Investment Option

Presented By-
Kundvalli Palriwal
World Production(2330 tonnes)
TOP 5 Gold Producers
Country Production(in tonnes)
South Africa 291.8
Australia 254.5
United States 251.8
China 247.2
Peru 203.3
Source:GFMS(precious metal consultancy firm)
Types of Investment

 DIRECT INVESTMENT
 Physical Metal
 Bullion derivatives

 INDIRECT INVESTMENT
 Gold ETF's
 Gold Mining Stock
 Bonds
Physical Metal

 Jewellery

 Gold Coins

 Tola Bars

 Kilo Bars
Gold Investment Practices in India

 Indians Love PHYSICAL GOLD. Current private holdings are

more than 25,000 tonnes held in form or jewellery, Coins and
Bars.

 Gold is in the Indian Culture

 Gold is a form of storing wealth Traditionally, Indians bought

gold in the form of jewellery that served dual purpose –
Jewellery as well as investment but over the past few years a
new trend is emerging wherein in the Bars , Coins purchase is
growing.
 Fluctuations in Gold Prices make Indians move towards
Jewellery ,bars & coins Purchase especially days before
festivals .

 Age Old Traditions to Systematic Investment in Gold over a

period of time (Man faces less amount of opposition from
family members to buy Gold.)

 Awareness of Gold prices.

 Investment in Gold for Life : Wedding, Children, Property

purchase, & EMERGENCY.
Exchange Traded Funds

 Exchange Traded funds are open Ended Index funds that are
listed and traded on exchanges like stock equity based on
the Price of the metal .

 ETF are mainly in Gold, Silver, Platinum etc .

 They are listed in major stock exchanges.

Gold ETF’s

 Gold Exchange Traded Funds (GETF):

 Gold ETF’s is designed to provide returns that,

before expenses, should correspond to the returns
provided by Gold in the spot market.
ETF Advantage

 Like an Index Listing….

 track ‘s the asset Value
 Open Ended Mutual Fund

 Like a stock….
 Trading flexibility intraday on the exchange
 Real time price close
 Short term traders are not subsidized by long term investors
World Scenario

 Gold ETF’s was a huge success worldwide with 10 GETFs Trading

on 11 Exchanges with Total Value of Gold holding more than
$25bn. (as on 24th July 2009)

 Name of Gold ETF AUM (tonnes)

 Gold Bullion Security Australia -12.48 tonnes

 Lyxor Gold Security listed on LSE,- 93.10 tonnes

 New Gold Bullion Debentures Listed on JSE, SA -13.92 tonnes

 I shares Comex Gold Trust listed on NYSE -45.91 tonnes

 GoldBeES (Benchmark AMC), Goldshare (UTI AMC) & Kotak

Gold (Kotak M F) listed on the NSE India- 3.36 tonnes
ETFs on NSE

 Nifty BeES
 Bank BeES
 Junior Nifty BeES
 Liquid BeES
 Gold BeES
 UTI Sunder
 UTI Gold Share
 Kotak Gold ETF
Needs of ETF’s

 Small denomination – For Retail to the Common Man

 Cost efficiency – No holding cost or other cost

 Transparency in costs and charges

 Liquidity- can be sold anywhere.

 Most derivatives backed by gold and not outright or titled

ownership of physical bullion.

 Nature of Ownership and Intermediation of ETF

Advantages
 Quick and convenient dealing through demat account

 No storage and security issue for investors

 Transparent pricing

 Taxation of Mutual Fund

 Can be traded on stock exchange like buying / selling a stock

 Ideal for retail investor as minimum lot size to trade is one unit on
secondary market

 NAV of a unit will track price of approximately ½ or 1 gram of gold

Gold Vs Inflation Rate
Gold is the only asset class that is not
somebody else's liability
 Deflationary depressions are characterized by many
bankruptcies and defaults. The only assets that one can
count on are those in own possession that are liquid, like
cash or gold.

 Sound currencies such as gold become more valuable

because so much is wiped out in defaults and wholesale
wealth destruction. The price of gold can never go to zero
unlike the value of multinational corporations and bank
 Gold is the ultimate safe haven asset and the only
currency which cannot be printed or debased by
desperate governments.

 Inflationary depressions, however, wipe out the

currency itself, which lose value because the
government Print more to bailout the financial
system. Gold benefits from this brutal process.
Conclusion

 Investment in the gold in the form of physical

metal,ETF ensures that one can get Maximum
Leverage from the Gold Investment & Protect from
Inflation .
THANK YOU !!