CHAPTER - 1

INTRODUCTION AND DESIGN OF THE STUDY

1.1 INTRODUCTION:

Since prehistoric time, man continues to use gold in trade and as asset. Even current financial
activities are always based on gold. Ancient people treated gold as the true form of wealth.
Gold was used early in 4000 B.C as a fashion decorative object. In 1500 B.C the gigantic
gold bearing regions of Nabia made Egypt a wealthy nation (National Mining Association).
Gold has widely been recognized as the standard form of medium of exchange for
international trade. Gold is the oldest precious metal known to humankind. Gold is primarily
a monetary asset and partly a commodity. Gold is the world's ancient international currency.
It is an important element of global monetary reserves. Central banks, and official
international institutions have been major holders of gold for more than 100 years and are
expected to retain large stocks in future.

1.2 INVESTMENT:

Investment is time, energy, or matter spent in the hope of future benefits actualized within a
specified date or time frame. Investment has different meanings in economics and finance. In
economics, investment is the accumulation of newly produced physical entities, such as
factories, machinery, houses, and goods inventories. In finance, investment is buying or
creating an asset with the expectation of capital appreciation, dividends (profit), interest
earnings, rents or some combination of these returns. This may or may not be backed by
research and analysis. Most or all forms of investment involve some form of risk, such as
investment in equities, property, and even fixed interest securities which are subject, among
other things, to inflation risk. It is indispensable for project investors to identify and manage
the risks related to the investment.

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1.3 TYPES OF INVESTMENT:

The investments are broadly classified into two group i.e financial investment and Non-
financial investment.

1.3.1 FINANCIAL INVESTMENT:

Financial investment is the allocation of money to assets that are expected to yield some gain
over a period of time. It is an exchange of financial claims such as stocks and bonds for
money. They are expected to yield returns and experience capital growth over the years. The
financial investment in consists of

 Equities
 Mutual funds
 Bonds
 Deposits
 Shares
 Unit trusts

1.3.2 NON- FINANCIAL INVESTMENT:

This is also known as Non-securitised financial investment. The real assets always find a
place in the portfolio. The non- financial investment consists of

 Real estate
 Gold

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1.4 GOLD INVESTMENT:

Investing in gold has been seen as the supreme way of safe haven investment. Gold
investment is booming in recent years and the reasons behind this can be that the investors
become more aware of the benefit of the gold and its special feature, Gold demand for
investment purpose accounts to one third of gold demand all over the world which is
substantially influential (World Gold Council, 2009). Investment demand for gold has shown
significance increase in the last seven years as investors seek the fashion to balance their
investment portfolio uncertainty.

Generally gold demand can be divided into three main types which included jewellery
demand, gold investment demand, and industrial demand. Gold investment can be further
divided into physically and non-physically holding the gold. There are several ways to
participate in gold investment.

1.5 WHY INVEST IN GOLD?

In portfolio management, prudent investors will have different sort of investment vehicle.
The reason for holding diverse investment is to safeguard the portfolio against fluctuations or
uncertainty that occurs in the economy system. Gold investment has been studied by many
professionals towards its ability to preserve the wealth of the investors against the
overwhelming global financial crisis and economic uncertainty.

Generally the group of similar assets will react correspondingly among each other during the
transformation of the economy and financial system. Diversification will reduce investor's
risk in portfolio investment. Besides the common investment vehicle like company share,
bond, and mutual fund, gold investment is an option for investor to diversify their investment
in a generally more robust and less risky vehicle as compared to other investment vehicles.

The inflationary heading ability of gold is prominent especially during the economic
uncertainty period. Gold price reacts quickly than other commodities when there is any
change in the market condition. Conversely, price of the CPI-basket is adjusted slowly to the
change of market condition, Risk factors that may affect the gold price are quite different in
nature from those that affect other assets. Purchasing power of gold is maintained even in the
transformation era which is remarkably significant.

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In addition, gold is one of the safety instruments that have very limited amount of risk
associated with them. The profitability of gold investment is operating in the accrual basis.
There is liquidity risk which means the possibilities that the asset cannot be sold as the buyer
in the market may not be available during the time of reselling. However the gold market has
high demand rate from the individual customer, jewellery sector, financialhedge, universal
acceptance, and transportability have made gold the superior choice for investment purpose.
In Erode District, investors have some ways to participate in the gold investment market
either physically and non-physically holding gold. The commercial bank investment branches
have contributed some fine tuning gold investment accounts. State Bank of India, Indian
Bank, Indian Overseas Bank, Canara Bank, Lakshmi Vilas Bank and Karur Vysya Bank offer
their gold investment account which is called gold savings passbook account (GSPA). The
gold investment that involves non psychically holding gold in Erode district includes gold
fund, gold related funds and unit trust.

1.6 IMPORTANCE OF THE STUDY:

The growing popularity of the gold market investment has been evident from the continuous
increase in the number of individual investors. Investors are in the gold market for high
rewards at the same time they play an important role in the industrial development of a
nation. The present study systematically analyses the various factors that influence the
behaviour of gold investors in Erode district. It identifies various problems faced by the
investors at the time of investment in gold. It also offers suggestion to overcome the problem.
Tamilnadu is gradually moving towards the liberalization in different areas especially
banking area due to the open forces from the foreign financial institution. Local banks and
investment branches increasingly focus on customer services and improving their facilities.
By understanding the local investee perception towards the gold investment, local banks (or)
other local investment institutions will be able to compete with other foreign giant finance
and investment institutions. More investors seek gold as protection against the instability of
numerous macro-economic variables such as inflation, currency exchange rate, and interest
rate. In industrial demand gold has been used as the thermal and electrical conductor.

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1.7 SCOPE OF THE STUDY:

The purpose of the study is to analyse the behavioural pattern of gold buyers that includes a
thorough analysis of reasons for purchasing gold, parameter for selecting a particular jeweller
and factors influencing gold purchase behaviour of buyers. The outcome of this study will be
of immense help to the jewellers in understanding the choices and preferences of buyers, the
criteria adopted by buyers in selecting a particular jeweller, in adopting a suitable pricing
strategy, and in devising an appropriate marketing strategy, so as to nurse their customers in a
better way. The present study attempts to understand the behaviour of individual investors in
gold investment in Erode district.

1.8 STATEMENT OF THE PROBLEM:

Gold has been traditionally the preferred asset for Indians. In facts, India, even today is
amongst the largest purchasers of gold in the world. Gale is presumably as widely used
investment in India as other investment instruments. But it is one prime option among rows
of other instruments. It is considered by many, to be the best investment and can protect
themselves during stock market declines 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
highs and lows and Indian households could just as easily lose money investing in gold as
with any other investment. Gold investment is very popular in other district such as Salem,
Coimbatore, Namakkal, Trichy, Madurai, and Madras.

1.9 OBJECTIVES:

 To analyse the consumer purpose of gold investment

 To analyse the investors preference towards Gold Investment compared to other
investments
 To examine the factors consider while investing in Gold

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1.10 HYPOTHESE OF THE STUDY:

a. There is no significant difference in the purpose of gold investment between investors with
different demographic factors.

b. There is no significant difference between the investors with different demographic

profiles in their preference of gold investment over other investments.

c. There is no significant difference between investors with different demographic profiles in

the factors influencing their investment in gold.

d. There is no significant difference between the investors with different demographic

profiles in their expected returns from investment in gold.

e. There is no significant association between the problem faced by the gold investors and the
demographic profile of the gold investors.

1.11 METHODOLGY OF STUDY:

Research methodology is a way to systematically solve the research problem. It may be

understood as a science of studying how research is done scientifically. It is about the various
steps that are generally adopted by a researcher in studying his research problem along with
the logic behind them. It is necessary for the researcher to know not only the research
methods/techniques but also the methodology.

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1.12 AREA OF THE STUDY:

Erode District is one of the 38 districts in the state of Tamil Nadu in India. It was the largest
district by area in the state before the formation of Tirupur District in 2009. The headquarters
of the district is Erode. It is divided into two revenue divisions, Erode and
Gobichettipalayam, and is further subdivided into 10 taluks. Erode District was a part of
Coimbatore District before its division into two on 17 September 1979. It covers an area of
5,722 square kilometres (2,209 sq mi), and as of 2011, had a population of 2,251,744.

Agriculture is the most important source of income in Erode District. Paddy, plantain, silk,
cotton, turmeric, coconut and sugarcane are some of the major products from agriculture and
its associated industries.

Erode is the top turmeric producer in Tamil Nadu, making up 43% of statewide production.
[11] Erode is an important market centre for turmeric, being known as "Turmeric City."
March 2019, turmeric from Erode received a Geographical Indication tag from the
Geographical Indication Registry,[12] making Erode Manjal Vanigarkal Matrum Kidangu
Urimaiyalargal Sangam the registered proprietors of the Geographical Indication Erode
Manjal (Erode Turmeric).[13]

Erode is also the leading producer of plantain, coconuts and white silk in Tamil Nadu.

1.13 RESEARCH DESIGN:

The research design involves a series of rationale decision making choice which should be
conducted after the generation of hypothesis. In this research design, the investigation
extends to research inferences, study setting, and unit analysis and time horizon.

1.14 METHOD OF SAMPLING:

The sampling procedure followed in this study is non-probability convenient sampling.

Random procedures are used to select the respondents from Erode District.

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1.15 SOURCE OF DATA:

 Primary data:

The research is done through observation and collection of data through questionnaires.

 Secondary data:

Secondary data are those Information that are already published. For the study the data
collected from secondary sources are;

 Internet
 Website
 Existing Research

1.16 SIZE OF THE SAMPLE:

Purpose of the survey is to determine the perception of gold investors in Erode district
towards gold investment. Thus, residents of Erode district are the main respondents for this
research. A total of 110 respondents were randomly selected by the researcher.

1.17 STATISTICAL TOOL USED:

After the data were collected diverse statistical tools and techniques were used to get an
insight into the behavioural aspect of investors. Data were analysed with the help of SPSS
software. The following tools were used to analyse the data collected.

 Simple percentage analysis

 Weighted average method
 Chi-square
 Factor analysis

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1.18 LIMITATIONS OF THE STUDY:

In spite of its strengths and uniqueness, the study hedges with certain limitations.

1. Any study on investors' behaviour of gold investment cannot provide enduring finding
over time as expectation of the investor and type of scheme provided by the gold market
change from time to time. Therefore the findings of the study indicate only contemporary
views of the customers and may not hold good for all times to come.

2. There are various investment avenues in the market, however, the study confines only to
investment in gold.

3. Due to stiff competition prevailing among the gold market, the nature and type of scheme
provided, the innovation in them are also changing from time to time. Hence the finding
pertaining to the investor view may not be suitable for all times to come.

4. The general reluctance of people to reveal data on income and investment made the task of
gathering data somewhat difficult.

5. This study covered Erode district only.

1.19 CHAPTER SCHEME:

CHAPTER I Deals with introduction about gold investment, importance of the study, and
scope of the study, objectives of the study, hypotheses, and methodology of the study.

CHAPTER II Presents a review of literature.

CHAPTER III Deals with the theoretical background of the present study.

CHAPTER IV Presents the analysis and interpretation of data.

CHAPTER V Presents the findings, offers suggestions, and gives a conclusion of the
study.

