India's fixation on gold is legendary – the country is the world's second-largest consumer market for the yellow metal. Gold is also a must have in every Indian investor's portfolio.
Gold prices often go up when other financial assets like stocks and bonds fall in value. During financial crash, inflation or global trade issues, an investment in gold is considered as a safe haven. This means by investing in gold, you can ensure good returns even during bad phases. And there's no better way of investing in gold than through the government-backed methods.
Know more about the gold investment schemes backed by the Indian government:
1. Gold Monetization Scheme
The Gold Monetization Scheme (GMS) was introduced by the Central Government in 2015-16.
- Under GMS people can deposit gold in any form gold bars or coins, or even jewellery and the investor will get an interest on the weight of the deposit
- Under the GMS, customers may be asked to complete KYC (know-your-customer) process
- The interest rate is determined by the banks individually
- The minimum investment required under GMS is 30 grams of gold
- There is 3 term deposit plans- short-term (1 to 3 years), medium term (5 to 7 years), and long-term (12 to 15 years) are available under the GMS.
2. Indian Gold Coin
Indian Gold Coin (IGC) is the first ever national gold coin of Indian and it was launched by the Prime Minister Narendra Modi in 2015.
- The IGC has the emblem of Ashok Chakra on the one side and face of Mahatma Gandhi on the other.
- IGC is available in the denomination of 5, 10 and 20 grams
- The pricing of the coin is being managed by MMTC, a Government of India Undertaking
- Every Indian Gold Coin is certified as per the Bureau of Indian Standards (BIS) Hallmark
- Customers can purchase IGC through selected bank branches and MMTC units
- MMTC also offers the buy-back option for IGC through its own showrooms across India
- MMTC will repurchase the Indian Gold Coin, in intact tamper-proof packaging and with original invoice, at the prevailing gold base rate
3. Sovereign Gold Bonds Scheme
Sovereign Gold Bonds Scheme (SGBs) are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity.
- Under Sovereign Gold Bonds Scheme (SGBS) gold bonds are issued in paper and demat form
- SGBS are issued by the Reserve Bank of India (RBI) and are alternatives to owning physical gold
- Bonds will be tradable on stock exchanges within a fortnight of the issuance on a date as notified by the RBI
- The investors will be paid Interest on the amount of initial investment at the rate notified by RBI
- The tenor of the bond will be for a period of 8 years with an exit option from 5th year onwards to be exercised on the interest payment dates