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Should You Consider Buying Gold Jewellery For Investment?

Adhil Shetty
Image by Tuhin khamaru from Pixabay

Q. Is Buying Gold Jewellery A Good Investment? – Adesh Jain

A. Gold is one of the oldest commodities, but opinions on investing in it are most polarized. Historically, it has been a symbol of wealth and the easiest asset to liquidate.

No wonder, it is a lucrative investment for many – the perfect hedge to beat inflation and economic uncertainty. Although, most gold jewellers may exchange gold jewellery, but ask for making and wastage charges, which results in losing some of the value; hence buying gold jewellery might not be as profitable as it seems.

While there are other ways to invest in physical gold such as bullions or coins, it is better to understand the implications of investing in physical gold – such as the cost to store physical gold, applicable taxes as per income tax bracket, etc. However, if you really want to go for jewellery then it’s vital to measure its value by weight and purity–24 Karat is considered pure gold and anything less is an alloy with gold.

Instead, you can also invest in stocks of a company that produces gold. This way the value of the stock may be strongly correlated with the value of gold itself. Likewise, a gold ETF (exchange-traded fund) that specializes in investing in a range of gold securities is also a good option.

Sovereign Gold Bonds (SGBs) is a government-backed investment scheme meant for investors who do not want to invest in physical gold. These bonds are issued from time to time and their value increases with gold, plus there’s an extra interest of 2.5% per year. Another brownie point in favour of these bonds is that, unlike gold mutual funds, the gains from the gold bonds are tax-free.

It is always wise to not put all your eggs in one basket and rather maintain a well-diversified portfolio.

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