A PROJECT REPORT

ON
“GOLD AS AN INVESTABLE COMODITY”

Submitted by
Pushpendu Ghosh
in Partial Fulfilment for the award of the Degree Of
Bachelor's of Business Administration
In
Department Of Management
Brainware University

APRIL,2024

Submitted by : Guided by :
Pushpendu Ghosh Piyali Halder
 CERTIFICATE

It is certified that the project report titled “Gold as an Investable Comodity”

submitted by “Pushpendu Ghosh” has been carried out under my supervision and the
work has not been submitted elsewhere for a degree.

Signature of SUPERVISOR:

Name: Piyali Halder

Department: Management

Brainware University
April,2024
 DECLARATION

I hereby declare that the project work titled “Gold as an Investable Commodity” was
carried out by me for the degree of BBA under the guidance and supervision of Piyali
Halder ma’am and has not been submitted elsewhere for a degree
 ACKNOWLEDGEMENT

It is my immense pleasure to acknowledge and thank every individual who directly or

indirectly contributed to this project titled “GOLD AS AN INVESTABLE
COMMODITY” which was done during the final year of the Bachelor of Business
Administration Course.
I express my deep sense of gratitude and thank my guide Piyali Halder ma’am for her
timely help and encouragement given to me.
INDEX
CHAPTER 1: Introduction To the Topic
1.1 What is gold?
1.2 History of Gold as an Investment
1.3 Why Invest in Gold
1.4 Forms of Investment in Gold
 Introduction Of the Topic

1.1 What is Gold?

- Gold is a precious metal that has been valued for centuries due to its rarity and
beauty.

Gold is a chemical element it has the symbol Au (from the Latin word "aurum") and
the atomic number 79. In its pure form, it is a bright, slightly orange-yellow, dense,
soft, malleable, and ductile metal. Chemically, gold is a transition metal, a group 11
element, and one of the noble metals. It is one of the least reactive chemical
elements, being the second lowest in the reactivity series. It is solid under standard
conditions.

Gold often occurs in free elemental (native state), as nuggets or grains, in rocks,
veins, and alluvial deposits. It occurs in a solid solution series with the native
element silver (as in electrum), naturally alloyed with other metals like copper and
palladium, and mineral inclusions such as within pyrite. Less commonly, it occurs in
minerals such as gold compounds, often with tellurium (gold tellurides).
Gold is resistant to most acids, though it does dissolve in aqua regia (a mixture of
nitric acid and hydrochloric acid), forming a soluble tetrachloroaurate anion. Gold is
insoluble in nitric acid alone, which dissolves silver and base metals, a property long
used to refine gold and confirms the presence of gold in metallic substances, giving
rise to the term 'acid test'. Gold dissolves in alkaline solutions of cyanide, which are
used in mining and electroplating. Gold also dissolves in mercury, forming amalgam
alloys, and as the gold acts simply as a solute, this is not a chemical reaction.

A relatively rare element, gold is a precious metal that has been used for coinage,
jewelry, and other works of art throughout recorded history. In the past, a gold
standard was often implemented as a monetary policy. Gold coins ceased to be
minted as a circulating currency in the 1930s, and the world gold standard was
abandoned for a fiat currency system after the Nixon shock measures of 1971.

In 2020, the world's largest gold producer was China, followed by Russia and
Australia. As of 2020, a total of around 201,296 tonnes of gold exists above ground.
This is equal to a cube, with each side measuring roughly 21.7 meters (71 ft). The
world's consumption of new gold produced is about 50% in jewelry, 40% in
investments, and 10% in industry.[13] Gold's high malleability, ductility, resistance to
corrosion and most other chemical reactions, and conductivity of electricity have led
to its continued use in corrosion-resistant electrical connectors in all types of
computerized devices (its chief industrial use). Gold is also used in infrared
shielding, the production of colored glass, gold leafing, and tooth restoration. Certain
gold salts are still used as anti-inflammatory agents in medicine.

1.2 History of Gold as an Investment

Gold has been used as an investment option for thousands of years. It has served as a
safe haven during times of economic uncertainty and geopolitical instability. The
allure of gold as an investment can be traced back to ancient civilizations such as the
Egyptians, Greeks, and Romans who valued its inherent beauty and durability.