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 CHAPTER – 2

2.1 REVIEW OF LITERATURE

1. Soniya Garg, 2021 - Gold has been a major investment avenue among investors. Investor
behaviour varies on the basis of their needs, benefits return expectations etc towards various
investment avenues. Every investment avenue has different pros and cons. Gold has some
special benefits as an investment option. It is quite popular traditionally as well as for
financial security purposes. In Indian context people used to buy gold in form of jewellery on
festivals, marriages etc. Earlier jewellery was considered as the most common form of gold
investment but now a days more options are available in the form of Gold investment like
Gold Bars, Gold ETFs, SGBs etc. This paper is an attempt to explore various factors which
influence the investor behaviour towards Gold investment by factor analysis

2. BS Hundal, Saurabh Grover, Jasleen Kaur Bhatia, 2013 - Needs, Benefits, Fund
Allocation Patterns and Resources may vary among investors but the motive is to earn
beneficial level of return. The level of return may vary but an investor expects some added
advantage over the blocked money. Specifically in Asia and the Middle East, gold
investments and gold jewelry are regarded as financial or semi-financial assets. Consumers
have become aware of price movements and very sensitive to them. Unlike paper currency,
coins or other assets, gold has maintained its value throughout the ages. People see gold as a
way to pass on and preserve their wealth from one generation to the next. The perceptions of
an investor differ with respect to alternative investment avenues, assets and segments present
in the market. This study includes 183 respondents from different cities of Punjab. This paper
is an attempt to study the factors influencing purchase behavior of retail investors towards
gold with the help of Factor Analysis.

3. AW Ahmad Fauzi, AR Husniyah, S Mohamad Fazli, O Mohamad Amim, 2017-

Economic uncertainty has led to the decision of investing in a much safer investment such as
gold investment. Gold in the investment portfolio is perceived to safeguard individual
investors against market risk. The Malaysian government has launched unit trust schemes
under the Amanah Saham group which is a government-backed fail-safe investment. Gold
investment, however, is a new phenomenon with very little promotion. The central bank has

10
introduced the gold coin series while the private banking sector released few gold-related
products.

4. CM Indira, N Mukund Sharma, 2024 -The financial instruments which derived their
prices from physical Gold are Known as Gold derivatives. Gold derivative is contracts
between seller and buyer who take exposure to physical gold. Types of gold derivatives
traded enormously in India are Gold coins/Gold Bar, Gold ETF, Gold Options, Gold Futures.
The Indian government aims to transform the Indian gold market by initiating Make in India,
setting up of Bullion Exchange that would provide an efficient market to gold and so on. In
this sense it's very important to know the investor behaviour towards gold and its derivatives.
In this research attempts to know the investment behavio0r of investors towards Gold Futures
using Factor Analysis method. The deciding factors of the investors such as diversification,
market fluctuations are inclined towards investing in Gold Futures.

5. Achmad Nur Alfianto, Anton Priyo Nugroho, 2020 - This study aimed to analyze the
influence of knowledge of Islamic finance on the attitudes towards gold investment and to
analyze the impact of religiosity on gold investment behaviour using the Theory of Planned
Behaviour (TPB) approach tested on employees of Islamic financial institutions in the
Regency of Magelang Indonesia. Data obtained from 205 respondents who were employees
of 10 Islamic financial institutions and then analyzed using descriptive analysis and Structural
Equation Modeling (SEM). The result showed that religiosity had a positive and significant
influence on gold investment behaviour. Also, the variables of attitude, subjective norm, and
perceived behavioral control influenced positively and significantly the intention to invest in
gold.

6. Hani Amirah Juisin, Muhammad Amir Syazwan Mohd Sayuthi, Hanudin Amin,
Imran Mehboob Shaikh, 2023 - Gold investment is one of the essential long-term
investments for many to diversify their investment portfolios. Muslims are continuously
looking for halal products and services in any aspect of life and one of them is Shari’ah gold
investments (SGI). However, evidence pertinent to Muslims’ behaviour towards Shari’ah
gold is somewhat inconclusive and for that, a new empirical investigation is needed to reduce
the gap, at best. Hence, the purpose of this study is to study factors determining SGI
behaviour in Penang, Malaysia.

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7. Vinod K Bhatnagar, Shilky Yadav, Shilpa Yadav, 2014 - Understanding investors’
behaviour is difficult. Investing is simple but knowing the right avenue for investment is also
difficult. The objectives of the study were to design, develop and standardize a measure for
evaluating investor’s psychology towards gold, to determine the underlying factors affecting
psychology towards gold and to know the difference in the investment psychology of male
and female towards Gold. We applied KMO and Bartlett’s test of Sphericity indicates that the
data is suitable for factor analysis and found that the item to item correlation matrix was not
an identity matrix.

8. Mrs Prathibha Vikram, Rajendra Kumar Sinha, 2022 - The emergence of the
contradictory approach on investing decisions is reflected in Behavioral Finance. Investment
behaviour has witnessed a huge change after the pandemic and the investor is leading a new
trend in the pattern of investment. The Investment avenues include both real assets and
financial assets. Investment is based on savings and these investment portfolios take their
shape as per the Investor’s attitude. The priority on which to invest at what percentage lies
with the investor’s desire and one such desirable, attractive and emotional investment is
GOLD. The perception of Gold in an Indian Investor is different when compared to other
avenues of investment.

9. G Venkatachalam, G Prabhakaran, 2015 - Gold is always considered as one of the best

investment alternatives available with common Indian investor. Indians consider the
investment in gold as a traditional method of investment. As a world’s top consumer of gold,
India accounts for 20% of world gold demand. As the importance of gold investment is
increased due to extreme unpredictable change in the financial markets, economic uncertainty
and fears that national currencies will lose their value etc, force the investment in gold. It is
mainly because gold is always considered as the best.

10. Dinesh Agarwal, Arup Barman, Banashree Sarma, 2014 - Investment in gold still gets
a special patronage from the investing public in India. Irrespective of the size of their income,
people invest in gold even though the various restrictions are imposed by the Central
Government and RBI. People do invest in bars and coins. Today, the concept of cyber gold is
also emerging and becoming popular in the form-Gold ETF||. Investors generally buy gold as

12
a way of diversifying risk like a hedge against inflation if perceived economically. Gold
investors are normally not restricted to one form; they do their investment

11. Shivali Shah, NK Patel, 2023 - In recent years, the average income of Indians has
increased significantly. Although it is well established that rising income drives up gold
demand, the relationship between gold purchase and income in India is more complex. Many
factors influence the gold investment decision, and psychological variables are among them.
The primary goal of this research paper was to determine impact of psychological variables
on the intention to engage in gold investment. Financial knowledge, future time perspective,
financial risk tolerances and goal clarity are the four psychological variables examined in this
study. 325 retail investors were selected through judgmental sampling techniques.

12. Ashish C Mehta, Abha Moradia, 2021 - Investors’ primary goal is to increase their
wealth. For long term wealth creation, stocks and gold are inevitable components of the
investment portfolio. Generally individual investors have certain behavioral tendencies that
affect their investment decisions and portfolio returns as a result. There has been a lot of
research interest around this topic in the recent years. Many people invest in stocks but not all
have the skills or the expertise to evaluate which stocks are good and which are not.
Therefore, they rely on some cognitive and emotional decision-making methods to make a
suitable investment decision for them. Gold investment is also guided by the traditions and
customs rather than a rational and sound investment decision. This research paper mainly
focuses on the factors that affect the individual investors’ investment decision making
process for stocks and gold and eventually affect the portfolio performance.

13. Ahmad Fauzi Abdul Wahab, Husniyah Abdul Rahim, Mohamad Fazli Sabri, Mohd
Amim Othman, Roziah Mohd Rasdi, 2016 - Asset accumulation has focused intensely on
investment as a tool for elevating income. Gold investment has gained the attention among
individuals due to the introduction of new forms of gold investment products. This study
applied the Theory of Planned Behaviour to include the construct of gold investment literacy.
A total of 254 respondents among urban public sector employees in Peninsular Malaysia
sampled via a multistage random sampling responded to self-administered questionnaires.
Statistical analyses demonstrated moderate levels for gold investment literacy, subjective
norms, perceived behavioural control, attitude and investment intention. Multiple regression
analysis revealed that gold investment attitude, subjective norms and perceived behavioural

13
control significantly predicted employees’ intention to invest in gold with moderate explained
variance (R2= 0.564) by the predictors.

14. Kanika Marwaha, Sangeeta Arora, 2015 - With the diversification of investment
avenues in the current era, it is imperative to examine the variables that appear to exercise the
greatest influence on the individual investor while choosing investment avenues. The present
study is an exploratory attempt to analyze the perception of individual investors of the stock
market of Punjab towards investing in gold vis-à-vis stocks. A pre-tested, well structured
questionnaire which was administered personally and the responses of 207 respondents are
analyzed. Weighted Average Scores method used to identify the most and least influencing
variables and Paired Sample T-test is applied to the data to identify if there exists any
significant difference in the variables influencing the investment preferences for gold (safe
investment) vis-à-vis stocks (risky investment).

15. Anli Suresh, R Keerthika, 2019 - Electronic gold or dematerialization gold is emerging
trends of investment in the gold portfolio, the market has various choices on the modern
investment which brings the behaviour of investors and impact of psychology on their
decision making skills, behaviour finance is quite sensitive dimension that dealing with most
fluctuating sector called human behaviour and their decision making. The study constitutes
the influence of human behaviour’s dependency on educational literacy level while making
the choice of investment. The research study made to identify the existing relationship
between annual incomes over choice of investment envisage with electronic format of gold
and the basis on educational literacy in behavioural pattern of investors contemplate with
modern contour of gold investment. The study has been analyzed with Karl Pearson’s
correlation test and Regression model with a sample size of 100 respondents.

16. P Menakadevi, P Prabha, M Latha Natarajan, 2021- Gold investment culture involves
in the blood of our generation but the awareness of different instruments are
comparativelyless than the physical gold. For collecting inclusive information about the
investor’s behavior in gold instrument as paper gold, digital gold and physical gold in
Coimbatore district, sample size of 150 investors are selected through the random sampling
method. The research is based on data collected on two phases. The statistical tools used
were-Percentage Analysis, Chi Square, Correlation and Rank Correlation. The study exposed

14
that utmost of the investors are not aware that any of the schemes and because of that they
prefer gold jewellery and prefer to invest in Gold ETF, sovereign gold bonds which gives
more profit.

17. Shobha CV,2017 - Among the various precious metals “Gold” is the most popular as an
investment. Why it is so? The answer is it is a mainstream asset as it is not only an effective
diversifier but also gives a competitive return when compared to major financial assets. The
present study analyses ‘Gold as a safer investment alternative’by examining its risk and
return in terms of other investment alternatives like stock and bond. The risk and return
analysis of an asset class is better studied with its volatility measurement. The present study
uses daily prices of gold, stock Nifty 5o, and India Government Bond. The chi-square test
was applied and the results showed that all the variables under study except education
qualification (‘p’value 0.8308) dictated investors decision in selecting gold as an investment
opportunity.

18. Tan Suang Sin, Arunagiri Shanmugam, Nagenthiri Mohan, 2023 - Despite being
considered a safe haven against inflation, gold investment does not generate regular income,
such as dividends or interest. Being heavily reliant on capital gains, gold investment can be
considered a risky investment. Yet, the demand for physical gold remains robust among
Malaysians. There is confusion about whether the investment decision is based on saving or
consumption. Thus, this study was conducted to explore the influence of saving habits,
spending habits, and financial literacy on gold investment risk behaviour. Financial literacy
was included due to its importance in personal financial planning. The findings of this study
can verify the interrelations of saving, consumption and investment in the Keynesian
investment theory. A convenient sampling approach was employed. A total of 149 working
adults in Perak participated in the online survey. SPSS statistics version 26 was used for
Pearson’s correlation and multiple linear regression analyses.

