GLOSSARY

Exit load

Refers to the commission paid by the investor during the time of exiting the mutual fund or Gold Exchange Traded Fund (ETF). The main purpose behind imposing the charge is to discourage investors from withdrawing from the mutual fund prematurely.

Fiat money

Refers to paper money that was made a legal tender as per law, but is not backed by metals such as gold/silver.

Field

Refers to the open area or background present on a coin.

Fineness

It is the purity of a precious metal that is measured in 1,000 parts of an alloy. For example, gold bar with fineness of 0.995 means that it has 995 parts of gold and 5 parts of another metal.

Gold Accumulation Plan

A gold accumulation plan enables customers to invest in gold using monthly instalments. Physical gold can be accumulated over the course of one year to fifteen years.

Gold as a hedge

Gold is the best possible hedge against inflation since the rising prices can be offset by the simultaneous rise in gold prices.

Gold fund

Refers to a mutual fund or Exchange Traded Fund (ETF) that invests primarily in various gold manufacturing companies or gold bullion. The share price within a gold fund would closely match the spot price of gold itself. Please note that the major assumption here is that the mutual fund holds majority of its assets in gold or in stocks/bonds of gold miners/ manufacturers.

Gold futures

Gold futures are instruments that are traded on the MCX. One can buy into these gold futures in order to invest in gold. These futures contracts tend to track gold prices. Moreover, the investors have to ensure that they settle these futures contracts by pre-determining a closing date.

Gold monetisation scheme

The Indian government on May 19, 2015 announced that it will soon start its Gold Monetisation Scheme. As per this scheme, every Indian investor will be permitted to deposit a minimum of 30 grams of gold or jewellery in a bank to gain interest.

Indirect investment

Indirect investment refers to indirect ways of investing in gold such as gold ETFs, E-Gold, and gold futures. It is also called paper gold.