The smartest investors always tend to choose something that is valued across the world. Naturally, gold is one of those options. Now, there are two ways you can purchase it. The first involves buying it from a reputed dealer. The second is to trade in the gold bullion market.
This article focuses on the latter. More importantly, it examines the benefits of investing in this space.
Similar to how exchanges deal with securities and derivatives, a bullion market trades in gold and silver. As such, they are one of the primary ways to invest in those two precious metals.
That said, bullion markets are usually Over-The-Counter (OTC). In short, they are decentralised and operate without a binding exchange or broker. Moreover, unlike traditional variants such as the New York Stock Exchange (NYSE) or the National Stock Exchange of India (NSE), they have no physical location. Instead, trading takes place electronically.
Some other features of a gold bullion market are as follows:
Aside from the points mentioned above, bullion trading is significantly less flexible than other options like gold ETFs or futures. This is primarily due to two reasons.
First, because it's a tangible object, bullion or gold coins, for that matter, are difficult to trade and move in defined amounts. Second, it is expensive to store and insure them.
Gold acts as a hedge against inflation. But it’s vital to understand how this works. Say, someone buys 10 grams of gold for ₹1,000. Now, if inflation erodes the purchasing power of the rupee, gold bullion price will not fall as a result. Instead, its cost per gram will increase, compensating the trader with a higher monetary value than the original investment.
Another benefit of buying gold is that it is less volatile than other options. During an economic crisis, stocks and bonds may dip in value. But gold will remain relatively stable. This is partly because it is unaffected by peripheral market movements. More importantly, it is scarce. And anything finite will always hold its value over time.
Both of those advantages make gold a highly liquid asset. In short, there are mostly no downsides to investing in it. As an added benefit, purchasing gold also diversifies your portfolio, eventually providing better financial security should you need it.
Now that you have a basic idea of the gold bullion market, your next step is identifying the channels from which you can start trading.
And that’s where Fi Money steps in. As one of India’s leading investment platforms, Fi Money offers traders several short-term and long-term options.
Our peer-to-peer 'Jump' feature also helps you beat inflation while earning 9% per annum on your initial investment. But what if you want to prioritize short-term returns? Our 'Smart Deposit' will let you do just that!
We offer everything from highly liquid commodities to stocks in the most reputed global companies!
So, why wait? Sign up on the app today!
There are several options available when it comes to buying gold bullion. You can directly purchase assets from reputed dealers and jewellers, get them through online transactions with banks or acquire gold ETFs, mutual funds, etc. At Fi Money, we offer users several channels to go about this in a manner best suited to them.
While the process may differ based on the institution, most banks have online services dedicated to gold transactions. Simply log into your account and place the order. Then, visit the nearest branch to procure your bullion/coins.
The Canadian Maple Leaf, the Gold American Eagle and the South African Krugerrand are some of the best options in the gold bullion market. All three are widely valued and have a high purity (22 carats or more).