19. Aditi Mahajan, 2022 - Gold has always been a favoured investment option among the
investors. The behaviour of investors towards different investment options differs depending
on their own expectations of return, risk tolerance and such other factors. Every option of
investment has its own benefits and limitations. Gold offers some unique advantages as a
form of investment. Since a long time, it has been a favoured avenue of investment for the
reason of financial security. People in India used to purchase gold jewellery for festivals,

15
weddings and other special occasions. The most popular form of investment in gold was
jewellery. But there are now additional possibilities including gold bars, EFTs. The present
study makes an effort to explore the factors that affect the behaviour of an investor towards
making investment in gold with the help of factor analysis.

20. Jaana Lisette Lutter, I Soone, 2008- Author has worked several years on promoting
physical gold as an investment in Estonia and the nearby region. Although gold is the oldest
form of money in the world, its investment value is completely new to Nordic countries and
lacks tradition which is rooted in several other regions of the world. Investment gold’s
awareness marketing has had both extremely successful and totally failing projects.
Consumer investment process has not been studied much in the past. Therefore, to better
understand how people make their investment decisions, author sees the need to study
consumer behaviour in general and look at it from investment point of view.

21. Mallika Mathew, MM Sulphey, 2020 - This paper investigates the behavior of the
capital market investors in Kerala towards gold investment. It also examines the perception of
the Gold Exchange Traded Funds as a gold investment option among the capital market
investors in Kerala. A structured questionnaire was used for collecting data from the
Keralities who are demat account holders and invest in the capital market. Factor analysis
was used to identify the factors which influence the perception of the investors towards Gold
Exchange Traded Funds. Discriminant analysis was used to identify the factors influencing
the investment in Gold Exchange Traded Fund. This is the only study, which has been
conducted to study about the perception of the capital market investors in Kerala towards
Gold Exchange Traded Funds as an investment option in gold.

22. S Amirthalingam, R Geetha, 2023- The purpose of this research is to understand the
factors influencing the rural investors satisfaction level on gold investment. As a matter of
fact in India people buy and use gold on all occasions, and hence gold has much scope from
the business point of view. For this research Descriptive Research Method was used. This
method describes and explains various characteristics of individuals or groups. The source of
Secondary Data was from websites, pamphlets, magazines, periodical surveys and library
books. The statistical data analysis was done by SPSS software version 21; the following
tests were conducted for the study percentage analysis, One-Way ANOVA and Chi-Square
method. During the survey it was observed that many people felt that the quality of gold has
to be improved.

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23. Krishna Gadasandula, Anitha Lourdu James, Nageswara Rao Thadvuai, N
Balakrishnan, Mohamed Zaheeruddin, 2024 - Rationale: The primary goal of this paper is
to assess gold investor activity in terms of gold demand generators, rationale for gold
purchases, and the motives of gold buying. Research Design: The research was created using
a combination of secondary data analysis and a large primary survey with a sample of 600
gold investors’ selected by using convenience sampling technique and tried to take opinions
through online questionnaire. Finally, 449 investors responded after a prolonged persuasion
and efforts.

24. Teerapat Tewarueangsap, 2019 - With the divergence in global economy and a rising
digital platform, individual investors need to consider all kinds of saving and investment
instruments, such as equity stock trading, mutual fund, and commodity, on different
platforms, from offline to online, to give as much return possible. The objectives were (1) to
understand the criteria that people choose when they decide to invest in particular
product/service,(2) to identify critical factors influencing saving concern toward online
services and (3) to evaluate the saving value consumers willing to trade off with other
services with online services and (4) to identify segments based on consumer attitudes,
behaviors and trade-off value. The research duration was 12 weeks, starting from 10th
January 2020 until 5th April 2020.

25. Dewi Tamara, Anom BR Seto, Dodi Kurniawan, Kevin N Hamonangan, 2021 - This
research aims to determine variables such as attitude, perceived social pressure, perceived
behavioral control, perceived ease of use, perceived usefulness, and perceived security and its
effect towards intentions in gold investing on e-commerce platforms. Quantitative data was
collected from 153 respondents selected by purposive sampling method. Online questionnaire
was distributed to the respondent's located majority in Jabodetabek area. Proposed hypothesis
was tested using PLS-SEM method. This research concluded that attitude and perceived
behavioral control have a significant effect towards intention. Perceived usefulness also has a
significant effect towards attitude; hence attitude successfully mediates the relation between

17
perceived usefulness and intention. The results of the research prove the lack of Indonesian
consumers awareness towards gold investment in e-commerce platforms.

26. Swati Godbole, Dr Kirti Arekar, 2014 - Gold is one of the oldest precious metals
known to man and for years it has been valued as a global currency, an investment, a
commodity and an object of beauty and India is not an exception to this. India’s love affair
with gold is timeless spanning over centuries and millennia. With globalisation various
investment avenues were made available to investors. The results of the study indicate that
the ease at the time of purchase and high liquidity has resulted into Gold being highly
preferred Investment Avenue as against the others.

27. Kirti Arekar, Swati Godbole, 2016 - India’s love affair with gold is timeless and gold is
not just another precious metal but is a part and parcel of the Indian culture. However of
recent there has been a shift in the mindset of the people and they have started looking at gold
beyond a status symbol. Therefore the objective of this study is to examine the factors
impacting the gold buying behaviour of the retail consumers and to examine which of these
factors ie Risk and return, Market information, Motives, Security, Opinions and Benefits,
have significant impact on the different age group. Regression analysis was done to identify
the most significant factor out of the six identified factors (by factor analysis) that has impact
on different Age groups. It has being observed that Motives behind buying gold, market
information and risk and returns influence the investment decisions of the buyers with respect
to different age groups.

28. Biswajit Acharjya, Subhashree Natarajan, 2019 - Behavioural finance has gained
research interest among researchers because of investor behavior and market anomalies.
Investor behaviour varies with demographics and geographic characteristics. Further, investor
behavior towards a gold exchange trade fund is gaining research interest due to various
factors. Thus, there is a need for intelligent techniques for identifying the investors behavior
despite the presence of uncertain behavioral characteristics. Therefore, to study uncertain

18
behavior characteristic in gold exchange traded fund, in this article the authors employ a
fuzzy rough set. They employ fuzzy rough quick reduct algorithm to find the superfluous
attributes. Further decision rules are generated to identify the chief feature of investors'
behavior towards gold exchange traded fund.

29. Arun Kumar DC, PV Raveendra, YM Satish, 2021 - Gold is considered as one of the
best investment avenues available for Indian investor. Indians consider the gold investment as
traditional form of investment and from past it is given moderate return which is considerably
higher than inflation. Hence also use has hedging tools. Gold demand and gold price is a
complex composition of various economic determinants. The study is aimed to find the
impact of those various investment and other behavioral factors influencing gold investment.
The study summarizes wide literature review which includes research from long period. A
Structural equation modeling technique is used to find the structural relationship between
various investment and other behavioral factors influencing gold investment the result of the
same reveals that the investors behavior towards investing in gold for future and safety
purpose.

30. Nishad Nawaz, Sudindra VR, 2013 - 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
households predominantly in the form of jewellery. There are various alternatives available
for investment in gold through options like jewellery, 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 objectives of the study is to understand
the various investment options for investors, factors needs to be aware of and know-how of
investing in gold, pros and cons of various forms of investments 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 consists of questionnaire
and secondary data through website, research papers and magazines. Based on the research it
is found that many investor still prefer jewellery, gold coins and gold bullion bars forms of

19
investment and prefer to invest in ETF and Futures and options which gives more profit and
easy form of investment.

CHAPTER III

THEORETICAL BACKGROUND OF GOLD INVESTMENT

3.1 INTRODUCTION

Investment is the employment of funds with the aim of achieving additional income or
growth in value. The essential quality of an investment is that it involves 'waiting for a
reward. It involves the commitment of resources which have been saved or put away from
current consumption in the hope that some benefits will accrue in future. Investment is the
allocation of monetary resources to assets that are expected to yield some gain or positive
return over a given period of time. These assets range from safe investments to risky
investments. Investments in this form are also called 'Financial investments. From the point
of view of people who invest their funds, they are suppliers of Capital' and in their view,
investment is a commitment of a people's funds to derive future income in the form of
interest, dividends, rent, premiums, pension benefits or the appreciation of the value of the
principal capital.

The nature of investment in the financial sense differs from its use in the economic sense. To
the economist, 'Investment' means the net additions to the economy's capital stock which
consists of goods and service that are used in the productions of other goods and services. In
this context, the term investment, therefore, implies the formation of new and productive
capital in the form of new construction, new producer's durable equipment such as plant and
equipment. Inventories and human capital are included in the economist's definition of

20
investment. The financial and economic meanings of investment are related to each other
because investment is a part of the savings of individuals which flow in to the capital market
either directly or through institutions, divided in 'new' and second hand capital financing
Investors as 'suppliers and investors as 'users' of long-term funds find a meeting place in the
market. In this report, however, investment will be used in its 'financial sense and investment
will include those instruments and institutional media into which savings are placed. This is
because the history of gold market is booming and busts overnight millionaires an instant
paper.

3.2 IMPORTANCE OF INVESTMENT

Investments are both important and useful in the context of present day conditions.
Some factors that have made investment decisions increasingly important are:

(a)Longer life expectancy or planning for retirement, (b) increasing rates of taxation, (c) High
interest rates, (d) High rate of inflation, (e) Longer incomes, (f) Availability of a complex
number of investment outlets.

(a) Longer Life Expectancy

Investment decisions have become significant as people retire between the age of 55 and 60.
Also, the trend shows longer life expectancy. The earnings from employment should,
therefore be calculated in such a manner that a portion that a portion should be put away as
savings. Savings by themselves do not increase wealth; these must be invested in such a way
that the principal and income will be adequate for a greater number of retirement years. The
importance of investment decisions is further enhanced by the fact that there are an increasing
number of women working in organizations. These women will be responsible for planning
their own investments during their working life so that after retirement they are able to have a
stable income. Increase in the working population, proper planning for life span and
longevity have ensured the need for balanced investments.

(b) Increasing Rates of Taxation

21
Taxation is one of crucial factors in any country which introduces an element of compulsion
in a person's savings. There are various forms of savings outlets in our country in the form of
investments which help in bringing down the tax level by offering deductions in personal
income.

(c) High Interest Rates

Another aspect which is necessary for a sound investment plan is the level of interest rate.
Interest rates vary between one investment and another These may vary between risk and safe
investments; they may also differ due to different benefits schemes offered by the
investments. These aspects must be considered before actually allocating any amount. A high
rate of interest may not be the only factor favouring the outlet for investment. The investor
has to include in his portfolio several kinds of investments. Stability of interest is as
important as receiving a high rate of interest. This book is concerned with determining
whether the investor is getting an acceptable return commensurate with the risks that are
taken.

