“TO STUDYON GOLD AS AN INVESTMENT OPTION”

A Project Submitted to
University of Mumbai
For Partial completion of the Degree of

Bachelor of Management Studies

Under the faculty of Commerce

By
VISHAKHA PANKAJ PATEL

Under The Guidance of

MEHUL BARAI
 Certificate

This is to certify that Ms. VISHAKHA PANKAJ PATEL worked and duly
completed her/his Project Work for the degree of Bachelor of Management Studies
under the Faculty of Commerce in the subject of Business Ethics and her project is
entitled, “TO STUDY ON GOLD AS AN INVESTMENT OPTION ” under my
supervision.

I further certify that the entire work has been done by the learner under my
guidance and that no part of it has been submitted previously for any Degree or
Diploma of any University.

It is her own work and facts reported by her/his personal findings and
investigations.

Seal of the College Name and Signature of the

Guiding Teacher

Date of Submission:
 Declaration by learner

I, the undersigned Miss VISHAKHA PANKAJ PATEL hereby declare that the
work embodied in this project work titled “TO STUDY GOLD AS AN
INVESTMENT OPTION” forms from my own contribution to the research work
carried out under the guidance of MEHUL BARAI is a result of my own research
work and has not been submitted to any other University for any other
Degree/Diploma to this or to any other University.

Wherever reference has been made to previous work of others, it has been clearly
indicated as such and included in the Bibliography.

I, hereby further declare that all the information of this document has been obtained
and presented in accordance with academic rules and ethical conduct.

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 Acknowledgement

I would like to acknowledge the following as being the idealistic channels and fresh dimensions

in completion of this project.

I take this opportunity to thank the University of Mumbai for giving me a chance to do this

project.

I would like to thank my Principal, Dr Debajit N. Sarkar for providing me the necessary

facilities required for completion of this project.

I would like to thank my Coordinator, Ms. HETA PARIKH for her moral support and

guidance.

I would also like to express my sincere gratitude towards my Project guide MEHUL BARAI

whose guidance and care made the project successful.

I would like to thank my college library, for having provided various reference books and

magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped me in

completion of the project especially my parents and peers who supported me throughout the

project.
SR.NO PARTICULARS PAGE
NO.
 EXECUTIVE SUMMARY 1

1 Chapter 1: - Introduction 3

1.1 Introduction to Gold as an investment 5

1.2 Why invest in gold? 5

1.3 Factors need to be considering while investing in gold 5

1.4 Where gold is tarded? 6

1.5 How to trade gold? 6

1.6 Types of gold investment 7

1.7 Major players 9

1.7(1) Where India stands on gold reserve 9

1.7(2) Where India Stands for Gold Reserve? 10

1.8 Summary of characteristics in investing in gold 11

1.9 Factors affecting gold price 12

1.10 The pros of investing in gold 15

1.11 The cons of investing in gold 16

1.12 Significance of gold in Indian culture 17

1.13 Investment in gold as an invest choice 18

1.14 Gold- jewelry Re-cycling 20

1.15 War,Invansion and national emergency 20

1.15(1) Gold's safe haven appeal 20

1.16 What is impact of coronavirus on gold investment and price in India 21

1.16(1) Coronavirus and Gold summary 23

1.17 Sovereign Gold bonds scheme 2020-2021 23

1.17(1) SGB minimum and maximum 24

1.17(2) SGB six tranches 24

1.17(3) How to purchase SGB 24

1.17(4) Benefits of purchasing SGB 25

1.17(5) Things you must know before investing 25

1.17(6) Are SGB safe? 25

1.17(7) Why did the government of India introduce this scheme 25

1.17(8) Comparing SGB with Physical Gold and Gold ETF 26

1.18 Strategies for investing in Gold 26

2 Chapter 2: - Research Methodology

2.1 Data source 28

2.2 Objective of the study 29

2.3 Scope of the study 30

2.4 Need of the study 31

2.5 Hypotheses 32

2.6 Statement of the problem 33

2.7 Limitations of the study 33

2.8 Research design 34

2.9 Sample design 34

 2.9(1) Sample size 34

2.9(2) Sample unit 34

2.9(3) Sample technique 34

3 Chapter 3:- Litterateur Review 35-44

4 Chapter 4:- Data Interpretation and Presentation 45-59

5 Chapter 5:- Findings and Suggestions of the study

Findings 60

Suggestions 62

Conclusion 63

Bibliography 65

Annexure 66

TABLE OF CONTENTS
 Executive Summary

Throughout the history, gold has often been used as a tool for bartering or trading. It was first used a form of
coins as a currency. The financial crisis of 2009 has seriously affected the world economy. On August 6, 2011
standard and poor downgraded the U.S.’s AAA credit ratings for the first time since its granting in 1917.
Developed countries have experienced an unprecedented 7.5 % decrease in the real GDP. Meanwhile the price
of gold remains high. Just four days after the downgrading of U.S.’s credit rating gold’s price climbed to
1,800US dollars per ounce compared to the average price of 1,224.53US dollar per ounce in 2010.

This paper is done in the interest of hoe gold should be invested, both in general and in the underlying
circumstances. The starting point to introduce the role of gold in a financial world, and its features as an
investment. After that an econometric model is applied to figure out what the relevant factors are that affect the
gold’s price primarily. Considering the testing period from 1991 to 2011, with monthly observation the findings
are the following : the return of gold has a strong positive correlation with the change of the inflation rate ; the
return of oil is, to some extent , positively related to the change of interest rate are proven to be not related to
the return of gold.

Since the return on gold is independent from the return of stock, these two factors, combined in a portfolio, will
diversify the risk of each other. the second objective of this paper is to estimate a proportion of a gold
investment in a portfolio including Danish stock and Danish mortgage bonds, using tangent portfolio and other
needful financial modeling in excel. The suggested portfolio is to allocate 3.57% of the investment in Danish
stock, 7.20% of the investment in gold and 89.23%of the investment in Danish mortgage bonds. The proportion
of investing in gold should remain the same in the 2009’crisis, while the proportion of investing in Danish
mortgage bonds and OMX20 should have some small changes.

The result does not necessarily mean that bonds are safer than gold and stocks. Bonds still have risk of
defaulting or being downgraded, especially under certain circumstances e.g., when the housing bubble burst, or
the credit rating was downgraded. to have a comprehensive conclusion, besides the recommended portfolio, it
needs to be addressed that gold is very unique asset, which has a static purchasing power to goods and services
in the long term .

Government and center banks store gold as backup for the paper currency. From a long-term perspective,
adding gold into a portfolio can enhance the ability of the portfolio to bear the risk in the crisis. The effects
become significant when the risk of inflation and government default is an underlying issue.

Gold is a very unique asset which has a static purchasing power to goods and services in the long term.
Government and center banks store gold as a backup for the paper currency. Form a long-term perspective,
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adding gold into a portfolio can enhance the ability of the paper of the portfolio to bear the risk in the crisis the
effect become significant when the risk of inflation and government default is an underlying issue.

Investing in gold has been seen as the supreme way of safe haven investment. Gold investment is booming in
recent year and the reason behind this can be explained as the investor become more aware of the benefit of the
gold investment.

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 CHAPTER 1: INTRODUCTION

GOLD AS AN INVESTMENT OPTION

ABSTRACT

GOLD INVESTMENT IN INDIA

Gold is the one of the precious metal plays an important role in our economy, Gold is the symbol of beauty, in
our country gold has some heritage value, now a day for all occasions gold is an inevitable elements.

In the current market scenario of high volatile, rapidly changing market place, various avenues for investment in
gold are creating the confusion among investors. As per various studies 16,000 tons of gold is there in Indian
household predominantly in the form of jewelry, Coins, bullions, ETF, mutual fund, E-gold etc. The present
study “A study on various form of gold investment “tries to study forms of gold investment available to
investors, factors needs to be aware of and know-how of investing in gold, pros and cons of various forms of
investment and to assist investors in creating awareness about various gold investment options. For the purpose
of the study the primary data and secondary data has been collected. Primary data consist of questionnaire and
secondary data through websites, research paper and magazines. Based on the research it is found that many
investors still prefer gold coins and bars form of investment and prefer to invest in Gold mutual fund and ETF
which gives more profit and easy form of investment.

My study tries to focus about different gold investment schemes available in the market and also the investor’s
attitude towards the investment.

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INTRODUCTION

GOLD AS AN INVESTMENT OPTION

Financial system consists of financial institution, market, services and instrument that are closely related with
each other. The role financial institution, services, market have increase in nowadays compared to the past
decade; the only reason for this was customer are aware about this. There are so many institutions that are
conducting coaching classes for the financial system, for example Tata Institute in Bombay is a leading institute
conducting coaching classes for actuarial course in the field of insurance.

India has always been known as elephant of the investment world. It moves slowly but surely. Investment is a
planned method of safely putting ones saving into different outlets to get a good return. the essential quality of
an investment is that it involves waiting for reward. Investment involves long term commitment investment is a
commitment of a person’s fund to derive future income in the form of dividend, rent, interest…. etc. There is
positive relationship between investment in right scheme at right time without any loss.

Gold as an asset plays very important role in an investor’s portfolio as if not only provides stability for returns
but also gives an opportunity to maximize the wealth of the investors. Investors generally buy gold as a way of
diversifying risk. Price of gold is determined by the market force of demand and supply. Central bank keeps
some portion of their securities in the form of gold. Some studies pointed out that US central bank is the largest
holder of the gold they own 8133 tons of gold it represents 63.8% of American foreign reserve. Gold is hedging
tool against inflation.

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Gold is traditionally considered by investors as a safe investment, especially during a time of recession with
high risk of inflation, exchange rate depreciating and bank collapse. The main reason is that unlike any
currency, gold has an intrinsic value. It is a precious metal. Being widely used in modern technologies.
Historically, gold was use as a currency in old times. Even no its is still considered as the backup of currency for
governments and central banks. The current gold price indicated in terms of currency and the current price of
currency is affected by the ongoing financial crisis.

1.1 Introduction to gold as an investment:

Gold is considered by many, to be the best investment you can make to protect yourself during stock market
decline and inflation. In fact, history shows that the performance of gold goes up in times of high inflation.
However, the price of gold also has its high and lows and you could just as easily lose money investing in gold
as with any other investment. The price of gold is turbulent from time to time. As mentioned before, there might
be different reason that affect the gold’s price especially during the financial crisis. In order to determine what
the real reason is for gold’s price to increase; it is necessary to identify the most relevant factors leading to the
phenomenon.

1.2 Why invest in gold?

In the economy world, historically, gold was being used as a currency. it always plays an important role in
the world’s major currency system. Gold first become the single metallize standard for US dollar in 1990
and being the back for US dollar until 1973. After 1973 both gold and US dollar are floating on the market.
Even though gold is no longer a monetary standard, government and central banks are still holding gold as a
portfolio in their reserve to back the paper currencies.

1.3 Factors need to be considering while investing in gold:

1) Forms of buying gold: Any investors have to be aware of the different forms of buying gold. Jewelry, the
most traditional and the dominant form of buying gold in India and coins and bars, gold exchange trade etc.
are other form of investment

2) Current income: Gold in any form does not give any current income. The only exception is the dividend
option in the gold ETF. If held in the physical form, there is only outflow of cash for the maintenance of
lockers.

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3) Capital appreciation: Gold is a very strong bet compared to share that are highly volatile. The idea for gold
investment will be to use it at times when the market is failing and when the inflation is very high.

4) Risk: Gold does not carry much risk at least in India, as we hardly see deflation in the real sense.

5) Liquidity: Gold score the highest in term of liquidity, compared to all other investment. At any time of the
day and any day gold can literally be converted to cash. Banks would give you a jewelry loan and so would
your friendly neighborhood pawn shop.

