Not just a tradition, investment in gold is a hedge against geopolitical uncertainty, the reason why demand for it has risen now on news of US airstrikes, elections in France and Germany and tensions around North Korea.
Talking gold, the domestic prices track international gold rates and international prices have an inverse relation with US dollar i.e. gold goes high when USD climbs down. Also, if interest rates move up gold becomes unattractive to pledge and raise fund.
Traditionally gold lovers in India chase the physical form – jewellery, bars and coins.
However investment dynamic is now changing and people are considering options like gold exchange traded funds (ETFs), gold fund of funds and sovereign gold bonds.
In fact, it is a wiser option to physical gold. Gold ETFs are backed by gold of 99.5 % purity. Thus when you buy ETFs instead of traditional jewellery or coin form, what you get as underlying asset is gold that is 99.5 percent pure.
Look beyond Akshaya Tritya. Look to ETF.