(d) High Rate of Inflation

Inflation has become a continuous problem since the last decade. In these years of rising
prices, several problems are associated coupled with a falling standard of living. Before funds
are invested, erosion of the resource will have to be carefully considered in order to make the
right choice of investments. The investor will try and search an outlet which will give him a
high rate of return in the form of interest to cover any decrease due to inflation. He will also
have to judge whether the interest or return will be continuous or there is a likelihood of
irregularity.

22
(e) Longer Incomes

Another reason why investment decisions have assumed importance is the general increase in
employment opportunities in India. After independence with the stages of development in the
country, a number of new organizations and services were formed. The banking recruitment
services, the Indian administrative services, public sector enterprises, expansion in private
corporate sector, establishing of financial institutions, Tourism, Hotels,Education are some
examples. The employment opportunities gave rise to both male and female working force.
More incomes and more avenues of investments have led to the ability and willingness of
working people to save and invest their funds.

(f)Availability if a Complex Number of Investment Outlets

The growth and development of country leading to gear tab economic activity has led to the
introduction of a vast array of investment out lets. Apart from putting aside savings in savings
banks where interest is low, investors have the choice of variety of instruments. The question
to reason out is which is the most suitable channel? Which media will give a balanced growth
and stability of return? The investor in his choice of investment will have to try and achieve a
proper mix between high rate of return and stability of return to reap the benefits of both. The
sorne of the instruments available are corporate stock, provident fund, life insurance, fixed
deposits in the corporate sector, Unit Trust schemes & so on.

3.3 FACTORS FAVOURABLE FOR INVESTMENT

The investment market should hirve a favourable environment to be able to functions

effectively. In India all business activities are marked by social, economic and political
considerations. It is important that the political and economic institutions are favourable.
Generally, there are four bask considerations which foster growth and bring opportunities for
investment These are (a) legal safeguards (b) stable currency

23
(a)Legal Safeguards

A stable government which frames adequate legal safeguards legal encourages accumulations
savings and investments. Investors will be willing to invest their funds if they have the
assurance of protection of their contractual and property rights.

In India, the investors have the dual advantages of free enterprise and government control.
Freedom, efficiency and growth are insured from the competitive forces of private
enterprises. On the other hand being mixed economy, government control exerts discipline
and curtails some elements of freedom. A combination of the public sectors controlled by the
government and private sectors left free to operate, hopes to achieve the benefits of both
socialistic and capitalist forms of government without their disadvantages. In India, the
political climate is conducive to investment as government control lends stability to the
capital market.

(b) A Stable Currency

A well-organized monetary system with definite planning and proper policies is a necessary
prerequisite to an investment market. Most of the investment such as bank deposits, life
insurance and shares are payable in a fixed amount of the currency of the country. A proper
monetary policy will give direction to the investment outlets. As far as possible, the monetary
policy should neither promote acute inflationary pressures nor prepare for a deflation model.
Neither condition is satisfactory. Price inflation destroys the purchasing power of investment.
Thrift is also penalized when the net interest after taxes received by the investor is less than
the rise in the price level, leaving the investor with less total purchasing power than he had at
the time of saving. Inflation occurs generally in unstable conditions like war or floods but in
the last decade, it also discernible in peace conditions especially in developing countries
because of huge government deficit financed by bank credit. Deflation is equally disastrous
because the nominal values of inventories, plant and machinery and land and building tend to
shrink. An example of the evil effect of deflation can be cited for the period 1929-1933 in the
United States when the shrinkage in nominal values came to a point of producing wholesale
bankruptcy. A reasonable stable price level which is produced by wise monetary and fiscal

24
management contributes towards proper control, good government, economic well-being and
a well-disciplined growth-oriented investment market and protection to the investor.

3.4 TYPES OF INVESTMENT

Investment is a conscious act of an individual or any entity that involves deployment of

money (cash) in securities or asset issued by any financial institutions with a view to obtain a
target return over a specified period of time. Now a days there is a wide range of investment
for investor to choose from.

(a) Autonomous Investment

Investment which does not change with the in income level, is called as autonomous or
government investment. Autonomous Investment remains constant irrespective of income
level. Which means even if the income is low, the autonomous, investment remains the same.
It refers to the investment made on houses, roads, public building and other parts of
infrastructure. The government normally makes such a type of investment.

(b) Induced Investment

Investment which changes with the changes in the income level, is called as induced
investment. Induced investment is positively related to the Income level. That is, at high
levels of income entrepreneurs are induced to invest more and vice-versa. At a high level of
income, consumption expenditure increases this leads to an increase in investment of capital
goods, in order to produce more consumer goods.

(c) Financial Investment

Investment made in buying financial instrument such as new shares, bonds, security, etc. is
considered as a financial investment. However, the money used for purchasing existing
financial instruments such as old bonds, old shares, etc., cannot be considered as financial
investment. It is a mere transfer of financial asset from one individual to another. In financial
investment, money invested for buying of new shares and bonds as well as debenture have
positive impact on employment level, production and economic growth.

(d) Real Investment

25
Investment made in new plant and equipment, construction of public utilities like school,
roads and railways, etc., is considered as real investment. Real investment in new machine
tools, plant and equipment purchased, factory building, etc. increases employment,
production and economic growth of the nation. Thus real investment has a direct impact on
employment generation, economic growth, etc.

(c) Planned Investment

Investment made with a plan in several sectors of the economy with specific objective is
called as planned or intended investment.

3.5 FINANCIAL INVESTMENT

(a) Equities

Equities are a type of security that represents the ownership in a company. Equities are traded
(bought and sold) in stock markets. Alternatively, they can be purchased via the Initial Public
Offering (IPO) route, i.e, directly from the company. Investing in equities is a good long-term
investment option as the returns on equities over a long time horizon are generally higher
than most other investment avenues. However, along with the possibility of greater returns
comes greater risk.

(b) Mutual funds

A mutual fund allows a group of people to pool their money together and have it
professionally managed, in keeping with a predetermined investment objective. This
investment avenue is popular because of its cost- efficiency, risk-diversification, professional
management and sound regulation. You can invest as little as Rs. 1,000 per month in a
mutual fund. There are various general and thermatic mutual funds to choose from and the
risk and return possibilities vary accordingly.

26
(c) Bonds

Bonds are fixed income instruments which are issued for the purpose of raising capital. Both
private entities, such as companies, financial institutions, and the central or state government
and other government institutions use this instrument as a means of garnering funds. Bonds
issued by the Government carry the lowest level of risk but could deliver fair returns.

(d)Deposits

Investing in bank or post-office deposits is a very common way of securing surplus funds.
These instruments are at the low end of the risk-return spectrum.

(e) Unit Trusts

Money invested in a unit trust or fund, is pooled with money from other investors and
invested in a portfolio of assets according to the fund's stated investment objective and
investment approach. In Singapore, local and foreign funds offered to retail investors are
regulated as collective investment schemes. The unit trust or fund is managed by a fund
manager.

3.6 NON-FINANCIAL INVESTMENT

(a) Real estate

With the ever-increasing cost of land, real estate has come up as a profitable investment
proposition.

(b) Gold

27
The 'yellow metal' is a preferred investment option, particularly when markets are volatile.
Today, beyond physical gold, a number of products which derive their value from the price of
gold are available for investment. These include gold futures and gold exchange traded funds.

3.7 TYPES OF GOLD INVESTMENT

People often assume that buying gold coins or gold bars is the only way to invest in gold, and
it's true that physically buying gold in these forms is certainly a very straightforward way to
benefit from a rising gold price, and is an option well worth considering, Buying gold bullion
has become increasingly popular in recent years; partly as owning gold has become a more
attractive proposition in light of various economic uncertainties but also, because it has
become so easy to buy gold online.

3.7.1 GOLD BARS

Buying gold bars is one of the easiest ways to invest in gold. There are a number of gold
dealers that specialize in supplying gold bars and bars tend to be available with very low
premiums, Buying gold bars online is really straightforward, and it is easy to compare prices
at different online gold dealers to ensure you are getting the best deal possible.

3.7.2 GOLD BULLION COINS

Buying gold bullions coins is another fabulously simply way to invest in this precious metal.
As with gold bars, there are plenty of gold dealers that offer a wide selection of gold coins for
sale. Gold bullion coins are a great option for anyone looking to invest in gold, no matter
what budget is involved.

3.7.3 COLLECTIBLE GOLD COINS

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Collectible gold coins are not usually the first thing people consider when deciding how to
invest in gold. However, there is plenty of potential for profit in buying collectible gold coins.
Buying collectible gold coins is not quite as straightforward as buying bullion coins or gold
bars, but the rewards can definitely be worth the extra effort.

3.7.4 GOLD CERTIFICATES

Gold certificates represent an excellent way to buy gold without the complications of having
to actually take delivery of a pile of gold and then store it and look after it. Buying gold
certificates is another really straightforward way to invest in gold, and it is an option that is
well worth considering.

3.7.5 GOLD EXCHANGE TRADED FUNDS

There are plenty of ways to invest in gold other than physically buying gold and storing it,
and some of these may be more appealing to those investors that are perhaps more familiar
with investing on the stock markets than they are with holding a valuable commodity. One
such method of gold investment is gold exchange traded funds; an investment option that is
open to anybody and reasonably simple to understand.

3.7.6 GOLD FUTURES

Buying gold futures is one of the more complex, and riskier ways to invest in gold. As a
general rule it is not advice able buying gold futures unless the investor has some decent level
of investment experience, or at least has someone who can offer some advice and guidance
on what to do. Although the basic concept of gold futures is not that difficult to understand,
investing in gold in this way can carry significantly higher risks. There is also the potential
for great returns through buying gold futures too, so there are reasons why investors do like
to speculate on gold futures.

3.8 INVESTMENT OPTIONS AVAILABLE

29
There are a large number of investment instrument available today to make lives easier. In
India numbers of investment avenues are available for the investors. Some of them are
marketable and some of them also highly risky while other is almost risk less. The investor
has to choose Proper Avenue among them. Depending upon his specific need, risk,
preference and return expected. Investment avenues can broadly be categorised under the
following heads.

 Equity

 A Bonds

 Corporate debentures

 Company Fixed.

 Bank Fixed

 PPF

 Life Insurance

 Post office-NSC

 Gold/Silver

30
  Real estate

 Mutual fund

 Others

3.9 GOLD INVESTMENT TREND

Of all the precious metals, gold is the most popular as an investment, Investors generally buy
gold as a way of diversifying risk. The gold market is subject to speculation as are other
markets, especially through the use of futures contracts and derivatives. Gold price has shown
a long term correlation with the price of crude oil. This suggests a reason why gold is sold off
during economic weakness. However, during the recent period of recovery following the
worldwide economic recession of 2008, gold has also been used as an instrument to prevent
losses or incur profits.

The emotional aspects of gold are something that men are exposed to from a very young age.
Gold is everywhere: parents' wedding rings, pirate treasure, chocolate "gold" coins, royal
artefacts and glittering fillings in rap videos. It is that deep cultural importance of gold that
makes gold an anomaly in the world of commodity investing.

While many commodities are affected by more than just supply and demand, the price of gold
drifts farthest from that balance. For example, gold has played a role in currency going back
to the carliest recorded civilizations. Today is no different, with governments and central
banks holding gold as a store of value to support their currencies. Speculators spend a lot of
time thinking about the role of these agencies and their manipulation of the price of gold.

Of course, gold is also affected by supply and demand. It is estimated the Indian public holds
more than 13,000 tonnes of gold. As the economies in India, China, and other countries
continue to develop, the demand for gold jewelry will continue to increase. Gold is also used
in electronics. While the majority of gold produced is used in jewelry, it is estimated that up
to 20% of production goes into the manufacture of electronics.