6) Tax treatment: Gold suffers capital gains tax as per IT Act. so, it is better to ask your jeweler for the bill.
Gold does not have any other tax benefits

7) Convenience: Gold scores very high here. But with the per gram price rising. the smallest single investment
is becoming higher.

1.4 Where gold is traded?

In India, gold is traded in Rupee on MCX (Multi Commodity Market). If you want to trade it in dollar , you
could try interactive brokers and trade on NYMEX (The New York Mercantile Exchange).
The Multi Commodity Exchange of India Limited (MCX)- India’s first listed exchange, is a state-of-art,
commodity derivative exchange that facilitates online trading of commodity derivatives transaction, thereby
providing a platform for price discovery and risk management. The Exchange which started operation in
November 2003, operates under regulatory framework of Securities and Exchange Board of India (SEBI).

1.5 How to trade gold?

There are direct and indirect ways of investing in gold. One can buy physical gold, like gold coins and bars,
or one can buy gold mining stocks and funds and also other financial derivatives. in order words, one can
buy gold as real, hold it and sell for real to gain or lose the price differences. Or one can also gain or lose
from not holding physical gold, but from the movement of gold’s price. The distinction from either way is
not always clear. The best way of making choice when consider an investment in gold is to define one’s
need and choose the best option.

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Another way to trade gold is through a fund which trades on a stock exchange, like SPDR gold trust. If you
have a stock trading account, you can trade the price movements in gold. The trust holds gold in reserve,
and therefore, its value is reflective of the price of gold.

1.6 Types of gold investment:

1) Physical gold: Generally, physical gold is a part of most people’s investment portfolio. Physical
gold could be invested in the form of gold jewelry, gold coins or gold bullions. The advantages
of physical gold are investors has the direct ownership, and keeps value. The disadvantages is
privately stored gold is with low liquidity, the cost are high which including delivery and
processing fees. Relative to gold coins and gold jewelry, gold bullion is more preferable to invest
because of its lower costs and high liquidity. Vaulted gold represents gold bullion, it is stored in
professional bank vaults. The investors also acquire the vaulted gold ownership, but doesn’t hold
the gold in his own hands. Commonly, the vaulted gold plays lower cost and provides a high
liquidity.

2) Gold Backed Securities: Gold Backed Securities are one of gold investment ways which
indirectly invest gold. It combines the benefits of physical gold bullion with the liquidity of the
traditional securities market. Usually, the gold of securities can be redeemed, but the redemption
fee is relatively high to prevent gold trading frequency. Gold exchange traded funds (ETF) are
investment fund traded on stock exchange, much like stocks. Different from the stock ETF gold
ETF is a financial derivatives product tracking the spot gold price. Advantages of gold backed
securities is ; first the dealing spread are comparatively lower than physical gold (such as gold
jewelry ,coins and small bars) commonly they are 0.5% ; second , removed from the gold
custodial fees, storage fees, storage fees and insurance costs, only need pay a management fees
about 0.4%; at last with high liquidity , it is convenient to trade. Disadvantages of gold backed
securities is investor does not have gold ownership; some stock exchange impose extra charges
on each trading

3) Gold mining stocks: Gold mining stocks do not directly invest in gold but in gold mining
companies. Compare with other gold investment, it is more speculative. Gold mining stocks
carry risk, thus , as the investors would like to invest gold mining stock should think again. This
investment way need the investors have a broader risk tolerance, and can accept the possibility of
gold based losses in exchange for the potential for triple digit gains.

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4) Gold mutual fund: Gold mutual fund are another way to invest in gold. Its suitable for those
investors who would like to invest in physical gold, but still desire some exposure to the precious
metal. However, be careful of high annual charges that may plus hidden charges, and analyze the
offering prospectus prudentially.

5) Gold option and future: Gold option and future are the gold investment derivatives which are
short term speculation on the future gold price. The markets are more complex and trading in
speculation but not in physical gold. Thus those ways of investment are suitable for more
experienced and sophisticated investors. To buy option is risky, more investors lose than win.
The prominent advantages is that the investors can control a large investment with a small, and
limited, amount of money. The disadvantages is that option expire within a fixed period of time.
Gold option and futures may bring a large fortune; it also may be lost all in an instant.

6) Bullions: The value of gold bullion is determined almost entirely by the market price of gold at
the time of purchase. Gold bullions comes in one of the following two forms:
1) Bars: These are larger pieces of gold that are generally not kept in the physical possession
of the investor, and are usually purchased by larger companies and organizations as
opposed to individuals. There are several variation of smaller sized bars that are kept I by
individuals in their possession.
2) Coins: Gold coins are minted in several different one-ounce forms ranging from 1/10oz. to
1 kilo; though one ounce coins are by far the most popular amongst small company and
individual investors. Coins are kept either in possession of the investors or in depositories.

7) Gold ETF: Gold exchange traded funds are products (also called Closed End Funds Exchange
Traded Notes) that aim to track the price of gold and are traded on major stock exchanges. Each
Gold, ETF, CEF (Closed End Fund) and ETN (Exchange Traded Note) is setup and structured
differently. Also, not all of them are backed by physical gold , like gold ETN which use
derivatives to track the price of gold.

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1.7 Major Players
Gold market has several players on it. These players can have a significant influence on the price, and
therefore it is crucial to know who they are and what role they play. In brief , they can be categorized
as government and central banks, institutional investors and funds, and private gold mining corporate

Figure 1.7(1) Top 20 official sector gold holding (tons) as of June 2019

Governments and central banks hold capital reserve to back up their liabilities. The capital reserve in
general is combination of foreign currency, gold and other kind of assets. The percentage of holding
each one change over time. But the purpose of holding gold is quite similar to the private investors,
which is to diversify the portfolio and control of risk. In theory central bank should hold gold as a large
position in its assets, so that they can be at a safer position towards the reserve. In practical, this is the
case. Figure 1.7(1) above shows the top 20 official sectors of holding gold. The US, Germany and Italy
are the three on top. One of the reasons that the US is holding more than twice gold as Germany is that
it is the biggest economy in the world. However, the current financial crisis could be another good
reason. The banks that structure their reserves mainly on US dollars will need to move more towards to
gold, in order to eliminate the risk exposure from US dollar.

Institutional investors and funds are very large. In general, they are one of the major players on the
market, even though they do not sell or buy gold often. Instead of selling gold to the customer, they sell
shares, which provide an option of investing in gold with lower access cost and more liquidity. They

9
cannot sell the share before they physically purchase gold, therefore their demand is based on investors
demand in gold shares, which has been growing constantly, and believed to be continued

The reason for private mining company playing an important role on gold market is to hedge the price
of gold. They will detect the trend of price movement and accordingly hedge for the future price by
adjusting supply.

1.7(2) Where India stands on Gold Reserve?

As per the World Gold Council’s data India has 618.2 tons of gold as holding, which is 6.9 percent of
the share held in gold in total foreign reserve.
While panic recently gripped the already slowed down Indian economy following media reports on
India selling its gold reserve, the country has the 10 th largest gold reserve in the world, revealed data
released on Friday on the world official gold holding.

The Reserve Bank of India purchases 52.3 tones gold in FY19 to augment its foreign exchange
reserves, according to the latest data released by to the World Gold Council. With this, it has entered
league of world’s top gold holding central banks. RBI currently holds 618.2 tons of the metal as part of
its foreign exchange reserves. Till about a month ago, the central bank was ranked 11 th, but in march it
added 3.7 tons of gold to its forex reserves and dislodged the Netherlands from the 10th spot.

The World Gold Council derives data on gold reserves from International Financial Statistics under
International Monetary Fund. All signatory central banks have to provide monthly updates to the IMF
on their gold purchases forming part of their Foreign Exchange Reserve.

The latest data base shows the RBI’s gold holding is 6.9% of its overall foreign exchange reserve.
India’s central bank started adding gold from over a year ago after staying put for 8 years. Previously it
had added gold in November 2009 when it bought 200 tons from IMF

As per the World Gold Council data India has 618.2 tons of the yellow metal as holdings, which is
6.9% of the share held in gold in total foreign reserve. United State has the largest holding with 8133.5
tons followed by Germany with 3366 tons and International Monetary Fund (IMF) with 2814 tons.

Other countries having more gold holdings than India is Italy with 2451.8 tons, France with 2436 tons
Russian federation with 2241.9 tons, China with 1948.3 tons, Switzerland with 1040 tons and Japan

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 with 765.2 tons. World Gold Council is an independent agency tracking and analyzing gold trade
globally at the wholesale level.

1.8 Summary of characteristic in investing in gold:

 Gold is different from stocks. The price of gold does not fluctuate as much as stocks. Like other
investment, its price also goes up and down, but it is not threatened by inflation. As its shows in figure
1.8(1) the price gold goes together with the inflation. However, the occurrence of some big events which
happened at the peak of gold’s price. The common of this event are that they cost the instability of the
financial world, and the price of gold can reflect the risk and move accordingly. Therefore, adding gold
to a long-term investment portfolio can diversify the risk on the financial markets.

Figure 1.8(1) The Historical Moments of Gold’s price

 No commodity has the same importance as gold even though in the short run it could grow more than
gold. The key difference is that gold was a currency and still is backing currency. This role cannot be
replaced by any commodity on the market.

 Gold has risk. The price fluctuates from time to time. As a figure 1.7(1)
Present above price of gold volatized in the past 20 years. If one buys from the peak of the market, the
price may not come up again at the same level, loss can occur. However, this is not exclusively
happened to gold market. Every investor will deal with the same in any market.

 Gold has shown positive result even during the economic downturn and market volatility. It is of as the
best hedge against inflation. Gold has seen strong asset appreciation in long term and emerged as must
have in once investment portfolio. Gold is an easy and convenient way to diversify your investment
11
 portfolio. You can start investment in gold with a small amount to save regularly for the long term. You
can redeem your gold fund as and when you need. Some of the gold funds such as SBI gold funds is
treated as a non-equity product from the tax perspective. You can claim long term capital gain, tax
benefit on this fund after a period of one year of investment.

 Another factor that drives gold investment is liquidity. When making an investment the ease with which
you can buy and sell an asset should be primary concern, and with over USD $100bn in daily trade, gold
investment is one of, if not the, easiest assets for everyday investors to buy and sell.

 Indians buy gold more than any other country in the world and gold has been a favorite commodity for
men women. Gold is used in jewelry since ages. Gold is not subject to any political chaos and signifies
how wealthy a country is.

1.9 Factors affecting gold price:

Gold is a precious metal and one of the most favoured forms of investment in India. The price of gold
doesn’t respond to demand and supply alone. In fact, there are a host of other factors that make it difficult to
predict the price of gold at any given time.

Globally some of the factors that influence the cost of gold are inflation and the supply of gold and the
central bank decision to buy or sell gold. The bullion business done by exchange traded funds, economics
conditions and so on.

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 Most of these factors do dictate gold price in India. But there are some other local peculiarities that
affect both the offline and online gold rate in the country. Let’s consider them one by one.

In India, love for gold has been passed on from generation to generation which in hindsight seems a very
good choice. In other words, the purchasing power of gold has remind uniform over the ages.

 Inflation:
It is generally noting that gold price reacts to inflation. As the Indian economy experience inflation
and the local currency weakness, people prefer to invest on gold, which in turn leads to a rise in its
demand.

However, it would be wrong to claim that both of these are exclusively related. Gold price were
rising even before the recession of the early 2000’s and peaked after the situation improved. However,
the gold price did respond to the inflation resulting from the recession.

 The Central Bank’s decision:

The decision of the Central Bank (Reserve Bank of India in India’s case) to buy or sell gold can
affect its price due to the sheer volume of the transaction. Central Bank hold a significant amount of
gold reserve, which they must sell off when the economy is booming. The gold is sold in the market
though other institutional buyers are not that keen to buy it. This leads to a slide in the gold price almost
every time the central bank begins to reduce its gold reserve.

