Investing in gold is a crucial decision for many investors. Gold has been a highly sought-after asset class due to its rarity, liquidity, and protection against inflation. It is also considered a safe haven asset.

Investing in gold is a crucial decision for many investors. The question is how to invest, when to invest, and how much to invest.

There are two ways to invest in gold, viz, physical gold and digital gold. Let us examine the pros and cons of both types of investments.

PHYSICAL GOLD: GOLD COINS VS GOLD BARS

Physical gold refers to jewelry, gold coins, and gold bars. Buying gold in the form of ornaments has inherent risks, viz, loss on making charges, taxes, safekeeping, and purity. The next option is gold coins and bullion. Both are advisable. Gold bars are 24 carat with 999.9 purity, while gold coins are 22 carat with 916 purity.

A key advantage of gold bars is their lower premiums compared to gold coins, making them cost-effective for bulk purchases. Another advantage of gold bars is that there is no value-added tax. (VAT). For example, if you buy gold coins for RO 5000, you have to pay a VAT of RO 250. (@ 5 per cent).

Suppose you sell it at a later date, the VAT paid, ie, RO 250, is a loss for you. But gold bars are VAT-free, which makes them attractive to buy. The lower premium and high purity make gold bars an attractive investment in the long term.

Between the gold coins and gold bars, gold bars need a higher amount, while gold coins need a relatively smaller amount. Also, gold coins are more liquid than gold bars in view of their size and weight. However, gold bars are suggested as a diversified investment with a long-term horizon, subject to storage and insurance costs.

Investing in gold is a crucial decision for many investors.

DIGITAL GOLD

The current trend is E-Gold or digital gold. Digital gold, in simple terms, is the electronic form of gold investments. This method is very convenient, cost-effective, and no worry about its purity and safekeeping.

Digital gold is becoming popular globally. For example, digital investment in India has grown by over 70 per cent post-pandemic, and a large number of investors are looking for online gold investment.

Gold savings Mutual Funds, Gold ETFs, online gold investment apps, etc are popular digital gold investment options. Through the online applications, one can buy, sell, and hold gold in digital form.

Under this scheme, gold with a purity of 999.9 is purchased and kept digitally. This gold is backed by physical gold and kept with trusted custodians.

This is best suited for long-term investment in gold as part of your diversified portfolio. The redemption may be made in the form of physical gold coins, gold bars, cash, ornaments, or a combination of these.

For ornaments, making, and other charges are to be borne by the investor. In India, MMTC-PAMP is one of the leaders offering digital gold of 999.9 purity. G-Pay, Phonepe, Paytm, Amazon Pay etc are popular digital gold investment apps. The gold so bought is maintained in the Gold Accumulation Plan (GAP), which can be verified by the investors. In Oman, several gold merchants and jewellery shops offer this digital form of buying gold.

HOW TO INVEST IN GOLD

Gold prices have skyrocketed to new heights in the last few years. There are several reasons for the rally, including the recent trade and tariff policies of the Trump administration. During turbulent times, the global investing community shifts its assets to gold, as gold is considered a safe haven. The price of 1 troy ounce of gold (31.1035 grammes) was $2,290 in April 2024, and now it stands at $3,126.

One gramme of 22 carat gold was RO 31 in December 2024, while it is above RO 37 per gramme now. Investors waited to cool down the price, but it rallied due to global reasons. So the question is how and when to buy gold.

The thumb rule is that one will not be able to catch the best price. The gold market is highly volatile. The practical option is to stay invested for the long term and buy the gold consistently at regular intervals, irrespective of the price. This helps to average out the price.

Buying gold coins and bars may not be practical under this method, as this requires a large amount. Here comes the advantage of investing smaller amounts at regular intervals in digital gold.

Among other investments, select a trusted online app and buy gold regularly, according to your capacity to buy, with long-term objectives.

Both holding physical and digital gold have their advantages and disadvantages. One can touch and feel the physical form of gold, while the virtual forms are intangible.

Undoubtedly, digital gold is an excellent investment alternative to fight inflation and diversify your investment portfolio. Having said that, the investment in gold is also subject to market risks.

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