31
The exact reasons are difficult to pin down, but gold is worth more US dollars now than at
any other time in history. The US dollar has been declining, but gold is also at all-time highs
in Japanese yen, British pounds and Euros. Another big part of the story is that gold is not at
all-time highs when its historical prices are adjusted for inflation. When gold hit $850 per
ounce in January 1980, gold was worth almost $2,400 current dollars. Many look at this
number and say gold has a lot of potential to rise even beyond current record prices.

3.10 OPERATIONAL DEFINITION OF GOLD

Operational Investing is an investment strategy which aims to generate investment return in

the form of increased value by improving operational performance. Other private equity
strategies focus on leveraging existing products, markets, or technologies in strong
companies with solid management teams. In these situations private equity investors,
typically investment bankers with little operational experience, maintain an arms-length
relationship while exerting their influence from the board room. Operational investing is a
"meat and potatoes" strategy that focuses on companies that may not be operating at peak
performance levels, have weak or incomplete management teams, and have the potential to
build value and drive profits through improved operational performance.

3.11 OPERATIONAL RISK

Operational risk is the risk that is not inherent in financial, systematic or market-wide risk. It
is the risk remaining after determining financing and systematic risk, and includes risks
resulting from breakdowns in internal procedures, people and systems.

3.12 REASONS FOR INVESTMENT IN GOLD

a. Diversification -Precious metals have a historical negative or weak correlation to price

movements in the financial markets, especially the stock market.

32
b. Liquidity- Excellent liquidity with bullion markets trading continuously around the globe
and no determination of market value required by investor upon resale as the price is based
on a livemarket price and thus not the subjective opinion of an auctioneer, valuer or vested
interests. One can automatically sell one's bullion at any time of one's choosing unlike a
house which can be on the market for months and sometimes a buyer can pull out at the last
minute and occasionally no buyers can be found for a property.

c. No Liabilities-Gold and silver are millenniums-old finite mediums of exchange or

currency that does not represent any government's liability or due to ability to ability to
repay; confidence in issuing entity is 100% assay precious metals for purity.

d. Safe Storage- Well-established, secure and regulated intermediaries such as the AAA
rated Perth Mint exist for long-term storage and insurance if holdings do not fit in or
investors do not feel secure enough to store boxes. bullion in a private residence or safety
deposit boxes.

e. Protect against uncertainty- Gold, silver, platinum and palladium are asset classes which
were in a bear market for over 20 years, after their phenomenal investment returns in the
stagflationary 1970s when they rose by some 3000% from $35 to $850. Precious metals were
disdained by Wall Street, much of mainstream finance and the majority of investors and since
2001, they are exhibiting signs of were massively oversold. But accumulation increasing
macroeconomic and geopolitical instability an increase in demand. and has led to

f. Better then paper money- Gold is an asset that central banks will increasingly use to
shore up confidence in increasingly debased and volatile fiat currencies as excessively loose
monetary and fiscal policies which may cause monetary instability. There is a likelihood of
paper money or fiat currency competitive devaluations going forward in order to maintain
exports.

g. Gold as a Safe Haven- A safe haven protects investors against a possible during the 2008
catastrophe. That's why many investors bought gold financial skyrocket is response to the
euro crisis. Gold prices continued 10 zone crisis, the impact of Obamacare, the Dodd-Frank
Wall Street Reform Act, and the 2011 delt calling crisis. Many other wanted to protect their

33
Investments against a possible US. comic collapse. As a result of This extreme sonomic
uncertainty, gold priore more than doubled again, from 5869.75 in 2008 to a record high of
$1,895 on September 5, 2011.

h. Gold as a Direct Investment Many, many investors saw these tremendous increases in the
price of gold and bought it as a direct investment to take advantage of future price increase.
Others continue to buy gold because they see it as a finite valuable substance, with many
industrial uses. Last but not least, gold is held by many governments and wealthy individuals.

3.13 HISTORY AND MISSION OF THE WORLD GOLD COUNCIL

The World Gold Council ([Link]) is a global organisation with about 100 employees
in seven offices around the world. It was founded in 1987 by leading gold mining companies.
The purpose of founding the World Gold Council was and still is today to stimulate and
sustain demand for gold. The World Gold Council calls itself the "market developmeni
organisation for the gold industry".

The Gold works in four sectors to achieve this aim:

 The Investment sector, which covers private and institutional investors

 The Jewellery sector
 The Technology sector
 The Official sector, which stimulates demand from governments and central banks

3.14 MEMBERS OF THE WORLD GOLD COUNCIL

The World Gold Council has 22 members. The members are gold mining companies that
represent approximately 60% of the annual global gold production.

As of November 2011, the members of the World Gold Council generated more than US-
Dollar 40 billion in annual revenues and had a combined market capitalization of over US-
Dollars 200 billion.

The current members of the World Gold 1 are:

 African Barrick

34
  Agnico-Eagle Mines Ltd
 Alamos Gold Inc.
 AngloGold Ashanti
 Barrick Gold Corp.
 Buenaventura
 Coeur d'Alene Mines Corporation
 Eldorado Gold Corporation
 Franco-Nevada Corporation
 Goldcorp Inc.
 Golden Star Resources Ltd
 Gold Fields Limited
 IAMGOLD Corporation
 Kinross Gold Corporation
 New Gold Inc.
 Newmont Mining Corporation

3.16 THE 10 BIGGEST GOLD OWNERS IN THE WORLD

The Netherland central bank, De Nederlandsche Bank, oversees the Dutch national finances,
including the country's 612.5 tonnes of gold reserves. The Dutch gold is currently worth over
$20 billion and accounts for 61.4% of the country's foreign reserves. Although Japan is the
ninth largest gold owner in the world, its 765.2 tonnes of the yellow metal account for just
2.1% of the island nation's total foreign reserves. Managed by the Bank of Japan, the
country's gold reserves would fetch approximately $25.4 billion on the open market.

Conducting Switzerland's monetary policy is the Swiss National Bank, which oversees the
country's 1,040.1 tonnes of gold. The gold is believed to be stored in huge underground
vaults near the federal Parliament building in Berne, but the Swiss National Bank treats the

35
location of the gold reserves as a secret. With the world's eighth largest reserve of the yellow
metal, Switzerland's stockpile would fetch approximately $34.5 billion in today's gold
market, accounting for 37.1% of the country's foreign reserves.

Originally listed on the New York Stock Exchange in 2004, SPDR Gold Shares has been one
of the fastest growing ETFs in the world. SPDR Gold Shares now trade on the Singapore
Stock Exchange as well as the Tokyo Stock Exchange. All of the Trust's gold is held by the
Custodian, HSBC Bank, in their London vault of a sub-custodian. except when the gold has
been allocated in the vault

The Banque De France is responsible for France's gold holdings, which have been reported at
about 2,450.7 tonnes by the International Monetary Fund. With the fifth largest gold reserve
in the world, France's amount to about $81.3 billion, accounting for 72.6% percent of the
country's foreign reserves top ten list. the second highest percentage of gold in foreign
reserves on our

The Italian National Bank, Banca D'Italia, manages the country's large gold holdings, which
account for 66.5% of its foreign reserves. With approximately 2,451.8 tonnes of gold in
reserve, Italy's holdings are very close to France's and are also worth approximately $81.3
billion at current prices.

The International Monetary Fund oversees the global financial system by following the
macroeconomic policies of its 185 member countries. It is an organization formed to stabilize
international exchange rates and facilitate development and offers highly leveraged loans,
mainly to poorer countries.

The IMF's gold policies have changed in the last quarter century, but the reserves remain in
place for use in stabilizing international markets and aiding national economies. The IMF's
official policy on gold as it is stated on the organizations website is governed by the
following principles:

 As an undervalued asset held by the IMF, gold provides fundamental strength to its
balance sheet. Any mobilization of IMF gold should avoid weakening its overall
financial position.
 The IMF should continue to hold a relatively large amount of gold among its assets,
not only for prudential reasons, but also to meet unforeseen contingencies.

36
  The IMF has a systemic responsibility to avoid causing disruptions to the functioning
of the gold market.
 Profits from any gold sales should be used whenever feasible to create an investment
fund, of which only the income should be used.

The Deutsche Bundesbank, Germany's central bank, is the most influential member of the
European System of Central Banks. With a hefty 3,412.6 tonnes of gold reserves valued at
about $113.2 billion at current prices, Germany's gold accounts for almost 70% of the
country's total foreign reserves. The United States holds the largest gold reserve in the world.
With 8,133.5 tonnes, U.S. gold holdings are worth approximately $269.67 billion. This
massive gold reserve represents about 9436 an ounce for every person living in the country.
The majority of the American gold is reported to be held in the world-famous United States
Bullion Depository in Fort Knox, Kentucky, although there is some controversy that suggests
otherwise. The remainder of the U.S. reserves is held at the Philadelphia Mint, the Denver
Mint, the West Point Bullion Depository, and the San Francisco Assay Office. The top ten
largest owners of gold in the world are reported to control a total of 24,258.3 tonnes, or over
855 million ounces. At current spot prices, this gold would be worth approximately $804.35
billion and represents about 15.4% of all the gold ever mined.

3.17 RULES AND REGULATIONS FOR GOLD INVESTMENT

The spurt of gold investment schemes has grabbed the attention of many. The gold
investment schemes which offer interest at the end of the tenure as contribution by the
company require the same to be redeemed against jewellery only. However, what is forgotten
in this mad rush is that such schemes are completely unregulated. Recent public interest
litigation (PIL) questioned the legality of these very gold investment schemes.

Such gold purchases schemes require the investor to put in money for say 11 months and the
instalment for the 12th month is put in by the company. Thus, the interest is nothing but the

37
last instalment which the investor earns. Although, such schemes claim that cash refunds will
not be possible, yet in a way it is cash in the form of the 12th instalment that the investor gets
back. Such schemes not only ensure that the investor remains tied to the company but also
that the company always has a steady inflow of money.

Although, there apparently seems to be nothing wrong in such schemes, yet the lingering
question is what if the company goes into liquidation? Will the investment ever be returned?
The terms of such schemes clearly mention that no cash refund is possible. The question
becomes even more daunting to answer considering that such schemes are completely
unregulated. According to a media report, both Securities and Exchange Board of India
(SEBI) and Reserve Bank of India (RBI) have replied to a Right to Information (RTI)
application stating that such schemes are not regulated by them at all. It is however, difficult
to believe how the regulatory bodies could take such a stand. Here are few regulations which
rebut this stand of the regulatory bodies.

3.18 CHAPTER SUMMARY

The above chapter has discussed, on the basis of the objectives collected from the various
journals, books and magazines, the gold investment behaviour of the investors in Erode
district. The researcher has discussed gold and types of investments in gold, advantages,
benefits, features favourable for gold investment and exchange trader products and behaviour
of the investment pattern and alternatives available for investment in gold.

CHAPTER-4

DATA ANALYSIS AND INTERPRETATION

4.1 INTRODUCTION:

38
 In this chapter data analysis and interpretation of the study on “A Study on the Gold
Investment Behaviour of the Investors” is presented based on the opinion of a sample of 110
respondents through questionnaire.

