Examining factors influencing investment in Digital Gold and Gold ETF using the PCA technique

Abstract

Digital Gold and Gold Exchange Traded Fund have emerged as an electronic option for investment in gold in India. The purpose of this study is to determine influential factors forming the perception and level of awareness of individuals toward investing in Digital Gold and Gold Exchange Traded Fund, and also analyze the relationship among these influential factors. Data for this quantitative analysis were obtained from a self-administered 5-point Likert questionnaire of 158 respondents who are individual investors investing in either Digital Gold or Gold Exchange Traded Fund to achieve the objectives of the study. Principal Component Analysis has been adapted as a dimension reduction technique to identify the factors impacting the decision of investing in Gold Exchange Traded Fund and Digital Gold. The factors that induce investors to invest in Digital Gold and Gold Exchange Traded Fund as identified in this study are conduciveness, security, and ease of accessibility. The factors that compel investors not to invest in Digital Gold and Gold ETFs are lack of contentment, operational challenges, lack of awareness, brokerage expenses, and infeasibility. The results disclosed that variables such as lack of satisfaction and lack of knowledge have higher factor loadings of 0.997, which indicates that investors are required to be more educated about the Digital Gold and Gold Exchange Traded Fund. Securities and Exchange Board of India, Reserve Bank of India and other regulatory authorities in India may consider regulation of Digital Gold so that it can be accepted as a trustworthy source of investment.