Such high-volume gold sells and purchases are also done exchange traded fund and are influential
drivers too, transaction done this way eventually impact gold’s demand and supply.

 Interest Rate:
Gold and interest rate have a simple inverse relationship. Once the interest rate increases, people
sell off their gold and try to use the money to earn high interest. When interest rate fall, they see more
sense in buying gold, thus increasing its demand. However, this is more of a short-term observation as
over long-term period, it is seen that gold price in interest rate both have rising, thus indicating a long
term positive co relation. For example, during the 1970’s, gold boom, rose in spite of a steady rise in
interest rate.

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 The jewelry market:
Indians traditionally buy a lot of gold for ornamental purpose. Buying gold jewelry is popular
custom across India during festival and weddings. As a result, the demand for gold rises during festival
and wedding season (generally October to December), irrespective of prevailing price. Thanks to the
demand India often ends up importing gold, particularly these seasons.

 The monsoon:
While urban India has other interesting investing option other than gold (real estate, stock market,
etc.) rural India has traditionally gravitated towards the yellow metal. This is substantiated by the fact
that 60% of the demand for gold in India comes from the rural market. A good monsoon result in a good
harvest and the income earned is uses to invest in gold, which is then save for the proverbial rainy day.
in case of a bad monsoon, the income falls drastically and gold comes to the rescue.

 Rupees Strength:
It must be notes that a major portion of India’s gold demand is met through imports. The reduced
purchasing power of a weak rupee leads to a fall in imports and subsequently the demand for gold. Of
course, this is characteristics of India alone as the global gold market is not affected by domestic
currency.

 Portfolio diversification:
Gold is often seen as a welcome change from this stress and risk associated with conventional
assets. It is also observed that gold generally doesn’t have any significant relationship with other
popular assets. Even when a particular asset is under market stress, gold doesn’t seem to be particularly
affected. So once penchant for investing in gold could depends volatility or stability or another asset.

 Global Movement:
Any global movement in the price of gold affect the price of yellow metal in India. This majorly
derives from the fact that India is one of the largest importers of gold and such when the import price
change due to global movement in price, the same is subsequently reflected in the price of gold at home.
Since the value of currency as well as various financial product may fall during political upheaval, gold
is seen as a safe haven by investors and such the demand and price of gold. Rise in times of political

14
 chaos as compared to peaceful times. The interest in buying the gold rises among consumer when the
confidence in the government and markets falter and as such gold is called the crisis commodity.

 Government gold reserve:

Central Bank of most major country’s hold both currency as well as gold reserves. US Federal
Reserve of the US and Reserve bank of India are two prime examples of this. When central banks of the
large country’s start holding gold reserve and procuring more gold, the price of gold goes up. This is
because the flow of cash in the market is increased while the supply of gold goes down

1.10 THE PROS OF INVESTING IN GOLD

 Inflation insurance – One reason people buy gold is to protect them from inflation. The thinking is
that if the Australian dollar gets significantly devalued, gold will retain – and even increase – its value.

 Disaster insurance – Similarly, some people regard gold as an asset that will always be in demand,
no matter how bad times get. The idea is that you will always have a valuable asset, even if financial
depression or a major war causes the economy to collapse or your home to be destroyed.

 Diversification – A lot of investors like to spread their money around, rather than putting all their
eggs in one basket. So, you might buy stocks, bonds, property and gold, figuring that if the markets
crash and your first three investments plummet in value, your gold will retain or increase its value.

 Simplicity – Buying gold coins or gold bullion is easier than picking the right stocks or property to
invest in.

 Tangibility – Some people feel uncomfortable buying assets they can’t touch – like shares or crypto
currencies – because they’re sceptical about whether an ‘electronic file’ can retain value over the long
term. So, they prefer something tangible like gold, which they believe is more likely to retain its value,
no matter what happens in the years ahead.

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1.11THE CONS OF INVESTING IN GOLD

 No yield – You can earn interest if you put your money in a term deposit, receive dividends if you invest
in shares or collect rent if you buy an investment property – but you won’t get any yield from owning
gold.

 Low capital gains – Property and shares tend to gain more value in the long term than gold. For
example, while the price of gold increased by 132.9 per cent between 1980 and 2017, the All Ordinaries
jumped by 1,133.5 per cent.

 Annoying to transact – Dealers often pocket a significant margin when buying and selling gold. Also,
authenticity is an issue. When you buy, you’ll need to be sure that you’re acquiring real gold. When you
sell, you might have to prove that you’re the genuine owner of the gold.

 Hard to store – Once you’ve got gold, what do you do with it? Put it in a bank? Hide it under the bed?

 Volatility – Gold prices can make big changes in a short amount of time. For example, prices climbed
30.6 per cent in 2010 and fell 27.6 per cent in 2013.

16
1.12 Significance of Gold in Indian Culture:
Gold has emotional value; it has a strong cultural and financial significance, which
supports demand across generations. Gold is fashioned into ornaments and jewelry and is also used as
an investment option in financial portfolios. gold is a vital part of Indians lifestyle. Over the years
Indian infatuation with gold has grown stronger and stronger, with Indians accounting for most of the
gold consumed globally. Gold in Indian history is more than an investment. It is culturally significant
metal which has found a place in India heart and homes alike.

There are few reasons which have propelled gold to a pedestal in India, a sport which it is likely to hold
on to for a long time.

 Religious connotations:
Gold is an integral part religious ceremony in India, regardless of religion. Be it
Hinduism, Sikhism, Jainism or Christianity, gold is a prominent asset across all major religion
in the country. Rising gold rate do not deter devotees from donating extravagant gold
ornaments to temple funds, a prime example being the Tirumala Temple in Andhra Pradesh,
which witness donation to the tune of tons on a year basis, regardless of gold rated in Andhra
Pradesh. It is common for people to purchase gold at different religious gathering and for
different occasions.

 Family heirloom:
Gold is a part of every Indian household and is consider a family heirloom by most
Indians. Gold jewelry and ornaments are passed on from generation to generation in a bid to
keep family legacy alive. It is common for most household to pass on jewelry from a mother to
a bride in weddings, irrespective of fact like change in design, trends or value. Gold is an
extremely sentimental part of certain tradition and continuous to remain a cherished heirloom.
Passing gold from one generation to another also helps to people save money on gold, avoiding
ever rising gold price in India.

 Golden gifts, ceremonies and weddings:

Gifting gold is considered auspicious in India, with gold gifts forming an integral part
of all ceremonies. Gifting gold enables recipients to use it fruitfully, as it is not only a key
source of money but it is also considered lucky. It is common to gift gold during wedding,
which can see brides brining in huge quantities of gold to their new homes which is considered
17
 auspicious. A gift of gold may be the highest form gifting in the country, showcasing the value
of an individual and purity of intent. Gifts of gold are common for birthdays and child births
even in smaller towns

 Status symbol:
There is no bigger status symbol than gold in India, an Indians are not shy to flaunt
it. In social setting billions of people gold is one element which can help people stand out,
literally shine in the crowd. Politicians, businessmen, actors, officials all love to show their gold
to the world, giving them new highs. Gold has been a status symbol n India since ages, right
from the time of kings and queens to the British and independent India has imbibed this into its
blood. The more gold one has the more power he/she has an indication of their ability to
purchase gold in spite of rising gold rates.

 Investment:
Gold has been considering the safest investment, a sentiment which Indians life by.
It is this property of gold as a protector against bad time which have pushed Indians to buy it as
investments. Owning gold is considered as an extremely smart choice, and is reflected in the
amount of gold Indians own. With gold price fluctuating every day, it makes sense to invent in
gold for a secure future.

1.13 Investment in Gold as an Investment Choice:

The world gold council stated that of all the precious metal, gold is the most popular as an
investment. Inventors generally buy gold as a way of diversifying risk. The gold market is subject to
speculations and volatility as are other market. Compared to other precious metals used for investment
gold has the most effective safe haven and hedging properties across a number of countries.

One in six investors choose gold as the best place to park money they wouldn’t need for more than ten
years- According to a recent Bankrate survey.

18
 The table below shows the latest data highlights by world gold council stating that there has been a
positive incremental inclination towards investment in gold between the year 2015 and 2016.

19
 Current Scenario of Gold (World Gold Council-3rd February 2017) is given below:

Gold demand rise 2% in 2016 as investment surged to four year high. The key findings of the gold
demand trend full year 2016 report were as follows:

 Overall demand for FY 2016 was 4,309 tons, up 2% compared with 4,216 tons in 2015.
 Total consumer demand FY 2016 fell by 11% to 3,071 tons, from 3,436 tons in 2015.
 Total investment demand grew by 70% to 1,561 tons in FY 2016 from 919 tons in 2015.
 Global jewelry demand was down 15% at 2,042 tons, compared with 2,389 tons in 2015.

1.14 Gold Jewelry Re-cycling:

In recent year the amount of second hand jewelry being re cycled has become multibillion-dollar
industry. The term “cash for gold” refers to a service for people to encase gold by selling their old broken or
mismatched gold jewelry to local and online gold buyers. Hence, investment is favored because of liquidity
option being near to hand.

1.15 War, Invasion and National Emergency

World has witnessed the power of gold during war, invasion and national emergency in several nation.
Currencies deflate and gold inflates in contingency and global uncertainties. Public loses its belief in the
political system and money and opt for gold as a resource.

1.15(1) Gold’s safe haven appeal

Gold’s safe haven appeal might lead investors to gold and other precious metals in terms of heightened
geopolitical tensions and war. Not only are other asset prices affected immediately in the event of war or
even the threat of it, but wars also mean excessive money printing and accelerated government spending.
It’s no surprise, then, if investors turn their attention to gold and other precious metals. We’ll see how gold
has reacted to the rumors of a war or to a run-up to war.

20
The late 1970s saw many upheavals, including the Iranian Revolution in 1978, the Iran-Iraq war in 1979, the
Soviet Union’s invasion of Afghanistan in December 1979, and the Iranian hostage crisis in 1979. As you can
see from the graph above, this period saw heightened activity in gold prices. Gold prices rose 23% in 1977,
37% in 1978, and an incredible 126% in 1979.

1.16What is the impact of Coronavirus on Gold investment and price in India?

 The coronavirus impact on markets across the globe has also affected gold, which is usually considered a
safe haven, with extreme price volatility confusing investors. Gold’s sudden price falls after hitting an
all-time high on March 9, is however not being seen by analysts as a vote against the metal, but rather a
21
 sell-off by investors seeking liquidity as they scrambled to square positions after a month of bloodbath
across stock and commodity exchanges.
 Gold, which traded at $1,674.5 an ounce on March 9, dropped to $1,477.3 on March 18, as stock
markets continued their free fall. “The initial response of investors this month was to rush to buy gold as
stocks and commodities across the board bled. However, as liquidity concerns arose, many had to sell
the metal to raise money to square up,” pointed out Amit Banerjee, an independent merchant banker
specialising in East Asian funds.
 Analysts feel that the precious metal will remain the safe haven it is, and investments made now will
fetch good returns over time. BlackRock’s Global Allocation Fund said that “with both nominal and real,
i.e., inflation adjusted interest rates in free fall, gold is well positioned to do what it is intended to do:
help insulate a portfolio. To the extent the coronavirus represents a threat to growth, gold should be a
particularly effective hedge.”
 According to the comparative analysis of asset classes in calendar year 2020 in a World Gold Council
(WGC) report, while Nasdaq fell 22.1 per cent, commodities as a group lost 26.2 per cent and emerging
markets lost 29.3 per cent as of March 18, gold lost just 1.1 per cent in value terms. “Thus far, selling
appears more concentrated on derivatives in exchanges, and over the counter. While gold-backed ETFs
have experienced outflows in recent days, flows remain positive for the year. Funds across regions have
seen $3.6 billion of net inflows in March, giving a collective total of $11.5 billion year-to-date,” the
WGC report said.

