Diwali is round the corner and “Gold” is the buzz word.In India Gold is more about sentiments and beliefs than investments. However fluctuating its movements be, however weak it may appear by a sudden steep fall or however beyond reach it becomes, still, this yellow glittering metal is a breath-taker when it comes to Indian women. And that probably is the reason why buying gold is never out of trend.
What one should keep in mind before buying Gold is :
The purity : Gold is not only an asset or investment but a most sought ornamental metal. So the purity of the gold varies depending upon the demand and preferences. Gold in its purest form is measured 24 carats on scale. But the jewelry -gold purity varies between 14 carats to 22 carats mixed with copper or silver. This is mainly because of the hardness needed to gold and the gems and accessories used to decorate it. The higher the purity the more the value of the metal is but, even the most decorative designing may lead to a high wastage and deduction when it comes to the resale of this precious metal for any reason. So these days even for the ornaments the Hallmark certification is kept in mind. This is done by the BIS hallmark agency of the government, this consists of five components the BIS mark, the fineness, the hallmark centre’s mark, the jeweler’s identification and the year of marking.
The Investment aspects :
A. Jewellery
- End use: Before buying gold the end use of the gold should always be kept in mind, in most of the cases it is ornamental but we still need to know how we will be using it like a daily wear, an occasional wear a gift or an asset for future use purpose like future weddings or an investment for a rainy day.
- The making charges: The making charges on gold depend upon the purity as the different alloys takes different amount of efforts and time. Normally the making charges vary between 100 Rs. per gram to 350 Rs. per gram. This rate plays a crucial role in the difference of rates of machine made and handmade ornaments.
- The taxes: The sales tax, the excise duties and the VAT also affects the cost of an ornament to a great extent. Many people do not take the bill to save the overhead costs but, it is always advisable to get the bills so that all the details about the purity and rate are recorded. There may be a chance that an 18 carat gold might in reality be 14 carats only.
B. Gold coins and bars
Gold bars and gold coins are the best to buy when taking for a long term investment or for trading in future as they are in the purest form and are certified mostly. Even when you exchange them for money in future there is minimum wastage or no wastage at all.
C. Gold ETF Exchange Traded Fund
These are the popular paper gold these days as there is no need to buy physical gold but the cost and returns are in terms of market value of physical gold.
D. Equity based Gold funds ad Gold mutual funds
Most of the mutual fund companies consider gold as a promising investment and have it in their portfolio these days thereby, making gold a preferred investment option.
When to invest in gold?
Apart from personal needs like marriage, childbirth or gift purpose, investment in gold should be done in a very calculative manner. Normally in India the wedding seasons are not the right time to invest as the cost of ornaments are ever high. Also one should set aside a gold fund depending upon the extra cash in hand. The best time to invest in Gold is when there are dips and steep falls in the bullion and commodity markets.
How to invest in gold?
Well the only answer is systematically. One should always watch his/ her wallet. Gold is lucrative the beautiful designs, the attractive offers and the greed for getting more can always sweep you off the feet and you might end up buying gold with the credit cards or might shift other funds here but, be careful. Don’t burden your pockets. Be reasonable. You may buy with your credit card at 32000/- for 10 grams rate and the next day the market rate may be 27000/- per 10 gram. What will you do then? So, spend within the limits. Set aside a small amount periodically and buy when you think the amount is sufficient to buy an adequate amount.
When to sell?
Sell at a price when profits booked expecting a very high return may also lead to losses due to a steep fall, so it’s always advisable to book profits and reinvest in dips.
The friendly asset
Gold is no doubt a friendly asset which is often inherited, can be used in times of urgency as a savior. The pawn dealers, the banks and the financial institutions have gold loan as one of their major product. Gold loans work upon the market value so before obtaining a gold loan ensure that you don’t let go all you have thinking it to be an easy way, banks hardly give 30-50% of the value and fluctuation in gold rates might make you lose your stuff unintentionally.
Things you ought to know and remember while buying Gold in India :
- Update yourself with current market price of gold and silver.
- Never buy Gold without Bill and always try to buy the hallmarked gold.
- Double check the purity of gold in absence of certificates if it’s taken for pawn, or bought from a close relative in times of dire need which usually happens.
- When buying from the shop ask about the purity, making charges, machine made or hand-made, wastage charges and also the VAT, buy only when completely satisfied. The making charges and wastage is very less in the machine made gold ornaments. In fact wastage is negligible but when you exchange old ornaments for new they do a lot of deductions.
- Always buy from a reputed shop. Never lose a pound against saving a penny.
- If you are buying gold through a periodic investment offer like gold harvest or monthly investment scheme with some jewelers, as there are many such schemes run across the country on corporate and local levels, always find out about the making charges they take and special clauses if any.