4.2 SIMPLE PERCENTAGE:

Percentage analysis is one of the basic statistical tools widely used in analysis and
interpretation of primary data. It deals with response to a particular question in which
percentage arrived from the total respondents selected for the study. It is one of the simple
forms of analysis which is very easy for anyone who understand the outcome of the research.

No. of Respondents

Simple percentage analysis = ____________________x100

Total no. of Respondents

4.2.1 GENDER

Table 4.2.1

Gender

Gender Frequency Percent

39
 Male 61 55.5

Female 40 36.4

Transgender 9 8.2

Total 110 100.0

Illustrates, Respondents based on Gender. Out of 110 respondents, sixty one (55.5)
respondents are Male, forty (36.4) respondents are Female, nine (8.2) respondents are
transgender. Thus it is inferred that majority of respondents are Male.

4.2.2 RESIDENTIAL AREA

Table 4.2.2

Residential Area

Residential Area Frequency Percent

40
 Urban 72 65.5

Semi urban 38 34.5

Total 110 100.0

Illustrates, Respondents based on Area of Residence. Out of 110 respondents, Seventy two
(65.5) respondents are reside in Urban area, Thirty eight (34.5) respondents are reside in
Semi-urban area. Thus it is inferred that majority of respondents are reside in Urban area.

4.2.3 AGE

Table 4.2.3

Age

Age Frequency Percent

41
 Up to 30 years 28 25.5

31-40 years 52 47.3

41-50 years 28 25.5

Above 50 years 2 1.8

Total 110 100.0

Illustrates, Respondents based on Age. Out of 110 respondents, Twenty eight (25.5)
respondents are Up to 30 years of age, Fifty two (47.3) respondents are between 31-40 years
of age, Twenty eight (25.5) respondents are between 41-50 years of age, Two (1.8)
respondents are above 50 years of age. Thus it is inferred that majority of respondents are
between 31-40 years of age.

4.2.4 EDUCATIONAL QUALIFICATION

Table 4.2.4

Educational Qualification

Educational Qualification Frequency Percent

42
 Up to SSLC 10 9.1

HSC 25 22.7

UG 44 40.0

PG 15 13.6

Professional 16 14.5

Total 110 100.0

Illustrates, Respondents based on Educational qualifications. Out of 110 respondents, Ten

(9.1) respondents are SSLC, Twenty five (22.7) respondents are HSC, Forty four (40.0)
respondents are UG, Fifteen (13.6) respondents are PG, Sixteen (14.5) respondents are
Professional, Thus it is inferred that majority of respondents are UG.

4.2.5 OCCUPATION

Table 4.2.5

Occupation

Occupation Frequency Percent

43
 Agriculture 8 7.3

Business 35 31.8

Private employee 37 33.6

Government employee 14 12.7

House wife 11 10.0

Other 5 4.5

Total 110 100.0

Illustrates, Respondents based on Occupation. Out of 110 respondents, Eight (7.3)

respondents are Agriculture, Thirty five (31.8) respondents are Business, Thirty seven (33.6)
respondents are Private Employee, Fourteen (12.7) respondents are Government employee,
Eleven (10.0) respondents are House wife, Five (4.5) respondents are Other. Thus it is
inferred that majority of respondents are Private employee.

4.2.6 MARITAL STATUS

Table 4.2.6
Marital Status
Marital Status Frequency Percentage

44
 Married 63 57.3

Unmarried 40 36.4

Separated 7 6.4

Total 110 100.0

Illustrates, Respondents based on Marital status. Out of 110 respondents, Sixty three (57.3)
respondents are Married, Forty (36.4) respondents are Unmarried, Seven (6.4) respondents
are Separated. Thus it is inferred that majority of respondents are Married.

4.2.7 TYPES OF FAMILY

Table 4.2.7

Types of Family

Types of Family Frequency Percent

45
 Joint 40 36.4

Nuclear 70 63.6

Total 110 100.0

Illustrates, Respondents based on Types of Family. Out of 110 respondents, Forty (36.4)
respondents are Joint family, Seventy (63.6) respondents are Nuclear family. Thus it is
inferred that majority of respondents are Nuclear family.

4.2.8 MEMBERS OF THE FAMILY

Table 4.2.8

46
 Members of the Family

Members of the Family Frequency Percent

Up to 2 9 8.2

3 42 38.2

4 45 40.9

Above 5 14 12.7

Total 110 100.0

Illustrates, Respondents based on Members of the Family. Out of 110 respondents, Nine (8.2)
respondents are Up to 2, Forty two (38.2) respondents are 3, Forty five (40.9) respondents are
4, Fourteen (12.7) respondents are Above 5. Thus it is inferred that majority of respondents
are 4 members of the family.

4.2.9 EARNING MEMBERS

Table 4.2.9

Earning Members

47
 Earning Members Frequency Percent

Up to 2 9 8.2

3 42 38.2

4 45 40.9

Above 5 14 12.7

Total 110 100.0

Illustrates, Respondents based on Earning Members. Out of 110 respondents, Nine (8.2)
respondents are Up to 2, Forty two (38.2) respondents are 3, Forty five (40.9) respondents are
4, Fourteen (12.7) respondents are Above 5. Thus it is inferred that majority of respondents
are 4 members of the family.

4.2.10 FAMILY INCOME

Table 4.2.10

48
 Family Income

Family Income Frequency Percent

Up to 20,000 7 6.4

20,001-30,000 20 18.2

30,001-40,000 33 30.0

40,001-50,000 20 18.2

Above 50,001 30 27.3

Total 110 100.0

Illustrates, Respondents based on Family Income. Out of 110 respondents, Seven (6.4)
respondents Family Income is Up to 20,000, Twenty (18.2) respondents Family Income is
between Rs.20,001-30,000, Thirty three (30.0) respondents Family Income is between Rs.
30,001-40,000, Twenty (12.8) respondents Family Income is Rs.40,001-50,000. Thirty (27.3)
respondents Family Income is above Rs.50,001. Thus it is inferred that majority of
respondents Family Income is Rs. 30,001-40,000.

4.2.11 MONTHLY INVESTMENT IN GOLD

Table 4.2.11

49
 Monthly Investment in Gold

Monthly investment in
Gold Frequency Percent

Up to 8000 16 14.5

8,001-10,000 50 45.5

10,001-12,000 31 28.2

12,001-14,000 13 11.8

Total 110 100.0

Illustrates, Respondents based on Monthly Investment in Gold. Out of 110 respondents,

Sixteen (14.5) respondents invested Up to Rs.8000, Fifty (45.5) respondents invested
Rs.8,001-10,000, Thirty one (8.2) respondents invested Rs.10,001-12,000, Thirteen (11.8)
respondents invested Rs.12,001-14,000. Thus it is inferred that majority of respondents
invested Rs.8,001-10,000.

4.2.12 FIRST GENERATION INVESTORS

Table 4.2.12
First Generation Investors
First Generation Investors Frequency Percent

50
 Yes 76 69.1

No 34 30.9

Total 110 100.0

Illustrates, Respondents based on First Generation Investors. Out of 110 respondents, Seventy
six (69.1) respondents resides in Yes, Thirty four (30.9) respondents resides in No. Thus it is
inferred that majority of respondents resides in Yes.

4.2.13 GUIDE FOR INVESTMENT

Table 4.2.13
Guide for Investment

51
 Guide for investment Frequency Percent

Self 35 31.8

Spouse 23 20.9

Parents 38 34.5

Friends/Relatives 14 12.7

Total 110 100.0

Illustrates, Respondents based on Guide for investment. Out of 110 respondents, Thirty five
(31.8) are guided by Self, Twenty three (20.9) respondents are guided by Spouse, Thirty eight
(34.5) respondents are guided by Parents, Fourteen (12.7) respondents are guided by
Friends/Relatives. Thus it is inferred that majority of respondents are guided by Parents.

4.2.14 INVESTING IN GOLD

Table 4.2.14
Investing in Gold

52
 Investing in Gold Frequency Percent

Bank 22 20.0

Financial institutions 35 31.8

Digital bonds 41 37.3

Other 12 10.9

Total 110 100.0

Illustrates, Respondents based on Investing in gold. Out of 110 respondents, Twenty two
(20.0) respondents are invested through Bank, Thirty five (31.8) respondents are invested
through Financial institutions, Forty one (37.3) respondents are invested through Digital
bonds, Twelve (10.9) respondents are invested through other. Thus it is inferred that majority
of respondents are invested in Digital bonds.

4.2.15 FREQUENCY OF INVESTMENT

Table 4.2.15
Frequency of Investment

53
 Frequency of Investment Frequency Percent

Diwali 20 18.2

Pongal 34 30.9

Atchaya thiruthi 48 43.6

Other 8 7.3

Total 110 100.0

Illustrates, Respondents based on Frequency of Investment. Out of 110 respondents, Twenty

(18.2) respondents are invested on Diwali, Thirty four (30.9) respondents are invested on
Pongal, Forty eight (43.6) respondents are invested on Atchaya thiruthi, Eight (7.3)
respondents are invested on other. Thus it is inferred that majority of respondents are invested
on Atchaya thiruthi.

4.2.16 SPECIAL OCCASIONS

Table 4.2.16
Special Occasions

54
 Special Occasions Frequency Percentage

Diwali 20 18.2

Pongal 34 30.9

Atchaya thiruthi 48 43.6

Other 8 7.3

Total 110 100.0

Illustrates, Respondents based on Special Occasions . Out of 110 respondents, Twenty (18.2)
respondents are invested on Diwali, Thirty four (30.9) respondents are invested on Pongal,
Forty eight (43.6) respondents are invested on Atchaya thiruthi, Eight (7.3) respondents are
invested on other. Thus it is inferred that majority of respondents are invested on Atchaya
thiruthi.

4.2.17 MOST PREFERED PERIOD OF INVESTMENT

Table 4.2.17
Most Preferred Period of Investment

55
 Most preferred period of
investment Frequency Percent

More than 10 years 14 12.7

6-10 years 38 34.5

1-5 years 48 43.6

Less than 1 year 10 9.1

Total 110 100.0

Illustrates, Respondents based on Most Preferred Period of Investment. Out of 110

respondents, Fourteen (12.7) respondents preferred period of More than 10 years, Thirty eight
(34.5) respondents preferred period of 6-10 years, Forty eight (43.6) respondents preferred
period 1-5 years, Ten (9.1) respondents preferred period of Less than 1 year . Thus it is
inferred that majority of respondents preferred period 1-5 years.

4.2.18 MODE OF PAYMENT

Table 4.2.18
Mode of Payment

56
 Mode of payment Frequency Percent

Cash 27 24.5

Online payment 41 37.3

Credit/Debit card 31 28.2

Installment 11 10.0

Total 110 100.0

Illustrates, Respondents based on Mode of Payment. Out of 110 respondents, Twenty seven
(24.5) respondents pay through Cash, Forty one (37.3) respondents pay through Online
payment, Thirty one (28.2) respondents pay through Credit/Debit card, Eleven (10.0)
respondents pay through installment. Thus it is inferred that majority of respondents pay
through Online payment.

4.2.19 TYPE OF INVESTMENT

Table 4.2.19
Type of Investment

57
 Type of Investment Frequency Percent

Physical Gold 28 25.5

Gold Bond 38 34.5

Digital Gold 44 40.0

Total 110 100.0

Illustrates, Respondents based on Type of Investment. Out of 110 respondents, Twenty eight
(25.5) respondents invest in Physical Gold, Thirty eight (34.5) respondents invest in Gold
Bond, Forty four (40.0) respondents invest in Digital Gold. Thus it is inferred that majority of
respondents invest in Digital Gold.