 Spot gold markets in India remained shut due to countrywide lockdown, while the precious metal was
quoting flat in the international market, according to HDFC Securities.
 In times of a crisis, investors globally view gold as a safe haven just the way they treat US government
bonds and currencies such as the US dollar, Japanese yen and the swiss franc.
 Analysts say the precious metal acts as an effective portfolio diversifier and serves as a store of value,
besides being a shield against inflation and a lender of last resort during economic uncertainties.
 Analysts said the rapid spread of coronavirus cases outside of China and its potential negative impact on
the global economy are prompting investors to take refuge in safe havens like gold. Gold prices, they
noted, have remained firm despite aggressive policy-easing measures carried out by China to shore up its
economy and moderate physical market activities.
 The investors in the country are investing in the bullion market for its safe-haven demand due to global
economic distress. The price of gold in the country opened at Rs.4,253 per gram at he month of April
and remained steady until the end of the first week of the month at Rs.4,253per gram

22
  India is the largest consumer of gold in the world and accounts for a quarter of the world’s total
consumption of gold. India uses gold primarily in the form of jewellery and secondarily for investments.
Gold rates in India change on a daily basis depending on many factors. These include the demand and
supply, global market conditions and currency fluctuations in the country.

 Gold in India is a solid instrument for investments even before the pandemic arrived. Traders in India
invest in gold bullion as it is considered a safe option. Gold prices have reached an all-time high in India
due to the pandemic, but a large part of this has been driven by depreciating rupee and increased import
duty. It must be noted that gold prices in India include 12.5% import duty and 3% GST. On the other
hand, international gold prices are much lower than the all-time high price.

 When the markets are shut and the world is facing an economic slowdown, the Government of India will
open subscriptions starting 20 April for the people to invest in Sovereign Gold Bonds. The Reserve
Bank of India will issue the SGBs on behalf of the Government of India. The SGBs will be issued in six
tranches from April to September. This will allow the investors an alternative to investing in gold with a
fixed interest of 2.5% per annum.

1.16(1) Coronavirus and Gold - Summary

Coronavirus’ impact on the markets is likely to be short-lived and the temporary impact on the stock
market is likely to be particularly negative, but the temporary impact on gold is likely to be positive.
Consequently, gold’s short-term gains might help to offset stock market’s declines. The implications are
unlikely to extent beyond the short-term, though. Once the situation is contained and the fear fades
away, the previous trends are likely to return.

1.17 Sovereign Gold Bonds scheme 2020-2021

The Reserve Bank of India will issue Sovereign Gold Bonds to the domestic investors on behalf of the
Government of India beginning 20 April offering an annual interest rate of 2.50%. The Sovereign Gold Bonds
will be issued in six tranches from April 2020 to September 2020. The Reserve Bank further stated that the
Bonds will be restricted for sale to resident individuals, HUFs, Trusts, Universities and Charitable Institutions.

23
1.17(1) SGB Minimum and Maximum limit

The minimum permissible investment in SGB will be 1 gram of gold and the maximum limit of subscription will
be 4 Kg for individuals, 4 Kg for HUF and 20 Kg for trusts and similar entities from April-March. The tenor of the
Sovereign Gold Bond will be eight years. The exit option will be given after 5 years and only on interest payout
dates.

1.17(2) SGB Six Tranches

 First Tranche (2020-2021): Series I of SGB will be open for subscription on April 20 and will close on
April 24. The SGB will be issued on April 28.
 Second Tranches (2020-2021): Series II of SGB will be open for subscription on May 11 and will close on
May 15.
 Third Tranches (2020-2021): Series III of SGB will be open for subscription on June 8 and will close on
June 12.
 Fourth Tranches (2020-2021): Series IV SGB will be open for subscription on July 6 and will close on July
10.
 Fifth Tranches (2020-2021): Series V SGB will be open for subscription on August 3 and will close on
August 7.
 Sixth Tranches (2020-2021): Series VI of SGB will be open from August 31 and will close on September
4.
The Sovereign Gold Bonds will only be sold through banks, Stock Holding Corporation of India (SHCIL),
designated post offices, and recognized stock exchanges (NSE and BSE) except Small Finance Banks and
Payment Banks.

1.17(3) How to purchase Sovereign Gold Bonds?

To purchase Sovereign Gold Bonds approach a SEBI authorised agent. Once you have redeemed the bond, the
corpus will be deposited to your registered bank account. The corpus will be deposited as per the current
market value.

24
1.17(4) Benefits of purchasing Sovereign Gold Bonds

1. The quantity for which you pay is protected.

2. The risks and costs of storing physical gold are eliminated.
3. Investors are given the market value of gold at the time of maturity of the Sovereign Gold Bonds.
4. Like physical gold, SGBs do not have making charges.

1.17(5) Things you must know before investing:

1. It must be noted that as per the Income Tax Act, 1961, the interest generated via SGBs is taxable.
2. Long-term capital gains generated are provided with indexation benefits to an individual or when
transferring the bond from one person to another.
3. The redemption price is based on the average of the closing price of 999 purity of gold in the
previous three working days and is priced in rupees.
4. You can earn a guaranteed annual interest at a rate of 2.50%.
5. After completing a time period of 5 years of investment, you can trade SGBs on the National Stock
Exchange or Bombay Stock Exchange, etc.
6. Banks accept SGBs as security against secured loans. The loan thus obtained will be gold loan after
setting the loan-to-value (LTV) ratio to the value of gold.
7. You can also invest in SGBs on the behalf of a minor.

1.17(6) Are SGBs safe?

SGBs are government securities and are considered safe. Their value is denominated in multiples of gold
grams. SGBs has witnessed a significant increase in investors, with it being considered a substitute for physical
gold.

1.17(7) Why did the Government of India introduce this scheme?

The Government of India introduced the Sovereign Gold Bond (SGB) Scheme to offer investors an alternative
to own gold. It belongs to the debt fund category and was introduced in November 2015.

25
Sovereign Gold Bond or SGB are government entities and thus are considered safe. If you are a gold investor,
then SGB is an alternative method to own gold without worrying about its security. In addition to this, a fixed
2.5% interest per annum can be availed after investing in SGB.

1.17(8) Comparing SGB with Physical Gold and Gold ETF

Particular Physical Gold Gold ETF SGB

Returns/earnings Lower than the real
return on gold due to
making
Safety Risk of theft, wear/tear
Purity The purity of gold always
remains a question
Gains LTCG after three years
As loan collateral Accepted
Less than actual return on More than actual return
gold on gold
High High
High as it is in electronic High as it is in electronic
form form
Long-term capital gain LTCG post three years.
post after three years (No capital gain tax if
redeemed after maturity
Not accepted Accepted

Storage expenditures High Minimal Minimal

Tradability or exit Restrictive Tradable on stock Can be traded and
formalities exchange redeemed from the 5th
year with the government

1.18 Strategies for investing in gold

Gold is protection. It’s insurance against inflation, currency debasement, and global uncertainty. It’s also a
great way to diversify a portfolio and it’s the ultimate in liquidity. Gold will preserve the purchasing power of
your wealth through time.

 Diversify
Gold will provide your portfolio as a counterbalance to a faltering stock market. It also gives you
insurance when inflation erodes the value of your investments, including currency and real estate.
In fact, studies have shown that even 5% investment of an equity portfolio in gold has resulted in
lower risk and higher return on investments.”That’s right: Lower risk. In general diversification will
help protect you from losing too many of your assets in the next market tumble (and another is

26
 coming bet on that). The sharp decline of stocks in the last meltdown was proof enough that
putting all of your eggs in one basket is a risky strategy.
 Spread the Risk and Lesson the Downside:-
When you buy gold, the first rule of thumb is dollar cost averaging putting a fixed amount of
money towards gold every month. This is the most effective method of investing in gold.
This helps not only lessen any downside but it also helps make the most of gold’s protection
against inflation and financial uncertainty.Even though gold has had some drops in price
over the last number of years, historically, gold goes up over time.It so happens that gold
prices at present are low. According to the World Gold Council, they’re nearly at production
threshold levels. This means that the spot price is about at what it takes to dig and process
gold out of the ground.When this happens production throughout the industry can
slowdown, supplies dwindle, and the price begins to go up again with demand.But even if
prices weren’t low, gold is still a good investment. Gold is real money. Gold is a store of
value and helps to offset the drops in currency, climbs of inflation, market tumbles, etc.
 Allocation:-
Most money managers advocate anywhere from 3%–10% in gold. More bullish managers
recommend an allocation as high as 20%. Renowned economist and author Jim Rickards is even more
liberal, he recommends having 10% of your assets in precious metals and as much as 30% in a crisis.
 A Gold IRA: -
Put simply, a Self-directed gold IRA is both an effective and flexible retirement account that
allows you to spread your assets and maximize your returns by adding gold and other precious metals
to your retirement portfolio. A gold IRA gives you more flexibility and control than your traditional
retirement account meaning you can spread your assets that much further. By spreading your assets,
you are reducing the risks of losing a large chunk of your asset value in one go. If you wish to transfer
from your traditional IRA or rollover a 401(k), there are rules and regulations involved in doing so.
These rules must be followed to the letter and all regulations complied with for the application to be
accepted. At RC Bullion our investment specialists are expert in navigating investors through the
process quickly and painlessly.

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 CHAPTER 2:- RESEARCH METHADOLOGY

Research Methodology is a systematic way to solve a problem. It is science of studying how research is to
be carried out. Essentially, the procedure by which research go about their work of describing, explaining and
predicting phenomena are called research methodology. It is also defined as the study of method by which
knowledge is gain. Its aim is to give work plan pf research. The present study is descriptive study in nature. In
this study my objective is to study various options available for investors in gold investment and to create
awareness on various forms of gold investments.

2.1 DATA SOURCE:

For fulfilling the above proposed objectives searchers will use both primary as well as secondary data.

 PRIMARY DATA: Primary data will be collected from the investors with the help of structured
questionnaire.
 Questionnaire: A structures questionnaire will be prepared and administrate to get it filled by the
respondent to gather the data about: Investors choice and preference and their decision behind choosing
gold as an investment option, also the various factor affecting will be identified by the course of the
study. Primary data are collected through survey. The questionnaire consists of two parts, first part of
the questionnaire consists of personal details. Second part of the questionnaire consist of preferred
metals, safest investment in form of gold and investors attitude towards invest in gold.
 SECONDARY DATA: Secondary data for the study will be collected through magazines, journals,
newspapers, websites, books and online resources.

28
2.2 OBJECTIVES OF THE STUDY:

The investors behavior has changes tremendously after the recession effect. India was not directly affected
with the sub-prime crisis effect which had lately hit the world. Fear has struck the mind of the investors heavily
and spending lavishly has lost its energy as people have started investing more than spending. So, it’s the time
to study the behavior of an investors and to understand his/her feelings, his/her anticipation and perception that
are related to an investment that he/she is making.

 To study the various options available for investors in gold investment.

 To study the influence of age on the investing in gold.

 To study the influence of gender on the investing in gold.

 To study the impact of income level on gold investment decision.

 To understand the perception of males and females towards gold as investment.

 To study the investors awareness on various form of gold investment.

 To study the Pros and Cons of various form of gold investment.

 To assist in creating awareness among investors on various golf investment.

 To identify the factors influencing investment choice in gold.

 To compare the investors choice for gold and other options.

 To determine the underline modal of investment choice in gold.

 To study the attitude of investors towards investment in gold.

 To identify the reason for investment in gold.

 To know the method of investment in gold market.

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2.3 SCOPE OF THE SYUDY:

 The proposes study would focus on the investment behavior and choice making gold by common
investors, which would be helpful to various organization. The study will cover other investment avenue
and will aim at determining the choice modal of a common investors. There may be some other factors
which have a dominant influence on investors choice. So, to explore those factors the study would be
done.

