We are reading lot about Gold as an investment . As a retail investor we feel investing in Gold is a safe bet than investing in equities. Gold over the period has risen at a steady rate. Below is a chart which shows the price of gold from 2003

Gold Price Chart in INR per 10 GM

Year    Rate In Inr
2013     29000
2012     32000
2011     25000
2010     18000
2009     14500
2008     12500
2007     10800
2006     9000
2005     7000
2004     5800
2003     5700

We see from the above table that if we had invested in Gold in Year 2003 it would have fetched us Rs.29000/- today ie an whopping 568 % increase in value . The same if we had invested in a Fixed Deposit in a bank it would have fetched us Rs.10740/-

If we had invested in equity it would have given more return than gold. But the problem is we have to research for a good scrip where we can invest. If we choose a wrong scrip then we wont be able to get a good return. Once invested we have review our investment at a regular interval .There may be fear that the scrip may go below our buying price.

We don't have to fear for the same while investing in Gold. Gold is a safe heaven for investor when the economy is down .

But one problem the retail gold investors has to face while investing in Gold. While purchasing Gold there is a problem as where to sell it for getting money.  Even if you are able to sell you wont be getting at today s market price. You will be getting at 20 to 30% Discounted value.

For retail investor the best bet is to invest in Gold ETF . Gold ETF are exchange traded funds that closely track the movement of price of Gold. A unit of Gold ETF represents a 1 Gm of Gold. An investor by buying one unit of Gold ETF purchase 1 Gm of Gold .  Investing in Gold ETF has several advantages . To name a few:

• Gold ETF is liquid . You can buy and sell it any time during market hours.
• You can trade in it.
• Holding Gold ETF is cheaper that holding Physical Gold. Like it involves security cost an while selling physical gold one will be getting the price lower than the market price.
• Also in India we sell physical Gold only as a last resort because so much sentiment is attached to holding of Gold. But with Gold ETF there wont be any such sentiment attached.