4.3 CHI-SQUARE
A Chi-Square test is a statistical test used to compare observed results with expected
results. Pearson’s Chi-Squared test is used to determine whether there is a statistically

58
significant difference between the expected frequencies and the observed frequencies in one
or more categories of contingency table.

4.3.1 GENDER AND FACTORS INFLUENCING

To identify whether gender is associated with Factor influencing on Gold investment

behaviour of the investors, chi-square test is employed.

Table 4.3.1

Gender and Factor influencing

Ho: gender is not associated with Factor influencing

Factor influencing
Gender Total
Low Moderate High

Male 7 33 21 61
11.5% 54.1% 34.4% 100.0%
Female 15 20 5 40
37.5% 50.0% 12.5% 100.0%
Transgender 0 6 3 9
0.0% 66.7% 33.3% 100.0%
Total 22 59 29 110

Df: 4 Calculated 2 Value: 15.133a P Value: 0.004 Significant

Male Investors have high Factor influencing on Gold investment behaviour of the investors.
Female Investors have low Factor influencing on Gold investment behaviour of the investors.
As the calculated P value is greater than 0.05 there exist a significant association between
gender and Factor influencing on Gold investment behaviour of the investors. Hence, the null
hypothesis is rejected.

4.3.2 AREA OF RESIDENCE AND FACTORS INFLUENCING

59
 To identify whether area of residence is associated with Factor influencing on Gold
investment behaviour of the investors, chi-square test is employed.

Table 4.3.2

Area of residence and Factor influencing

Ho: Area of Residence is not associated with Factor influencing

Area of Factor influencing Total

Residence Low Moderate High

Urban 15 37 20 72

20.8% 51.4% 27.8% 100.0%

Semi urban 7 22 9 38

18.4% 57.9% 23.7% 100.0%

Total 22 59 29 110

Df: 2 Calculated 2 Value: 0.427a P Value: 0.808 Not Significant

Investors residing in urban area have high Factor influencing on Gold investment behaviour
of the investors. Investors residing in urban area have low Factor influencing on Gold
investment behaviour of the investors. As the calculated P value is greater than 0.05 there
does not exist a significant association between area of residence and Factor influencing on
Gold investment behaviour of the investors. Hence, the null hypothesis is accepted.

4.3.3 AGE AND FACTORS INFLUENCING

60
 To identify whether Age is associated with Factor influencing on Gold investment
behaviour of the investors, chi-square test is employed.

Table 4.3.3

Age and Factor influencing

Ho: Age is not associated with Factor influencing

Age Factor influencing Total

Low Moderate High

up to 30 3 19 6 28
Years
10.7% 67.9% 21.4% 100.0%

31-40 Years 8 29 15 52

15.4% 55.8% 28.8% 100.0%

41-50 Years 10 10 8 28

35.7% 35.7% 28.6% 100.0%

Above 50 1 1 0 2
Years
50.0% 50.0% 0.0% 100.0%

Total 22 59 29 110

Df: 6 Calculated 2 Value: 9.859a P Value: 0.131 Not significant

Investors between 31-40 years of age have high Level of Preference on Gold investment
behaviour of the investors. Investors above 50 years of age have low Level of Preference on
Gold investment behaviour of the investors. As the calculated P value is greater than 0.05
there does not exist a significant association between age and Factor influencing on Gold
investment behaviour of the investors. Hence, the null hypothesis is accepted.

4.3.4 EDUCATIONAL QUALIFICATION AND FACTORS INFLUENCING

61
 To identify whether Educational qualification is associated with Factor influencing on
Gold investment behaviour of the investors, chi-square test is employed.

Table 4.3.4

Educational qualification and Factor influencing

Ho: Educational qualification is not associated with Factor influencing

Educational Factor influencing Total

qualification Low Moderate High

up to SSLC 2 5 3 10
20.0% 50.0% 30.0% 100.0%
HSC 6 17 2 25
24.0% 68.0% 8.0% 100.0%
UG 8 19 17 44
18.2% 43.2% 38.6% 100.0%
PG 3 9 3 15
20.0% 60.0% 20.0% 100.0%
Professional 3 9 4 16
18.8% 56.3% 25.0% 100.0%
TOTAL 22 59 29 110

Df: 8 Calculated 2 Value: 8.305a P Value: 0.404 Not Significant

Investors with qualification in UG have high Level of satisfaction on Gold investment

behaviour of the investors. Investors with qualification in HSC have low Factor influencing
on Gold investment behaviour of the investors. As the calculated P value is greater than 0.05
there exist a significant association between Educational Qualification and Level of S on
Gold investment behaviour of the investors. Hence, the null hypothesis is accepted.

4.3.5 OCCUPATION AND FACTORS INFLUENCING

62
 To identify whether occupation is associated with Factor influencing on Gold
investment behaviour of the investors, chi-square test is employed.

Table 4.3.5

Occupation and Factor influencing

Ho: Occupation is not associated with Factor influencing

Factor influencing Total

Occupation
Low Moderate High

Agriculture 0 6 2 8
0.0% 75.0% 25.0% 100.0%
Business 4 19 12 35
11.4% 54.3% 34.3% 100.0%
private 6 23 8 37
16.2% 62.2% 21.6% 100.0%
Government 5 5 4 14
35.7% 35.7% 28.6% 100.0%
House wife 7 2 2 11
63.6% 18.2% 18.2% 100.0%
Other 0 4 1 5
0.0% 80.0% 20.0% 100.0%
TOTAL 22 59 29 110

Df: 10 Calculated 2 Value: 23.137a P Value:0.010 Significant

Investors who are Business have high Factor influencing on Gold investment behaviour of
the investors. Investors who are House wife have low Level of Preference on Gold
investment behaviour of the investors. As the calculated P value is greater than 0.05 there
exist a significant association between occupation and Factor influencing on Gold investment
behaviour of the investors. Hence, the null hypothesis is rejected.
4.3.6 TYPE OF FAMILY AND FACTORS INFLUENCING

63
 To identify whether Type of family is associated with Factor influencing on Gold
investment behaviour of the investors, chi-square test is employed.

Table 4.3.6

Type of family and Factor influencing

Ho: Type of family is not associated with Factor influencing

Factor influencing Total

Type of family
Low Moderate High

Joint family 4 29 7 40
10.0% 72.5% 17.5% 100.0%
Nuclear family 18 30 22 70

25.7% 42.9% 31.4% 100.0%

TOTAL 22 59 29 110

Df: 2 Calculated 2 Value: 9.186a P Value:

Significant
0.010

Investors who are Joint family have high Factor influencing on Gold investment behaviour of
the investors. Investors who are Nuclear family have low Level of Preference on Gold
investment behaviour of the investors. As the calculated P value is greater than 0.05 there
exist a significant association between type of familys and Factor influencing on Gold
investment behaviour of the investors. Hence, the null hypothesis is rejected.

4.3.7 FAMILY INCOME AND FACTORS INFLUENCING

64
 To identify whether monthly income is associated with Factor influencing on Gold
investment behaviour of the investors, chi-square test is employed.

Table 4.3.7

Family income and Factor influencing

Ho: Family income is not associated with Factor influencing

Family income Factor influencing Total

low moderate high

Below 20,000 1 5 1 7

14.3% 71.4% 14.3% 100.0%

20,001-30,000 4 12 4 20

20.0% 60.0% 20.0% 100.0%

30,001-40,000 11 21 1 33

33.3% 63.6% 3.0% 100.0%

40,001-50,000 6 10 4 20

30.0% 50.0% 20.0% 100.0%

Above 50,001 0 11 19 30

0.0% 36.7% 63.3% 100.0%

Total 22 59 29 110

Df: 8 Calculated 2 Value: 36.256a P Value: significant

0.000

Investors who are earning above 50,001 have high Factor influencing on Gold investment
behaviour of the investors. Investors who are earning between 30,001-40,000 have low Level
of Preference on Gold investment behaviour of the investors. As the calculated P value is
greater than 0.05 there exist a significant association between Family income and Factor
influencing on Gold investment behaviour of the investors. Hence, the null hypothesis is
rejected.

4.4 WEIGHTED AVERAGE

65
 Table 4.4.1

Preference towards Gold Investments

PREFERENCE SA A N DA SDA TOTAL MEAN RANK

5 4 3 2 1 SCORE
Better annual 69 23 8 7 3 110 4.35 1
income
345 92 24 14 3 478
Better portfolio 23 61 15 11 0 110 3.87 2
management
115 244 45 22 0 426
Easily Convertible 40 21 35 10 4 110 3.75 5
200 84 105 20 4 413
Gold value 31 41 20 17 1 110 3.76 4
appreciation
155 164 60 34 1 414
Convenience 31 39 19 13 8 110 3.58 10
155 156 57 26 0 394
Traditional and 25 44 21 20 0 110 3.67 7
sentiment
125 176 63 40 0 404
Own possession 25 38 36 9 2 110 3.68 6
125 152 108 18 2 405
Accumulation of 22 48 25 12 3 110 3.67 7
wealth
110 192 75 24 3 404
Social needs 33 38 26 9 4 110 3.79 3
165 152 78 18 4 417
Multiple schemes 31 38 19 16 6 110 3.65 9
155 152 57 32 6 402

From the above table inferred that Preference towards Gold Investments weighted average
test is employed majority of the investors satisfied by Better annual income followed by
better portfolio management, social needs etc…

Table 4.4.2

66
 Purpose of investment in Gold

PURPOSE SA A N DA SDA TOTAL MEAN RANK

5 4 3 2 1 SCORE
High return 76 19 8 3 4 110 4.45 1
380 76 24 6 4 490
Emergency need 27 60 8 12 3 110 3.87 3
135 240 24 24 3 426
Child Education 36 33 30 9 2 110 3.84 5
180 132 90 18 2 422
Marriage 23 48 20 14 5 110 3.89 2
115 192 60 56 5 428
Retirement 33 39 22 8 8 110 3.74 7
165 156 66 16 8 411
Liquidity 35 38 23 13 1 110 3.85 4
175 152 69 26 1 423
Prestige and status 32 32 32 11 3 110 3.72 8
160 128 96 22 3 409
Convertibility 24 46 24 3 13 110 3.59 10
120 184 72 6 13 395
Increasing value 32 36 27 9 6 110 3.72 8
160 144 81 18 6 409
Guarantee and
Warrantee 31 44 15 18 2 110 3.76 6
155 176 45 36 2 414

From the above table inferred that Purpose of Gold Investments weighted average test is
employed majority of the investors satisfied by High return followed by Marriage,
Emergency need etc…

4.5 FACTOR ANALYSIS

Table 4.5.1
67
 Purpose of investment in gold

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .829

Bartlett's Test of Sphericity Approx. Chi-Square 691.091

df 55

sig. .000

To identify the prominent factors that influences purpose of Gold Investment in Erode city,
factor analysis is employed. Kaiser-Meyer-Olkin (KMO) and Bartlett’s Test of Sphericity has
been used as pre-analysis testing for suitability of the entire sample for factor analysis. The
result of KMO and Bartlett’s Test is found greater than 0.70. Hence the collected data is fit
for employing factor analysis. Further the large value of Bartlett’s Test of Sphericity (.829,
Df:55, Sig. .000) indicated the appropriateness of factor analysis i.e., the sample was
adequate.