 The study on gold as an investment option is conducted to know the various method od investment
option available in India and also the factors affecting the investment decision of the investors. Today
gold is becoming attractive avenue in perception in investors towards investment in gold is highly
significant,

 The analysis of the factors which affect the prices of gold and the investment decisions in gold. A
comparative analysis of these factors has been done on the various parameters like Standard Deviation,
Regression; Correlation to make possible the tedious of task of analysis of these factors. Further
analyzing the factors will suggest the investors that whether it will be profitable for the investors to
invest in gold.

 The scope of the study was to get a clear view about the concept of gold as an investment option the
report covers brief description about gold market. It gives brief idea about gold market and investment in
gold

30
2.4 NEED OF THE STUDY

 With the global uncertainties & complex environmental changes, the demand for gold is increasing
across the globe; World Gold Council (2016), reported a 4% global demand increase.
 The researcher has gone through a number of research papers and articles and barely any of them
showed any relationship between gold and investment choice. So at this junction it is important to
conduct a research in this field which will be unique in nature and will be helpful for the government of
India, jewelers, investors and researchers.
 With the rising demand and investment in gold, there is a need to identify whether this investment
choice is rational, behavioral choice or rule-based choice.
 Many researchers have studied the investment choice of the investor in various investment avenues but a
very few researchers have explored this investment choices in gold. Therefore, the present study focuses
on examining the investment choices of investors in contact to gold in Indian Markets.
 An approximate 9,50,000 kilogram of gold was imported in India in 2015-16, the country is estimated to
have imported 750 tons of gold, as against 971 tons in the preceding year. This does not include the
imports done for export purpose, according to the MMTC Pamp. It contributes to the economic growth
of the country at a higher level so this area needs to be explored.

31
2.5HYPOTHESES

H1; There is no significant difference between the choice of investment and gender of the investors.

This hypothesis states hat gender of investor has no difference in their choice making which implies that men
and women have same choice wile choosing gold.

H2: There is no significant difference among the investors of different age group and their investment choice
with choosing gold

This hypothesis states that age of investor has no difference in their choice making which implies the investors
of different ages have some choice while choosing gold.

H3; There is no significant among the investors of different income groups and their investment choices.

This hypothesis states that income of investors has no difference in their choice making which implies that
investors of different levels of income have same choice while choosing gold.

H4; There is no significant between the investor’s education qualifications in choice of investment.

This hypothesis states that education qualification of investors has no difference in their choice making which
implies that investors of different educational qualification have same choice while choosing gold.

H5; There is no significant difference between the investor’s occupation and their choice of investment.

The hypothesis states that occupation of investors has no difference in their choice making which implies the
investors of different occupation have same choice while choosing gold.

32
2.6 STATEMENT OF PROBLEM.

The statement of problems is to study the investment opportunities in gold marker, methods of analysing the
price trends, utilisation of derivatives in the market, evaluating the impact of various factors affecting the gold
prices and hedging strategies used in the market.

 India most of the investors invest in gold in the form of jewellery which involves various constraints;
includes high making charges, loss of value, safety issue and storage/ locker charges. The present study
creates awareness among investors in various forms of gold investment.
 Investments in gold have number of schemes. Investor’s perception, expectation are closely related with
each other.
 Commodity market is fully influenced by the attitude and behavior of the investor.
 Today gold plays an important role in our society. In the occasion of the marriage it is an inevitable
element.
 Hence, the study has made an attempt to analyze an investors attitude and behavior towards gold
investment in Mumbai and also various investment options available to investors.

2.7 LIMITATIONS OF THE STUDY

The study confines to people at Mumbai city, hence the findings cannot be generalized.

Due to shortage of time the sample size is limited to 100 only.

The information provided by the respondents in spontaneous and they may not be consistent.

Accuracy of the primary data collected depends upon the authenticity of the information field by the
respondents of questionnaires.

33
 2.8 RESEARCH DESIGN

The study is descriptive in nature. It helps in breaking vague problem into smaller and précises problem
and emphasizes on discovering of new ideas and insights. The methodology adopted to achieve the
project objective involved descriptive research method.
The research design constitutes the blue print for the collection, measurement and analysis of data. The
research has conducted on the people who invest in gold For the selection of the sample, convenient
sampling method was adopted and an attempt has been made to include all the age groups and gender of
every class.

2.9 SAMPLE DESIGN

In this research project Descriptive research design is used. Judgement and convenience sampling
method will be used to get the information about gold investment. This method is used because
exploring of gender, age, occupation. For conducting this research, a structured questionnaire is prepared
and sample of 100 customers is taken.

2.9(1) SAMPLE SIZE-

100 CUSTOMERS

2.9(2) SAMPLE UNIT

MUMBAI

2.9(3) SAMPLING TECHNIQUE-

Convenient sampling. A convenience sample is a type of non- probability sampling method where the
sample is taken from a group of people easy to contact of to reach. For example, standing at a mall or a
grocery store and asking people to answer questions would be an example of a convenience sample. This
type of sampling is also known as grab sampling or availability sampling. There are no other criteria to
the sampling method except that people be available and willing to participate. In addition, this type of
sampling method does not require that simple random sample is generated, since the only criteria is
whether the participants agree to participate.

34
 CHAPTER 3:-LITERATURE REVIEW

Ahmed Imran Hunjra and et. al. in their study, observed the risk and return relationship in commodity markets
as well as stock market on the basis of univariate modeling approach. The asymmetric and nonlinear
relationship between risk and return was observed on the basis of GARCH- MEAN and E-GARCH modeling
approach. The most appropriate models for commodities and stock markets are reported. The overall results
indicate that Asymmetric and seasonal effect was present in commodities market and stock markets. But the
asymmetric properties and seasonal effect was most dominant in stock price risk and return relationship.

Dr. Shefali Dani and Riddhi Ambavale, in their study found that Gold and Silver are the most popular metals in
India. Investors do invest in Gold and Silver with their other investment alternatives like stocks, mutual funds,
real estate property and the like. The research is that before the year 2006, investors regularly make investment
in Gold and Silver but they reduce their investment in such metals as the prices of Gold and Silver are at hike
peak for the year 2007 and they have chosen other options from the investment. In Silver, coins of silver are
most popular among the investors. For giving bonus or appreciation on gift to the employees of the organization
on special days. From their study of the investors’ preference on investment in Gold and Silver by conducting
research through questionnaire, we came to know that investors do invest in gold and silver depend on their
income and savings with them.

Several studies focus on the relationship between gold and silver prices. Solt and Swanson3 studied the
efficiency of both gold and silver markets and found some positive dependence in their price series. Ma4
considered gold and silver as close substitutes and conjectures the equilibrium parity between gold and silver
prices in the long run. He showed that significant trading profits are possible when gold and silver prices are far
away from their equilibrium parity. In turn, he provided evidence against the weak-form efficiency in the
relative pricing between these two markets.

On the contrary, Ciner found that the stable relationship between gold and silver prices has disappeared in the
1990s. He concludes that since these two metals have different economic uses and are affected by different
economic fundamental factors, gold and silver are not substitutes for hedging against similar types of risks.

Draper, Faff et. al. portfolios that contained Gold, Silver, or platinum perform significantly better than standard
equity portfolio. Therefore, the astute investors can minimize risk while maximizing returns.

35
Sherman in his study presented that gold markets behaved efficiently- new information is quickly incorporated
into the price. Under conditioning of uncertainty many investors turn to gold because it is a “Currency without
borders”-a highly liquid and secure asset that can be accessed at any time. In times of economic distress most
asset classes tend to move in the same direction. Gold is correlated to many assets, including equities and bonds.
The economic forces that determine the price of gold are opposed to the forces that determine other financial
assets. Therefore, gold play an important role as a diversifier, acting as a stabilizing influence for investment
portfolios. Thus, a portfolio mix of equities with gold would result in a portfolio of assets moving
independently, with low correlation.

Smith8 in times of economic uncertainty attention turned to investing in gold as safe heaven. Similarly, Faff and
Chan9 reported that gold stocks played an important role as a hedge against other stocks. The authors reported
that and investment in gold provides an effective hedge against inflation and political instability.

Taylor stated that both gold and silver along with platinum had provided a short and long run hedge against
inflation.

Blose compared gold fund returns with that of gold billion. He found that all the mutual funds have a greater
standard deviation than gold Billion, indicating that the total risk for the funds is greater than for gold. Gold
Billion had a significantly negative beta, but the R 2 value was low. (0.014). He concluded that the market had a
very little, if any, impact on both gold billion and gold mutual funds. If an investor (for the purpose of
diversification) was looking for an asset which was largely uncorrelated with the market, gold or any of the
mutual funds would serve that purpose; however, gold may be marginally better in this regard than the mutual
funds.

Basher and Sadoski reported in their recent study on oil price risk that they found strong evidence that oil price
risk impacted stock price returns in emerging markets.

Twit studied a small sample of gold mining firms in Australia and found that their values were affected by gold
price changes. EI-Sharif, Brown, Burton, Nixon, and Russell found positive, often significant, relationship
between the price of oil and equity values in the oil and gas sector using data relating only to the United
Kingdom

Even though Hondroyiannis and Papapetrou reported as one of their conclusions that oil price changes explain
stock price movements in Greece and Twit found a relationship between gold prices and gold mining stocks.

Ronald C. Kettering in his study investigated the relationship between gold, oil and various international
indexes. The study resulted in showing that is a strong, positive association between the international stock
indexes. There are also significant positive relationships between oil and stock prices, while gold’s expected

36
inverse relationship with stock prices has changed over time. The positive relationships suggest that some
traditional portfolio risk techniques may no longer be valid.

Mukherjee and Nagain in their study “Dynamic relations between macroeconomic variables and the Japanese
stock market: An application of a vector error correction model” has employed the Johansen co integration test,
Vector Error Correction Model (VCEM) and found that the Japanese Stock market was co integrated with six
macroeconomic variables, namely, exchange rate, money supply, exchange rate inflation rate, industrial
production index, long term government bond rate and the short term call money rate . The results of the long
run coefficients of the macroeconomic variables were consistent with the hypothesized equilibrium relationship.

Abdalla and Murine investigated interactions between exchange rate and stock prices in the emerging financial
markets of India, Korea and Pakistan and Philippines. They found that the results for India, Korea, Pakistan
suggest that Exchange rate Granger Cause on stock prices.

Ahmed investigated the nature of causal relationship between stock prices and key macroeconomic variables
(i.e., IIP, Exports, FDI, Money Supply, Exchange Rate, Interest rate) representing real and financial sector of
the Indian economy. Using quarterly data, Johansen of co-integration indicated the presence of a long
relationship between stock prices and IIP. In case of short run BSE SENSEX caused to exchange rate.

Gogineni explored the reaction of the US stock market as a whole and of different industries to daily oil price
changes. It was found that the direction and magnitude of the market’s reaction to oil price changes depended on
the magnitude of the price changes. Oil price changes most likely caused by supply shocks had a negative
impact while oil price changes.

Ghosh, Roy, Bandyopadhyay and Choudhury examined the primary factors responsible for affecting Bombay
Stock Exchange (BSE) in India. The paper investigated the relative influence of the factors affecting BSE and
thereby categorizing them. With the help of multiple regression models and applying Factor analysis the
primary factors were traced out. The relationship between BSE SENSEX and some other important economic
factors like, Oil prices, Gold price, Cash Reserve Ratio, Food price inflation, Dollar price, Foreign Capital
Inflows has been estimated taking into consideration the Multi collinearity problem among different
independent variables and attempted to eliminate it. The results revealed that dollar price along with “Factor”
i.e.; “External Reserve” and “Factor score 2” i.e.; “Inflation inertia” are significantly affecting BSE SENSEX.
The fluctuations in SENSEX due to Oil and CRR are significant. Any rise in Oil price will create inflation
inertia which will generate stochasticity in SENSEX. The External reserves taken together will act as resource
generating Factor in attracting Foreign Capital inflows, which will make SENSEX more sensitive.