Gold has been proved to be the most safe and significant form of investment. As
compared to the stock market, which is highly unpredictable and risky, gold is one of
the safest and consistent from of investment that has been giving returns to its
investors.
1.3 Why Invest in Gold?

Gold has historically been an excellent hedge against inflation because its price tends
to rise when the cost-of-living increases. Over the past 50 years, investors have seen
gold prices soar and the stock market plunge during high-inflation years. This is
because when fiat currency loses its purchasing power to inflation, gold tends to be
priced in those currency units and thus tends to rise along with everything else.
Moreover, gold is seen as a good store of value, so people may be encouraged to buy
gold when they believe that their local currency is losing value.

Investing in gold offers various benefits that make it an attractive option for investors
such as -

 Store of Value

One of the primary reasons to invest in gold is its ability to retain value over time.
Unlike paper currencies, which can be subject to inflation and devaluation, gold has
maintained its purchasing power throughout history. This makes it an effective
hedge against inflation and currency fluctuations.

 Diversification

Gold serves as a diversification asset in investment portfolios. It has a low correlation

with other asset classes like stocks and bonds. By including gold in a well-diversified
investment portfolio, investors can potentially reduce the overall risk and increase
potential returns.

 Safe Haven Asset

During times of economic uncertainty and market volatility, gold tends to perform
well. It is considered a safe haven asset because it is not subject to the same risks as
traditional financial assets. Investors turn to gold as a way to protect their wealth and
safeguard against potential economic downturns.
  Tangible Asset

Unlike stocks or bonds, gold is a tangible asset that investors can physically hold.
This provides a sense of security and ownership, as gold is not dependent on the
performance of corporations or governments. Investors can enjoy the peace of mind
that comes with owning a physical asset.

1.4 Forms of Gold Investment

 Gold Bullion

Bullion is gold that is officially recognized as being at least 99.5% and 99.9% pure
and is in the form of bars or ingots. In simple words we can say that it is the purest
form of Gold.

To create bullion, gold first must be discovered by mining companies and removed
from the earth in the form of gold ore, a combination of gold and mineralized rock.
The gold is then extracted from the ore with the use of chemicals or extreme heat.
The resulting pure bullion is also called "parted bullion." Bullion that contains more
than one type of metal, is called "unparted bullion."

KEY TAKEAWAYS

 Bullion can sometimes be considered as legal tenders, and it is often held as

reserves by central banks or by institutional investors.

 Investors can buy or sell bullion through dealers who are active on one of
several global bullion markets.

 Investing in gold and silver bullion can more easily be accomplished via
exchange-traded funds (ETFs) or futures contracts.
  Gold ETFs

Exchange-Traded Funds (ETFs) are investment funds traded on stock exchanges.

Gold ETFs allow investors to gain exposure to gold without physically owning the
metal. They track the price of gold and can be bought and sold like stocks. This saves
the investors the hassle of carrying, storing and moving gold. Investors can buy and
sell gold with a single click on their smart devices, this also saves time and effort.

 Gold Futures and Options

Futures and options contracts allow investors to speculate on the future price of gold
without owning the physical metal. These derivative instruments are traded on
commodity exchanges and can be leveraged for potential gains or losses.

Gold options give the holder the right, but not the obligation, to buy or sell gold at a
specific price, up until the contract expires. With a call option, the contract holder
reserves the right to buy gold at a specific price, while a put option holder reserves
the right to sell at a predetermined level. To trade gold options, it is necessary to have
a margin brokerage account offering access to options markets.

 Gold Mining Stocks

Investing in gold mining stocks involves purchasing shares of companies that

produce gold. The value of these stocks is influenced by factors such as the price of
gold, production costs, and company performance. Investing in gold mining stocks
provides indirect exposure to gold prices.

KEY TAKEAWAYS

 The mining sector is popular among investors as it produces a steady stream

of both precious and industrial-use metals and other raw materials.

 Investors split the sector into two main groups: majors and juniors.

 Juniors are riskier ventures, most likely found in commodity exploration, such
as oil, minerals, and natural gas.
 Majors are less volatile and more mature, with a large portfolio of claims and a
capital cushion used to finance further exploration.

 Mining companies are exposed to several unique risks including fluctuations

in commodities prices, geopolitical factors where mines are located, and
finding lucrative geological areas to stake a claim.