How can NRI invest in gold online in India?

NRI Investment in Gold

In today’s interconnected world, investment opportunities are available across borders, allowing even Non-Resident Indians (NRIs) to explore a plethora of investment avenues in their home country. Among these avenues, gold has had a special place in every Indian’s heart. With the advent of fin-tech, NRIs now have convenient and accessible ways to invest in gold sitting anywhere in India.

This article serves as a comprehensive guide, shedding light on the various online investment avenues available to NRIs seeking to invest in gold in India. We will explore the key methods that NRIs can utilize to invest in gold online, highlighting the advantages and considerations associated with each approach. We will explore the options available for NRIs to invest in gold and delve into the specifics, empowering NRIs to make informed investment decisions aligned with their financial goals.

Additionally, we try to address the regulatory framework governing NRI investments in gold in India. Understanding the guidelines set by the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) is crucial to ensure compliance and a smooth investment experience.

Before we look at the avenues available for NRIs to invest in gold, let us first understand why gold should be a part of everyone’s portfolio.

Why NRI should include gold in your portfolio?

Including gold in a portfolio can provide several potential benefits for an investor. Here are some reasons why an individual might consider including gold:

Diversification: Gold has historically had a low correlation with other asset classes such as stocks and bonds. Adding gold to a portfolio can help reduce overall portfolio risk and increase diversification. When other assets decline in value, gold may hold or increase its worth, potentially offsetting losses.

Hedge Against Inflation: Gold is often seen as a hedge against inflation. Inflation erodes the purchasing power of fiat currencies, but gold has maintained its value over time. By holding gold, investors can potentially protect their wealth from the effects of inflation and ensure that they have an asset that retains its worth.

Preserving Wealth During Market Turbulence: Gold is considered a safe haven asset during times of economic and financial uncertainty. It tends to perform well during periods of market turbulence, geopolitical tensions, or economic crises. Including gold in a portfolio can help mitigate the impact of market volatility and serve as a buffer against potential losses.

Store of Value: Gold has a long history of being recognized as a valuable asset. It has intrinsic value and can serve as a store of wealth. Unlike paper currencies, which can be subject to depreciation or even collapse, gold retains its value and is accepted globally. Including gold in a portfolio provides a tangible and reliable store of value.

Options for NRIs to Invest in Gold

#1 Physical Gold

As an NRI (Non-Resident Indian), you have several options for investing in physical gold. Below are a few points to note:

Get Familiar with the Regulations: Familiarize yourself with relevant regulations applicable in your home country as well as in India. Ensure that you comply with all the legal requirements.

Purchase from a Reliable Source: Identify a reliable source from where you can purchase physical gold. You can consider reputable online stores, banks, jewelry stores, etc. that deal with gold bullion or gold coins. Ensure that the gold you purchase meets the required purity standards. Obtain proper invoices or certificates of authenticity and ensure all necessary paperwork is in order.

Research Gold Prices: Stay informed about the current gold prices in the international and Indian markets. This will help you make an informed decision on when to purchase gold based on price fluctuations.

Determine the Most Suitable Form of Gold: Decide whether you want to invest in gold jewelry or gold coins. Each form has its pros and cons, so research each type before making a decision. Gold jewelry is subject to making charges as high as 30%-35%, which is lost when you go to sell it with a jeweler. However, these gold ornaments have usability value as against gold bullion or coins.

Storage of Physical Gold: Decide how you will store your physical gold. You can choose to store it in a secure vault provided by the dealer, a bank’s safe deposit box, or a private secure storage facility. Evaluate the costs and security measures associated with each option.

Insurance: Consider getting insurance for your physical gold to protect against theft, loss, or damage. Consult with insurance providers to understand the coverage options available.

Repatriation: If you plan to take the gold out at a later stage, ensure that you comply with the relevant regulations and obtain the necessary permissions or documentation for repatriation.

Where to Sell?: Research the marketplaces or platforms where you can sell it at a fair price in advance. This will help you avoid spending time doing research at a later stage when you intend to sell the gold.

Tax Considerations: Understand the tax implications of owning and selling physical gold both in your home country and in India. Consult with a tax advisor to ensure compliance with tax laws.

#2 Gold Mutual Funds

Gold mutual funds in India are investment schemes that primarily invest in gold-related assets, including physical gold, gold ETFs and shares of companies involved in gold mining or production. These funds are managed by asset management companies (AMCs) and offer individuals the opportunity to invest in gold without directly owning and storing the physical metal.

The process of investing in gold mutual funds is similar to any other mutual fund you might be investing in as an NRI. You need to have an NRE (Non-Residential External) or NRO (Non-Residential Ordinary) bank account in India and complete to Know Your Customer (KYC) with the mutual fund AMC by providing specific documents such as a copy of your passport, overseas address proof, and a foreign bank account statement.

Some of the popular gold mutual funds in India are as follows: 

  • HDFC Gold Fund
  • Axis Gold Fund
  • Aditya Birla Sun Life Gold Fund
  • Kotak Gold Fund
  • Nippon India Gold Savings Fund 

#3 Gold ETFs

Gold ETFs (Exchange-Traded Funds) in India are investment funds that trade on stock exchanges and aim to track the price of gold. These funds are designed to provide investors with a way to invest in gold without owning physical gold. Gold ETFs are open-ended mutual fund schemes that invest in standard gold bullion (0.995 purity) and aim to replicate the performance of gold prices.

You will have to invest in the gold ETFs through a trading and demat account. Check with a stockbroker and brokerage firm if they allow NRIs to invest and the process involved. They’ll typically need documents such as a copy of your passport, overseas address proof, and a foreign bank account statement. Once done, you can start buying and selling gold ETFs online through them.

Some of the popular gold ETFs in India are as follows:

  • HDFC Gold ETF
  • SBI Gold ETF
  • ICICI Prudential Gold ETF
  • Axis Gold ETF
  • Nippon India ETF Gold BeES

Can NRIs invest in Sovereign Gold Bonds (SGBs)?

Sovereign Gold Bonds (SGBs) are a very popular way to invest in gold in India. Many NRIs have a query in their mind about whether NRIS can invest in Sovereign Gold Bonds (SGBs) & if yes, then how? 

We would like to clarify that NRIs cannot invest in Sovereign Gold Bonds (SGBs) under Foreign Exchange Management Act (FEMA), 1999. In case any individual is holding SGBs before gaining NRI status, they need not panic and continue to hold them till maturity.

Final Thoughts on NRI Investment

In conclusion, with the advent of technology and the availability of online platforms, NRIs can now easily invest in gold and participate in its potential price appreciation. By following the necessary steps, including completing the KYC process, opening a trading account, and selecting a reliable online platform, NRIs can seamlessly invest in gold ETFs or gold mutual funds. This allows them to gain exposure to the precious metal without the need for physical ownership or storage. They can also alternatively prefer buying physical gold (bullion/jewelry) to invest. With careful research & due diligence, NRIs can successfully participate in the potential benefits offered by gold investments in India.

Are you an NRI and looking to invest in India?

We have a curated list of top investment products reviewed just for that. You can read our views. For a  10 Min free call to understand Alternative Investment in India ping us on WhatsApp below or drop a message on+919967974993.

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