Gold has an appeal to buyers that goes beyond its ornamental value; For many Indians, it is a long-term primary investment. Some parents buy gold for their child’s future at birth, while others accumulate gold over the years.
Whether it’s jewelry or coins and bullion, investing in physical gold offers security that certified gold doesn’t seem to provide.
But don’t be seduced by the emotional appeal of buying gold; You should also be aware of the nuances of such transactions. The positive feeling you get from buying gold should translate into a positive experience when you are able to sell it.
What are your options?
When you buy gold jewelry, you pay not only for the gold but also for the design and manufacture of the adornment. Design is what jewelers use to differentiate their products, and it’s something they charge you for. Also, there is a cost associated with turning gold into jewelry. these are also additional costs.
You don’t know the breakdown of design and manufacturing costs, but you may be able to negotiate them at the time of purchase. When you resell, you usually only get back the value in gold and have to waive any fees or design fees you paid.
Manufacturing fees apply not only to gold jewelry but also to gold coins of all denominations.
“Coins have negligible production costs associated with them; However, the overhead costs are less than buying a piece of jewelry. It’s also a matter of convenience for retail investors who want the security of owning gold,” says Rajiv Popley, director of the Popley Group, a gold and diamond jeweler.
Stick to contrasted gold
Gold is an emotional purchase and the average Indian finds it useful as a savings vehicle that can be traded at (cheaper) market prices anywhere in the world. Hit help here.
Purchasing hallmarked pure gold jewelry is a way to invest in gold for the long term. Hallmarking refers to the practice of marking the purity and fineness of gold and is done by the Bureau of Indian Standards. Unfortunately, not all jewelers and gold dealers in India mark their products, so you have to be careful when you sell stamped gold.
Your other option is to invest in coins and bars. Gold coins and bars are the purest form due to minimal workmanship and the fact that they are free of intricate designs and no other materials such as precious stones are added to them. This means that if you know the market price of gold, you can calculate the price you will get when you sell it.
Coins are available in small denominations such as 0.5g or 1g, and you can also buy large 100g or 1000g bars.
Buying gold coins also makes sense if you intend to accumulate gold over a long period of time.
Coins and bars are also marked and marked and should be checked prior to purchase.
What should be considered?
First of all, you should know that the smaller the denomination of the coin, the more expensive it becomes compared to the market price of gold.
Take, for example, on October 12, when the market price of 24K gold with a purity of 99.9% was Rs 52,230 per 10g. However, the price of a 1g coin was at least 10-15% higher depending on where you bought it and the price of a 10g coin was at least 6-15% higher.
“Pieces have different designs and those that are more detailed and intricate in design have higher manufacturing costs,” says Neha Jesrani Kapadia, independent jewelry designer and founder of Design Jewels.
If you decide to regularly invest in gold through such coins, it may also be wise to thoroughly research the various price points for the denomination you are looking for. Some gold wholesalers are cheaper than jewelry stores.
The degree of purity could also lead to a price change. Purity is measured in carats and fineness. Popley explained that there are three preferred fineness levels, 995, 999, and the super fine 9999. However, coins and jewelry can also have a lower fineness and not show up ahead of time.
See what you pay. It could be that the higher costs are due to higher purity. Make sure the gold is marked.
“Sometimes when gold coins or jewelry are melted down to create a new adornment, a 22-karat marked piece may be melted down to a lower purity,” Kapadia warns.
Some jewelers are known for their reliability and purity and as such may charge a premium for the pieces and jewelry they sell.
What to do?
Diversifying your long-term investments in gold can be helpful if you are confident that you are using the metal for an end use rather than keeping it in coin or bar form. There is flexibility and peace of mind in being able to deliver punched gold to a jeweler who can adorn it whenever they wish, rather than liquidate other assets that may or may not have yielded the desired return, or may even be used for other purposes.
Remember to carefully consider price and quality before making any gold investment plans.
Also, understand that buying physical gold satisfies the emotional pull of owning gold (for end use) and not the goal of getting a return.
Overall, gold’s long-term yield has barely matched long-term inflation and has fallen below it in some periods. Also, the cost of buying and storing physical gold makes it less effective as a pure investment.