Wang and Huang analyzed the daily data and employed time series method to explore the impacts of
fluctuations in crude oil price, gold price, and exchange rates of the US dollar vs. various currencies on the

37
stock price indices of the United States, Germany, Japan, Taiwan, and China respectively, as well as the long
and short-term correlations among these variables. The empirical results showed that there exist co-integrations
among fluctuations in oil price, gold price and exchange rates of the dollar vs. various currencies, and the stock
markets in Germany, Japan, Taiwan and China. This indicated that there existed long-term stable relationships
among these variables. Whereas there was no co-integration relationship among these variables and the U.S.
stock market indices.

Kumar aimed at studying the nature of the causal relationship between stock prices and macroeconomic
variables in India. For this purpose the techniques of unit root tests, co-integration and Granger causality test has
been applied between the NSE Index and macroeconomic variables , viz., REER, Foreign exchange reserve,
balance of trade, FDI, IIP, WPI using monthly data for the period from 1st April 2006 to 31st March 2010. The
major findings of the study are that there was no co integration between Nifty and all other variables except
WPI as per the Johansen co integration test as per the Johansen co integration test. Nifty did not Granger cause
WPI and WPI also did not Granger NIFTY.

Rabi N. Mishra and G. Jagan Mohan, in their study entitled “Gold Prices and Financial Stability in India”
proved that domestic and international gold prices are closely interlinked. The paper also concludes that
implications of correction in gold prices on the Indian financial markets are likely to be muted. According to
Mahmood Yahyazadehfar and Ahmad Babaie23 , the relationship between nominal interest rate and gold price
with stock price are negative. Also, the results of Impulse-Response Functions shocks show that stock price
reaction to the shocks is very fast.

Thai-Ha Le and Younghood Chang made a study on “Dynamic Relationships between the Price of Oil, Gold
and Financial Variables in Japan: A Bounds Testing Approach” and they confirmed that the price of gold and
stock, among others, can help form expectations of higher inflation over time. In the short run, only gold price
impacts the interest rate in Japan. Overall the findings of this study could benefit both the Japanese monetary
authority and investors who hold the Japanese yen in their portfolios.

Yen-Hsien Lee, Ya-Ling Huang & Hao-Jang Yang26 examined the asymmetric long-run relationship between
crude oil and gold futures. This study employs the momentum threshold error-correction model with generalized
autoregressive conditional heteroskedasticity to investigate asymmetric co integration and causal relationships
between West Texas Intermediate Crude Oil and gold prices in the futures market. From the study it is clear that
an asymmetric long-run adjustment exists between gold and oil. Furthermore, the causality relationship shows
that West Texas Intermediate Crude Oil plays a dominant role.

Graham Smith empirically investigated the relationship between gold prices and stock price indices on US
market using Unit Root Test, Johansen’s Co Integration Test, Vector auto regression and VECM. He confirmed
that the short-run correlation between return son gold and returns on US stock price indices is small and
38
negative and for some series and time periods insignificantly different from zero. All of the gold prices and US
stock price indices are I(1). Over the period examined, gold prices and US stock price indices are not co-
integrated. Granger causality tests find evidence of unidirectional causality from US stock returns to return son
the gold price set in the London morning fixing and the closing price.

Sharma and Mahindra estimated the long-term relationship between BSE and four macroeconomic variables
consisting of exchange rates, foreign exchange reserve and inflation rate and gold price based on the secondary
data between January 2008 and January 2009 using multiple regression models. The study divulges that
exchange rate and gold price influences the stock prices in India

In another study, Nath, G.C., et al. in their paper examine the extent of integration between Foreign Exchange
and Stock market in India during the liberalization era. The results that they have derived from these techniques
differ a lot. As per the former test it reveals the sign mild-to- strong causal relationship between returns in
foreign exchange and capital markets during the study period. Whereas as per the latter test, there is a high
degree of integration between the two and there is even bi-directional as well as contemporaneous causal
relationship between them.

In case of India, Sarkar, P. et. al. found that there is no positive relationship exists between real and stock
market variables either in short run or long run during 1950-51 to 2005.

Masih, M.M. Abul and Masih, Rumi examined the dynamic linkage patterns among national stock exchange
prices of four Asian newly industrializing countries - Taiwan, South Korea, Singapore and Hong Kong. The
sample used comprised end-of-the-month closing share price indices of the four NIC stock markets from
January 1982 to June 1994. They concluded that the study of these markets is not mutually exclusive of each
other and significant short run linkages appear to run among them.

In a similar study by Bae, K, Cha, B, and Cheung, Y the researchers tried to show the information transmission
mechanism that operates for stocks which are dually listed. This has helped in understanding the channel of
transmission of information that makes the exchanges dependent on each other. 3

Poshakwale, Sunil examined the random walk hypothesis in the emerging Indian stock market by testing for the
nonlinear dependence using a large disaggregated daily data from the Indian stock market. The sample used was
38 actively traded stocks in the BSE National Index. He found that the daily returns from the Indian market do
not conform to a random walk. Daily returns from most individual stocks and the equally weighted portfolio
exhibit significant non-linear dependence. This is largely consistent with previous research that has shown
evidence of non-linear dependence in returns from the stock market indexes and individual stocks in the US and
the UK.

39
Noor, AzuddinYakob, Diana Beal and Delpachitra, Saratha studied the stock market seasonality in terms of day-
of-the-week, month-of-the year, monthly and holiday effects in ten Asian stock markets, namely, Australia,
China, Hong Kong, Japan, India, Indonesia, Malaysia, Singapore, South Korea and Taiwan. He concluded that
the existence of seasonality in stock markets and also suggested that this is a global phenomenon.

Bunia and Mukti in their study presented the gold price and stock market moves in an opposite direction when
the economy is in a downturn and stock markets are going down, investors tend to park their funds in gold and
wait out the storm. As the gold price rises, Indian investor stand to invest less in stocks, causing stock prices to
fall. This study made on the co- movements of four macro-economic variables in terms of gold price, stock
price, reflex change rate and the crude oil Price based on 21 years data using econometric models for the periods
from January 1989 To September 2009. The study exposes that there is a co-integration relationship between the
variables

Yahyazadehfar and Babayev have made a Study to examine the impact of macroeconomic variables such as
interest rate, house price and gold price on stock price in capital market of Iran based on monthly data from
March 2001 to April 2011 using VAR and Johansen-Julius model. From the study it is clear that most of
fluctuation in stock price can be recognized to itself, nevertheless among the selected variables, the house price
has main role on stock price fluctuation.

Kaliyamoorthy and Parthiv have made a study to examine the relationship between gold price and stock market
for the period from June 2009 to June 2010. They prove that there is no relationship with the stock market and
gold price and stock market is not aground for rising gold price.

Sharma and Dasgupta has made a study to examine the long-run and short-run relationships between SENSEX
and four key macro-economic variables (wholesale price index, index of industrial production, exchange rate
and call money rate) of Indian economy by using monthly data from April, 2007 to March, 2012 with the
application of financial econometrics. Empirical results of the study showed that there are no short-run causal
relationships between SENSEX and four macro-economic variables but confirmed long-run relationships
between BSE SENSEX with index of industrial production and call money rate.

A. Vinayagamoorthy and K. Senthil Kumar in their study titled “An analysis of Postal Investment and Small
Savings”, have shown that mobilization of domestic financial resource has remained a major concern in many
developing countries. Despite the variety of vehicles that are intended to mobilize and allocate financial
resources, only very few offer strategies for meeting the needs of poor and lower income people. Savings are
increasingly beings acknowledged as a powerful tool for poverty reduction. Postal savings funds play a
significant role in financing public debt and in a number of countries, the funds are intermediated through a
variety of policy based financial institutions with developmental objectives, returning the funds to the direct

40
benefits of the community of savers. Savings is the excess of income over consumption expenditure. Savings
are meant to meet contingencies and raise standard of living of individual savers.

N. Kathrine A. Makala in his study “Women Investors” Perception Towards Online Trading In Tamilnadu With
Special Reference To Coimbatore District” shows that a good financial system provides the intermediation
between savers and investors and promotes faster economic development. An investment share requires a
careful evaluation of factors related to the economy, industry and the company. This analysis is called
fundamental analysis. An investor is surrounded by many factors in her consideration of making investments.
She is interested in liquidity of her assets. She is also interested by the fact that there is an increasing number of
women working in the organization. i. To identify the demographic profile of women investors. ii. To identify
the factors flouncing the women investors while making investment. iii, To suggest suitable measure to protect
the interest of women investors. In this study the researcher used Descriptive research, which is concerned with
describing the characteristics of a particular individual or of a group. The primary data have been collected from
women investors. The data were collected using interview schedule method. The interview schedule for women
investors is prepared in such a way that they are able to express their opinions freely and frankly. In this
research the researcher has selected Coimbatore District. There are many sample designs from which the
researcher chooses in this study Convenience Sampling design. In order to find out association between factors
associated with financial decision-making of women investors, two- way table according to their factor group
was framed. Chi-square test is applied to them to find out the association between the selected variables and
financial decision-making perception of women investors. The data collected are based on the questionnaire the
results of which will vary according to the opinions of individuals. The study is based upon prevailing investor’s
behavior. The women investor may change according to time, fashion, technology, development etc. It could be
seen from this that the calculated value is less than the table value at 5% level thus letting the null hypothesis be
accepted. Hence it is clear that there is no association between savings per month and time taken for investment
decision. Basic knowledge must be given to the investors about all types of investments, so that the investor can
make a better choice that best suits their investment plan

R. Ganapathi and S. Abu Malar in their studied Investors Attitudes towards Post office Deposit Schemes. The
post Office has long been known as a medium to inculcate the habit of thrift and savings among the agricultural
workers. But over time, its role has changed and it has grown to become one of the best avenues to channel
investment from even the wealthy investors and use them fruitfully in nation building activities. There has been
introduction of several types of deposit schemes that cater to the differing needs of different classes of investors.
They are well-known for their tax saving schemes, high interest rates and the safety and liquidity that they offer.
This has enabled them to compete successfully with the other avenues of investment available to investors like
commerce, etc. This study is an attempt to identify the awareness, preference and attitudes of investors towards
various deposit schemes offered by the Post Office among 300 respondents of the Coimbatore District.

41
V.K. Shoshana and Jayalakshmi in their study titled “Investor awareness and Preferences - a Study” have
examined the level of investor awareness regarding investment options and investment risks. The analysis
revealed that investment in real estate/property is preferred by majority of the respondents. The second most
preferred investment is bank deposits. Awareness about investment options and risks are high among old aged,
highly educated and those who are professional by occupation.

Srinivasan R in his study titled “Investors Protection: A study on Legal Aspects” attempted to point out lapses
in the various legal provisions

which were meant for safeguarding the interest of investors in Corporate Segment. It had been observed that the
capital market has emerged as a major source of finance for Indian corporate sector and also served as a
gateway to the investors to employ their savings. His study was to identify the avenues available to the investing
community and examine the adequacy of various protective measures in the existing statues and conducted the
survey to elicit investors’ opinion.

Dash R.K. and Panda J in their paper titled “Investors’ Protection: An analysis” have critically examined the
need for investors’ protection. They found that unincorporated bodies and Nidhi’s (Mutual benefit funds) whose
deposit acceptance activities did not come under the guidelines of the Reserve Bank of India shook the
investor’s confidence for the past several years. They stated that the poor growth level, dearth of innovative
schemes, poor marketing and unsatisfactory investor servicing etc. were the reasons for the low level of
confidence in the minds of the investors.