Rotated Component Matrix

68
 Component
1 2
Guarantee and
.866
Warrantee
Increasing value .830
Assurance of quality .812
Convertibility .729
Prestige and Status .648
High return .594
Liquidity .826
Retirement .793
Child marriage .762
Child education .713
Emergency .537
Eigen values 5.591 1.388
Percentage of variance 50.829 12.621
Cumulative Percentage 50.829 63.450
of variance
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 3 iterations.

Two factors are identified by locating Eigen values greater than unity. Factors which have a
component loading of 0.5 and above are said to be significant that induces purpose of Gold
Investment. From the rotated component matrix, it can be seen that “Guarantee and
Warrantee”, “Increasing value”, “Assurance of quality”, “Convertibility”, “Prestige and
Status”, “High return” have a component loading of 0.5 and above. Hence, these six variables
form first factor.

In the second factor, “Liquidity”, “Retirement”, “Child marriage”, “Child education”,

“Emergency” are found to be significant.

69
 CHAPTER-5

FINDINGS, SUGGESTION AND CONCLUTION

5.1 FINDINGS

SIMPLE FREQUENCY

 Majority (55.5) of the respondents are between Male

 Majority (65.5) of the respondents resides in Urban area
 Majority (47.3) of the respondents are between 31-40 years of age
 Majority (40.0) of the respondents Educational qualification are Under Graduate
Degree
 Majority (33.6) of the respondents occupation are Private employee
 Majority (57.3) of the respondents are Married
 Majority (63.6) of the respondents are Nuclear Family
 Majority (40.9) of the respondents are 4 members of the Family
 Majority (40.9) of the respondents are 4 earning members in Family
 Majority (30.0) of the respondents Family income is 30,001-40,000
 Majority (45.5) of the respondents are invest monthly Rs.8,001-10,000
 Majority (69.1) of the respondents resides yes for First generation investors
 Majority (34.5) of the respondents are Guide for investment by parents
 Majority (37.3) of the respondents are invested in Digital bonds
 Majority (43.6) of the respondents are invested in Atchaya thiruthi
 Majority (43.6) of the respondents are invested on Atchaya thiruthi for special
occasions
 Majority (43.6) of the respondents preferred period 1-5 years
 Majority (37.3) of the respondents pay through online payment
 Majority (40.0) of the respondents invest in Digital Gold based on type of investment

70
CHI-SQUARE TOWARDS FACTOR INFLUENCING

Gender
Male Investors have high Factor influencing on Gold investment behaviour of the investors.
also female Investors have low Factor influencing on Gold investment behaviour of the
investors. As the calculated P value is greater than 0.05 there exist a significant association
between gender and Factor influencing on Gold investment behaviour of the investors.
Hence, the null hypothesis is rejected.

Area Of Residence
Investors residing in urban area have high Factor influencing on Gold investment behaviour
of the investors. Investors residing in urban area have low Factor influencing on Gold
investment behaviour of the investors. As the calculated P value is greater than 0.05 there
does not exist a significant association between area of residence and Factor influencing on
Gold investment behaviour of the investors. Hence, the null hypothesis is accepted.

Age
Investors between 31-40 years of age have high Level of Preference on Gold investment
behaviour of the investors. Investors above 50 years of age have low Level of Preference on
Gold investment behaviour of the investors. As the calculated P value is greater than 0.05
there does not exist a significant association between age and Factor influencing on Gold
investment behaviour of the investors. Hence, the null hypothesis is accepted.

Educational Qualifications
Investors with qualification in UG have high Level of satisfaction on Gold investment
behaviour of the investors. Investors with qualification in HSC have low Factor influencing
on Gold investment behaviour of the investors. As the calculated P value is greater than 0.05
there exist a significant association between Educational Qualification and Level of S on
Gold investment behaviour of the investors. Hence, the null hypothesis is accepted.

71
Occupation
Investors who are Business have high Factor influencing on Gold investment behaviour of
the investors. Investors who are House wife have low Level of Preference on Gold
investment behaviour of the investors. As the calculated P value is greater than 0.05 there
exist a significant association between occupation and Factor influencing on Gold investment
behaviour of the investors. Hence, the null hypothesis is rejected.

Type Of Family
Investors who are Joint family have high Factor influencing on Gold investment behaviour of
the investors. Investors who are Nuclear family have low Level of Preference on Gold
investment behaviour of the investors. As the calculated P value is greater than 0.05 there
exist a significant association between type of familys and Factor influencing on Gold
investment behaviour of the investors. Hence, the null hypothesis is rejected.

Family Income
Investors who are earning above 500001 have high Factor influencing on Gold investment
behaviour of the investors. Investors who are earning between 30001-40000 have low Level
of Preference on Gold investment behaviour of the investors. As the calculated P value is
greater than 0.05 there exist a significant association between Family income and Factor
influencing on Gold investment behaviour of the investors. Hence, the null hypothesis is
rejected.

WEIGHTED AVERAGE

Preference towards Gold Investments

From the table inferred that Preference towards Gold Investments weighted average test is
employed majority of the investors satisfied by Better annual income followed by better
portfolio management, social needs etc…

Purpose of Gold Investments

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From the table inferred that Purpose of Gold Investments weighted average test is employed
majority of the investors satisfied by High return followed by Marriage, Emergency need
etc…

FACTOR ANALYSIS

Purpose of Gold Investments

Two factors are identified by locating Eigen values greater than unity. Factors which have a
component loading of 0.5 and above are said to be significant that induces purpose of Gold
Investment. From the rotated component matrix, it can be seen that “Guarantee and
Warrantee”, “Increasing value”, “Assurance of quality”, “Convertibility”, “Prestige and
Status”, “High return” have a component loading of 0.5 and above. Hence, these six variables
form first factor.

In the second factor, “Liquidity”, “Retirement”, “Child marriage”, “Child education”,

“Emergency” are found to be significant.

5.2 SUGGESTIONS

Diversification: Consider allocating a portion of your investment portfolio to gold to

diversify risk.
Long-term Perspective: Gold is often seen as a long-term store of value, so consider holding
onto it for the long haul rather than trying to time the market.
Research: Stay informed about geopolitical events, economic indicators, and market trends
that may impact the price of gold.
Risk Management: Determine your risk tolerance and adjust your gold investment
accordingly. Gold prices can be volatile, so be prepared for fluctuations.
Physical vs. Paper Gold: Decide whether you want to invest in physical gold (bullion, coins)
or paper gold (ETFs, futures, mining stocks). Each has its own advantages and risks.
Costs and Fees: Be mindful of any costs and fees associated with buying, storing, and selling
gold. These can eat into your returns over time.
Storage: If you're investing in physical gold, consider secure storage options such as a safe
deposit box or a reputable storage facility.

73
Regular Monitoring: Keep an eye on your gold investment regularly, but avoid making
impulsive decisions based on short-term fluctuations.
Consultation: If unsure, consider consulting with a financial advisor or gold investment
expert to tailor your investment strategy to your specific financial goals and circumstances.

5.3 CONCLUSION

This study deals with the investment in gold, starting with the historical development of gold
and ending with the various instruments available for the purpose of investment in gold,
especially in India. There is a detailed discussion on the pros and cons of the methods of
investment in gold. How and why gold has become a means of investment is briefly touched.
Why a person should make an investment in gold and one should not make such an
investment is also dealt with.

The findings from the qualitative phase of this study support that gold investment is a ritual
activity in the Indian culture. Most of the investors preferred gold for better annual income,
better portfolio management and also social needs. The study analysed that the investors
involving in gold investment activities for the purpose of High return, Emergency need and
marriage. The study indicates that most of the investors invested in Digital Gold. As per
study, investors are invested on Atchaya thiruthi. They study discovered that gold is a best
investment bet which reduces portfolio risks and quite safest investment destination. The
study confined that first generation investors are High. The findings and suggestions made in
this study will explicitly serve as an eye-opener for the gold investors and gold shops. To
conclude, if these findings and suggestions are utilized it will be a win-win situation for both
gold investors and gold shop owners.

74
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 APPENDIX
A STUDY ON THE GOLD INVESTMENT BEHAVIOUR OF THE
INVESTORS IN ERODE CITY

PERSONAL DETAILS:

1. Gender:

a) Male b) Female c) Transgender

2. Residential Area:

a) Semi urban b) Urban

3. Age (in years):

a) Up to 3 b) 31-40 c) 41-50 d) Above 50

4. Educational qualification:

a) Up to SSLC b) HSC c) UG d) PG e) Professional

5. Occupation:

a) Agriculture b) Business c) Private employee d) Government employee e) House

wife

[Link] status:

a) Married b) Unmarried c) separated

7. Types of family:

a) Joint b) Nuclear

79
8. Members in the family:

a) Up to 2 b) 3 c) 4 d) Above 4

9. Earning members in your family:

a) Up to 2 b) 3 c) 4 d) Above 4

10. Family Income:

a) Up to 20,000 b) 20,001-30,000 c) 30,001-40,000 d) 40,001-50,000 e) Above

50,001

11. What is your monthly investment of amount in gold ?

a) Up to 8000 b) 8,001-10,000 c) 10,001-12,000 d) 12,001-14,000

12. Are you first generation investor?

a) Yes b) No

13. Who guided you to invest in gold?

a) Self b) Spouse c) Parents d)Friends/Relatives

14. Where do you invest in gold?

a) Bank b) Financial institutions c) LIC d) Others

15. What is your frequency of investment in gold?

a) Monthly b) Quarterly c) Half yearly d) Annually

16. What is special occasions to invest in gold?

a) Diwali b) Pongal c)Atchaya thiruthi d) others

17. Most preferred period of investment in gold?

a) More than 10 years b) 6-10 years c) 1-5 years d) Less than 1 year

18. What is your mode of payment?

80
a) Cash b) Online payment c) Credit/Debit Card d) Installment

19. State your type of investment?

a) Physical Gold b) Paper Gold c) Digital Gold

20. What is your purpose of investment in gold?

[Link] PURPOSE SA A N DA SDA

1
High return

2 Emergency need

3 Child education

4 Child marriage

5 Retirement

6 Liquidity

7 Prestige and status

8 Convertibility

9 Increasing value

10 Guarantee and warrantee

81
21. Why do you prefer to invest in gold compared to other investments?

[Link] PREFERANCE SA A N DA SDA

1 Better annual income

2 Better portfolio management

3 Easily convertible

4 Gold value appreciation

5 Convenience

6 Traditional and sentiment

7 Own possession

8 Accumulation of wealth

9 Social needs

10 Multiple schemes

82
22. Indicate the factors you consider while investing in gold

[Link] FACTORS TO BE HIGHEST HIGH MEDIUM LOW LOWEST

CONSIDERED

1 High liquidity for easy

conversion into cash

2 An ornament for its own

value regardless of the
changes in the world
situation

3 Yielding higher return rate

than saving/investmen t in
other types of assets

4 Low risk involved in

investing

5 Inflation rate

6 Political stability

7 The reliability of the gold

shops/companies

8 Speed and accuracy in

providing information such
as the notice of gold price

83
9 The brand

10 Fluctuating gold price

11 Wastage and making

changes

12 Payment condition such as

paying by credit card options

13 Buying/selling via the

internet

14 The convenience and

fastness of the buy back
procedure

15 Discounts

16 After sale service such as

SMS gold price alert

84
85