I have written about investing in gold through gold ETFs, and gold monthly income plans in the past, but there is a more direct way to invest in gold, and that is by buying gold coins. I use the word direct because you buy physical gold, and don’t have to pay fees to the middle-man, thereby eliminating at least one layer in between.
The flip – side is that you will have to store physical gold with you, but most of you would have bank lockers to store jewelery anyway.
Here are a few things you should know about buying gold coins in India:
1. Reputed banks sell gold coins: The most important thing to me is that reputed banks like SBI also sell gold coins, and that reduces the chances of fraud, and someone selling you something which is of less purity than they claim. A lot of banks have entered this space, and they sell gold coins through their branches. Not every branch will sell you gold coins, so you need to go to the bank’s website and find out the closest branch that will do so.
2. Different sizes: Gold coins are available in different sizes, so you can buy the ones that suits your needs the most. The usual sizes are coins of 2, 4, 5, 8, 10, 20 and 50 grams. The coins are 24 carats, and the banks guarantee their purity too.
3. PAN needed if you are buying gold coins worth more than Rs.50,000: If you plan to buy gold coins worth more than Rs.50,000 then the bank will ask you for your PAN details. I don’t think a jeweler will ask for similar documentation, and that might be one reason to go to a jeweler to buy a gold coin.
4. Banks won’t buy – back your gold coin: I have not seen any banks that you can sell your gold coins to. They are happy to sell you their gold coins, but you can’t go to them and sell it back to them. You will have to sell the gold coins to the jeweler, and this is probably another reason for buying gold coins from jewelers in the first place.
5. You might pay a premium for buying gold from a bank: Now, I started off extolling the virtues of buying gold coins from reputed banks, and I will end this post by mentioning that if you compare prices between your local jeweler and some banks – you might find a difference. There will be a difference even when they guarantee the same purity. A lot of people think that this premium is worth it because the price is higher when you go to sell the gold, but that is not always true. You don’t get this premium while selling off your gold coin. In effect, buying gold coins from your jeweler might turn out to be cheaper than buying it from a bank. It is up to you to decide whether the difference in price is worth it to you or not.
These were just some points that you should keep in mind while buying gold coins – I am going to write more about this topic in the future because a lot of people are interested in this, and would love to hear if any of you have had any experience with buying gold coins.
You may also like:
- How to invest in Gold?
- Banks Want to Buy Their Own Assets With Taxpayer Money
- Tata Gold Fund: Gold ETF for Indian Investors
- How many levels away are you from your investments?
- Gold ETF in India
{ 126 comments… read them below or add one }
← Previous Comments
Well you got interesting write up on the gold coins, though I would personally always suggest for Gold ETF if one seeks an investment.
But it is also to note that very few people know that if one invests in gold as an SIP (by doing monthly investment), we can see that gold has given 19% returns CAGR from 2001 to 2010. In similar time frame the sensex has also given 19% CAGR.
For more you can check: why invest in gold
What about the ten years prior to that? What was the return in that time frame?
Well in that time frame it has given a modest returns around 9-10% … but at the same time one must have invest via SIP to get those kinda returns.. the gold hasnt enjoyed great growth post oil shock of 1980. Its performance has added only in last 10 -12 years.. considering the same gold can always be as an good asset class diversification in the range of 5-10% in portfolio.
That’s an important thing to mention when you talk about just the past 10 years in my opinion.
How to declare the gold price in daily.
According to international market
← Previous Comments
{ 8 trackbacks }