Gaurav Kara, Prashant Kumar Mishra and Manoj Kumar Dash titled “Factors Influencing Investment Decision
of Generations in India: An econometric Study” aimed at gaining knowledge about key factors that influence
investment behavior and ways these factors impact investment risk tolerance and decision-making process
among men and women and among different age groups. The individuals may be equal in all aspects, may even
be living next door, but their financial planning needs are very different. It is by using different age groups
along with Gender that synergism between investors can be generated. In this context, demographics alone no
longer suffice as the basis of segmentation of individual investors. Hence keeping this in mind, the present study
is an attempt to find out factors which affects individual investment decision and Differences in the perception
of Investors in the decision of investing on basis of Age and on the basis of Gender. The study concludes that
investors’ age and gender predominantly decide the risk-taking capacity of investors.

Singh and Chandler pointed out that since interest rates on investments like public provident fund, national
savings certificate, bank deposits, etc., are falling, the question to be answered is: What investment alternatives
should a small investor adopt? Direct investment in capital market is an expensive proposal, and keeping money
in savings schemes is not advisable. One of the alternatives is to invest in capital markets through mutual funds.
This helps the investor avoid the risks involved in direct investment. Considering the state of mind of the
42
general investor, this article figured out the preference attached to different investment avenues by the investors;
the preferences of mutual funds scheme over others for investment; the source from which the investor gets
information about mutual funds; and the experience with regard to returns from mutual funds. The results
showed that the investors considered gold to be the most preferred form of investment, followed by NSC and
post Office schemes. Hence, the basic psyche of an Indian investor, who still prefers to keep his savings in the
form of yellow metal, is indicated. Investors belonging to the salaried category, and in the age group of 20-35,
years showed inclination towards close-ended growth (equity-oriented) schemes over the other scheme’s types.
A majority of the investors based their investment decision on the advice of brokers, professionals and financial
advisors. The findings also revealed the varied experience of respondents regarding the returns received from
investments made in mutual funds.

Gnana Design C in his study titled “Investors’ Perception towards Equity Share Investment – An Empirical
Study” has examined the investment pattern of the equity investors and the problems of equity share investors in
primary and secondary market. The analysis revealed the attitude and perception of the investors towards equity
share investment. The study reveals the demographic profile of the investors. Most of them prefer balanced risk
and prefer to monitor their investments daily. It is clear that speculative value is the main factor to make
investments in equity shares. The main problems faced by the equity share investors are non-receipt of share
certificate and delay in payment. Investors can be induced to invest more in equities, provided measures are
taken to overcome the above said problems.

Krishnamurthy Suresh in an analysis of popular perceptions has said that retail investors swarmed back to the
stock markets in the year 2003-04. The investments of households in shares and debentures rose by a paltry 8.6
per cent of Rs. 5,847 crores in 2003-04. Households had deposited Rs.1,69,000 crore in bank deposits while
investments in small savings rose 19 percent. The data suggest that in 2003-04 the household investor had
turned extremely conservative.

Schwarzkopf pointed out that the attraction effects occur when an inferior item changes a decision-maker’s
perception of the relationship between other available alternatives, contrary to the expectations of rational
decision-making. This study presented the first evidence that this affects which has appeared persistently in
consumer research, can influence investment decisions. Results of an experiment conducted on graduate
students with investing experience or interest showed that the investor’s perceived values of reported financial
or non-financial performance, quality of earnings, and information source reliability were subject to trade-offs
and can be altered by the composition of the decision set, rather than by any intrinsic changes in the investment
candidate itself.

43
Karthikeyan has conducted research on Small Investors' Perception on Post Office Saving Schemes and found
that there was significant difference among the four age groups, in the level of awareness for Kisan Vikas Patra
(KVP), National Savings Schemes (NSS and Deposit Scheme for Retired Employees (DSRE), and the overall
score confirmed that the level of awareness among investors in the old age group was higher than in those of the
young age group. No difference was observed between male and female investors except for the NSS and KVP.
Out of the factors analyzed, necessity of life and tax benefits were the two major ones that influence the
investors both in semi-urban and urban areas. Majority (73.3 per cent) of investors of both semi-urban and urban
areas were very much willing to invest in small savings schemes in future provided they have more for savings.

After reviewing various literatures, the researcher has come to know that no studies were found on the chosen
topic. To fill the gap, it is necessary to undertake a Study on the Risk Return Analysis of Bullion and Equity
Market and hence this study.

44
 CHAPTER :- 4

DATA ANALYSIS INTERPRETATION & PRESENTATION

Data interpretation refers to the implementation of processes through which data is reviewed for the purpose of
arriving at an informed conclusion. The interpretation of data assigns meaning to the information analyzed and
determines its signification and implications.

The importance of data interpretation is evident and this is why it needs to be done properly.

Data is very likely to arrive from multiple sources and has a tendency to enter the analysis process with
haphazard ordering. Data analysis tends to be extremely subjective. That is today, the nature and goal of
interpretation will vary from business to business, likely correlating to the type of data being analyzed. While
there are several different types of processes that are implemented based on individual data nature, the two
broadest and most common categories are ―quantitative analysis‖ and ―qualitative analysis‖.

Yet, before any serious data interpretation inquiry can begin, it should be understood that visual presentations of
data findings are irrelevant unless a sound decision is made regarding scales of measurement. Before any
serious data analysis can begin, the scale of measurement must be decided for the data as this will have a long-
term impact on data interpretation ROI.

After the data collection it was compiled, classified and tabulated manually and with help of computer. Then the
task of drawing inferences was accomplished with the help of percentage graphic method.

45
 1. GENDER

GENDER

42%

58%

MALE FEMALE OTHERS

CHOICES COUNT PERCENTAGE

MALE 58 58%

FEMALE 42 42%

OTHERS 0 0

TOTAL 100 100

INTERPRETATION
From the above data we can analyze that out of 100 respondents’ number of male respondents are 58 and
female respondents are 42 and others is 0.

46
 2. AGE GROUP?

AGE GROUP
5% 24%
4%

67%

BELOW 20 YEARS 20-30 30-40 40-50 MORE THAN 50

CHOICES COUNT PERCENTAGE

BELOW 20 YEARS 24 24%
20-30 67 67%
30-40 5 5%
40-50 4 4%
MORE THAM 50 0 0
TOTAL 100 100

INTERPRETATION
From the above we can analyze that out of 100 respondents 24% are below 20 years. 67% are between
20-30 years. 5% are between 30-40 years. 4% are between 40-50 years. And 0 respondents are more
than 50 years.

47
 3. Qualification

QUALIFICATION
11%

44%

42%

3%

GRADUATE POST GRADUATE UNDER GRADUATE OTHERS

CHOICES COUNT PERCENTAGE

GRADUATE 44 44%
POST GRADUATE 3 3%
UNDER GRADUATE 42 42%
OTHERS 11 11%
TOTAL 100 100

INTERPRETATION
From the above data we can analyze that out 100 %, 44% are graduates. 3% are post graduate. 42% are
under graduates and 11% of the respondents are qualified in different streams.

48
 4. OCCUPATION

OCCUPATION
6% 24%
4%

66%

SALARIED STUDENT BUSINESS HOUSEWIFES RETIRED

CHOICES COUNT PERCENTAGE

SALARIED 24 24%

STUDENT 66 66%

BUSINESS 6 6%

HOUSEWIFES 4 4%

RETIRED 0 0

TOTAL 100 100

INTERPRETATION
From the above data we can analyze that out of 100 respondents 24% are working class. 66% are
students. 6% are doing business. 4% are housewife’s and there is no one who is retired.

49
 5. ANNUAL INCOME

GOLD
4%
5%

24%

67%

UPTO 2,50,000 2,50,000-3,50,000 3,50,000-4,50,000

4,50,000-5,00,000 MORE THAN 5,00,000

CHOICES COUNT PERCENTAGE

UPTO 2,50,000 67 67%

2,50,000-3,50,000 24 24%

3,50,000-4,50,000 04 4%

4,50,000-5,00,000 0 0

MORE THAN 5,00,000 5 5%

TOTAL 100 100

INTERPREATAION
From the above data we can analyze that 67% have income up to 2,50,000. 24% have income between
2.50,000-3,50,000. 4% have income between 3,50,000-4,50,000. 0 respondents have income between
4,50,000-5,00,000 and 5% of the respondent’s income is more than 5,00,000.

50
 6. DO YOU HAVE KNOWLEDGE ABOUT GOLD INVESTMENT?

GOLD
11%

89%

YES NO

CHOICES COUNT PERCENTAGE

YES 89 89%
NO 11 11%
TOTAL 100 100

INTERPRETATION
From the above data we can analyze that out of 100 respondents 89% have knowledge about e-banking
and 11% don’t have knowledge about e-banking.

51
 7. DO YOU OR YOUR FAMILY MEMBERS INVEST IN GOLD?

GOLD
12%

88%

YES NO

CHOICES COUNT PERCENTAGE

YES 88 88%
NO 12 12%
TOTAL 100 100

INTERPRETATION
From the above data we can analyze that 88% of the respondents said yes to above question and 12%
said no to above question.

52
 8. IF YES, WHAT IS THE MOST PREFERRED FORM OF INVESTING IN
GOLD?

GOLD
17%

47%

27%

9%

ETF GOLD MUTUAL FUND E-GOLD COINS AND BARS

CHOICES COUNT PERCENTAGE

EXCHANGE TRADED 17 17%
FUND(ETF)
GOLD MUTUAL FUND 27 27%
E-GOLD 9 9%
COINS AND BARS 47 47%
TOTAL 100 100

INTERPRETATION
From the above data we can analyze that 17% prefer investing in ETF. 27% prefer to invest in gold
mutual fund. 9% feel to invest in e-gold. 47% prefer investing in coins and bars.

53
 9. DO YOU THINK INVESTING IN GOLD IS THE SAFEST OPTION?

GOLD
8%

92%

YES NO

CHOICES COUNT PERCENTAGE

YES 92 92%

NO 8 8%

TOTAL 100 100

INTERPRETATION
From the above data we can analyze that 92% think investing in gold is the safest option and 8% think
investing in gold is not the safest option.

54
 10.IF YES WHICH IS THE MOST SAFEST FORM FOR GOLD
INVESTMENT?

GOLD
16%

46%

30%

8%

ETF GOLD MUTUAL DUND E-GOLD COINS AND BARS

CHOICES COUNT PERCENTAGE

EXCHANGE TRADED 16 16%

FUND(ETF)

GOLD MUTUAL FUND 30 30%

E- GOLD 8 8%

COINS AND BARS 46 46%

TOTAL 100 100

INTERPRETATION
From the above data we can analyze that according to the respondents 16% feel ETF as the safest form
of gold investment. 30% feel gold mutual fund as safest form. 8% prefer e-gold as safest form of
investment. 46% feel coins and bars as safest form of investment.

55
 11.DO YOU THINK GOLD INVESTMENT HAS INCREASED THE
ECONOMIC GROWTH?

GOLD
21%

71%

YES NO

CHOICES COUNT PERCENTAGE

YES 71 71%
NO 29 29%

TOTAL 100 100

INTERPRETATION
From the above data we can analyze that 71% think gold investment has increase the economic growth.
29% think that gold investment has not increase the economic growth.

56
 12.FOR HOW MUCH PERIOD OF TIME WILL YOU PREFER GOLD AS AN
INVESTMENT?

GOLD
20%

37%

43%

SHORT TERM LONG TERM MEDIUM TERM

CHOICES COUNT PERCENTAGE

SHORT TERM 20 20%

LONG TERM 43 43%
MEDIUM TERM 37 37%
TOTAL 100 100

INTERPRETATION
From the above data we can analyze that 20% prefer gold for short term. 43% prefer gold for long term.
37% prefer gold for medium term.

57
 13.WHICH IS THE MOST PREFERRED INVESTMENT OPTION AMONG
THE 4 METALS? (RATE THE METALS)
50%
45%
45%

40%
37%
35% 34%
35%
32%
29% 30%
30%
25%
25% 23% 23%
21%
20%
16%
15%
10% 10%
10%
6% 6% 5% 7%
5% 3% 3%

0%
GOLD SILVER PLATINUM DIAMOND
RATINGS1 RATINGS 2 RATINGS 3 RATINGS4 RATINGS 5

RATING GOLD SILVER PLATINUM DIAMOND

RATING 1 25% 10% 37% 21%

RATING 2 3% 45% 23% 32%

RATING 3 3% 23% 29% 30%

RATING 4 35% 16% 6% 10%

RATING 5 34% 6% 5% 7%

TOTAL 100 100 100 100

INTERPRETATION
From the above data we can analyze that in Rating 1- gold has got 25%, silver 10%, platinum 37%,
diamond 21%. In Rating 2 gold has got 3%, silver 45%, platinum 23%, f diamond 32%. In Rating 3 gold
has got 3% silver 23%, platinum 29%, diamond 30%. In Rating 4 gold got 35% silver 16%, platinum
6%, diamond 10%. In Rating 5 gold got 34%, silver 6%, platinum 5% and diamond 7%.

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 14.WILL YOU RECOMMEND PEOPLE TO INVEST IN GOLD?

GOLD

21%

2%

77%

YES NO MAYBE

CHOICES COUNT PERCENTAGE

YES 77 77%

NO 2 2%

MAYBE 21 21%

TOTAL 100 100

INTERPRETATION
From the above data we can analyze that 77% will recommend others to use gold as an investment. 2%
say that they will not recommend others to invest in gold. 21% may or may not recommend others to
invest in gold.

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 CHAPTER:-5

FINDINGS & SUGGESTIONS OF THE STUDY

5.1 FINDINGS

 The above graphic depicts that out of 100% gender, the no of male is 58% and female is 42%
 The above graphical also states respondents’ gender, occupation, annual income and education
qualifications.
 The above pie chart shows us that the 67% are the highest number of respondents whose age group lie
between 20-30 as compared to other age groups.
 The age group of20-30 are more interested in gold investment.
 The above pie chart also tells us that 44% of the respondents are graduate which is the highest.
 Through above pie chart we also come to know that out of 100 respondents 66% of the respondents are
students,
 Through above pie chart we also to come to know that majority of 67% of the respondent’s annual
income is only up to 2,50,0000.
 Through the above pie chart, we also come to know that us that that a very high proportion of
respondents are aware of gold investment.
 We also can analyze from the above pie chart 88% of respondent's family are invest in gold and 12% of
respondent's family are not aware of Gold investment.
 Out of the 47% of the respondents prefered Coins and Bars. Out of them majority 27% of the
respondents prefered Gold Mutual Fund as an investment in Gold.
 Out of the 17% of the respondents prefered ETF. And 9% of the respondents prefered E-Gold as an
investment option.
 Through the above pie chart, we can also analyze that majority of 92% of the respondent think that the
Gold is the safest option in the market for investment. And 8% of the respondents think that Gold is not
the safest option for the investment.
 From the above pie chart we also came to know majority 46% respondents think that the Coins and Bars
are the safest form of Gold investment. And 30% of the respondents think that Gold Mutual Fund is the
safest form of Gold investment. 16% respondents think that ETF is the safest form of investment. And
rest of the 8% respondents think that E-Gold is the safest option for investing in Gold.
 Majority of 71%of the respondents feel that the Gold investment can increase the economy.And 29% are
not sure that the Gold investment can increase the economy.

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 43% of the responses feel that the Gold investment is suitable for long term investment. And 20%
responses feel that the Gold investment is suitable for short term investment. 37% of the respondents
feel that the Gold investment is more suitable for medium term investment.
 From the above pie chart of table, no 13 in that we can see that Gold has the highest ratings.
Respondents feel that Gold is the most preferred metal for investors for investment. Gold has got 69% of
the ratings as compared to ratings of the other metals. And Silver has got 22% ratings of the respondents
feel that the Silver is the second option for investment after Gold. And platinum has got 11% of the
ratings and Diamond has got 17% of the ratings.
 Looking at the pie chart of no, 14 we can see that majority of the respondents that means 77% of the
respondents will surely recommend others to investing in gold , while 21% of the respondents are not
confirmed that may recommend others or not 2% of the respondents may not recommend others because
they do not think that the Gold investment is the good investment option in the market.

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5.2 Suggestion:

 It is suggested for investors to purchase gold jewelry with the known jewelry makers or the standard retail
outlets where making charges are comparatively lower.
 Purchasing gold bullion or gold coins attracts service tax and at the time of selling will not get good returns.
It is suggested for investors not to purchase gold coins or gold bullions for shorter period. Holding gold
coins or gold bullions foe longer period is suggestible.
 It is suggestible for investors to invest in gold ETF where possibilities of losses or limited. EFT are available
at easy and it does not need high knowledge, as it is very easy trading mechanism.
 It is suggestible for small investors should not enter Futures and Options without proper knowledge on
trading and risk management strategies. Although Futures and Options provide high exposure for traders it
involves high degree of risk.
 It is suggestible for investors to go through offer documents, scheme objectives, performance analysis
through experts before investing in mutual funds.
 Gold is very sensitive metal because the price of gold determined from the international activities.
Recommendation to the investors of gold is that excessive reliance on trading strategies to generate return
can be dangerous and counter productive.
 Return from buy and hold strategy should be more than sufficient to compensate for the inherent volatility.
 A reasonable allocation in a conservative, diversified portfolio should be 0 to 3% during a gold bear market
and 5 to 10% during a bull market.
 As an investor one should look technical chart like candle stick, line graph, bar chary. In candle stick one
should look for the resistance and support level of the price where he will able to judge the range in which
price lies, there are different formations in candle stick like ascending triangle, descending triangle,
systematic triangle on which one should also look for the breaking or high of the price so that he will be able
to take decision were to enter and exit.
 In my view most attractive investment in gold is through bars and coins. Bars and coins is easy way of
purchasing gold and it has high liquidity option and it helps during the crises phase.
 For being on the safer side an investor should always enter into market with hedging or arbitraging option
because that will assure the investors with a reasonable profit which turn involves low risk.

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Conclusion: -

Gold is a good investment. It’s a sound investment. More importantly, gold-as an investment-offers you tangible
wealth that you can hold in hand and that has intrinsic value based on

It’s weight, and practical usage. Inflation erodes the value of the Dollar year after years, whilst gold remains one
of the single best investment options, year after year.

REGAL ASSET have remained a leading name in investment options due to their sheer quality and range of
their gold, silver and platinum which is sought after by US investors in particular. Use them as a model for what
to look for in any gold investment dealer and you cannot go wrong.

Investment in gold, be it as coins, gold bullion bars or as limited edition proof coins, has historically been
proven to work as a solid and stable financial strategy that can proof your wealth against any financial storm.
Today there are a staggering array of investment options for anyone looking to increase his or her wealth
substantially, and most, if not all, come with a varying element of risk. Gold is the least risky option over time,
and while gold price can dip, this is always a short-term ‘‘Blip’’ if you will, with gold always rebounding
strongly to reach even greater highs. Gold has always increased consistently in value, and remains strong when
confidence in paper currency falters.

The beauty of investing in gold, is that it is imminently attractive attracttive to buyers, and is as good, if not
better, as cash, but unlike cash, gold has never been undermined by inflation. Paper money has no value other
than that decided by various financial mechanism: gold holds value not just as currency but with a wealth of
practical application: gold holds value not just as currency but with a wealth of practical application too
numerous to detail. Suffice to say, gold is not just a pretty hunk of metal but a valuable component of industry,
from scientific, to medical, and beyond.

By choosing to invest in gold, you are choosing to allow your assets to keep pace with future development,
rather than allowing their value to hinge on the past. Your wealth will grow built on developing and innovation,
rather than conservation. By taking steps to keep your financial portfolio as a current concern, you take steps to
secure your future in a very relevant way.

From the above data it can be recommended that gold price are rising consistently, so it is recommended that
investment made in gold is completely beneficial and safe.

In the current market scenario of high volatile, rapidly changing market place, various avenues for investment in
gold are creating the confusion among investors. As per various studies 16,000 tons of gold is there in India
household predominantly in the form of jewelry. There are various alternatives available for investment in gold
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through option like jewelry, coins, bullions, ETF, mutual funds, E-gold etc. The present study ‘A study on
various forms of gold investment’ tries to study forms of gold investment available to investors. The objective
of the study is to understand the various investment option for investors, factors needs to be aware of and know-
how of investing in gold, pros and cons of various form of investment and to assist investors in creating
awareness about various gold investment options. For the purpose of study the primary data and secondary data
has been collected. Primary data consist of questionnaire and secondary data through website, research papers
and magazines. Based on the research it is found that many investors still prefer jewelry, gold coins and gold
bullion bars forms of investment and prefer to invest in ETF and Futures and options which gives more profit
and easy from of investment.

The problems facing the world today are not going to disappear overnight. In this uncertain era of globalization
and increasing in coronavirus pandemicit is imperative that we all be proactive to protect our wealth and health
and secure a future for our families. For those who have experienced severe losses in their investments it is even
more critical to take action now. It is never too late.

No investment is a sure thing, and no single investment strategy is right for everyone. However, experts agree it
is wise to include gold investments in every portfolio as a hedge against inflation and declining value in
mainstream investments.

64
 Bibliography

www.sbcgold.com

www.alternativeinvestmentcoach.com

www.telegraph.co.uk

www.smh.com.au

www.moneycontol.com

www.gold-traders.com

www.macrotremds.net

http://gold.approximity.com/gold_FAQ.html

http://profit.ndtv./news/your-money/article-investing-in-gold-7-facts-you-should-know-317318.percent

About Gold-ETF’’,nsegold.com

Gold: A commodity like no other’’, World Gold Council.Gold.org

Tiddie.com, An Introduction To Gold As An Investment, 26th May 2013

65
 ANNEXURE

1. NAME

2. GENDER
o MALE
o FEMALE

3. AGE GROUP
o BELOW 20
o 20-30
o 30-40
o 40-50
o 50 above

4. EDUCATION
o GRADUATE
o POST GRADUATE
o UNDER GRADUATE
o OTHERS

5. OCCUPATION
o SALARIED
o BUSINESS
o STUDENT
o HOUSEWIFE
o RETIRED

6. ANNUAL INCOME
o UPTO 2,50,000
o 2,50,000-3,50,000

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 o 3,50,000-4,50,000
o 4,50,000-5,00,000
o MORE THAN 5,00,000

7. DO YOU HAVE KNOWLEDGE ABOUT GOLD INVESTMENT?

o YES
o NO
8. DO YOU OR YOUR FAMILY MEMBERS INVEST IN GOLD?
o YES
o NO
9. IF YES, WHAT IS THE MOST PREFERRED FORM OF INVESTING IN GOLD?
o EXCHANGE TRADED FUND(ETF)
o GOLD MUTUAL FUND
o E-GOLD
o COINS AND BARS
10. DO YOU THINK INVESTING IN GOLD IS THE SAFEST OPTION?
o YES
o NO
11. IF YES, WHICH IS THE MOST SAFEST FORM FOR GOLD INVESTMENT?
o EXCHANGE TRADED FUND(ETF)
o GOLD MUTUAL FUND
o E-GOLD
o COINS AND BARS

12. DO YOU THINK GOLD INVESTMENT HAS INCREASE THE ECONOMIC GROWTH?
o YES
o NO

13. FOR HOW MUCH PERIOD OF TIME WILL YOU PREFFERED GOLD AS AN INVESTMENT?
o SHORT TERM

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 o LONG TERM
o MEDIUM TERM

14. WHICH IS THE MOST PREFERRED INVESTMENT OPTION SMONG THE 4 METALS?
(RATE THE METALS).

GOLD
SILVER
PLATINUM

DIAMOND

15. WILL YOU RECOMMEND PEOPLE TO INVEST IN GOLD?

o YES
o NO
o MAYBE

68