You are here: Home » Economy & Policy » Features
Business Standard

Planning to buy gold this Akshaya Tritiya? Keep these key things in mind

An explainer on how to go about making investments in gold ahead of Akshaya Tritiya

Rajesh Bhayani  |  Mumbai 

Akshaya Tritiya, gold, Akshaya Tritiya 2017
Akshaya Tritiya 2017: How to make profitable investments in gold. Photo: Akshaya Tritiya, gold, Akshaya Tritiya 2017Akshaya Tritiya 2017: How to make profitable investments in gold. Photo: ReutersWhat would you buy on the Akshaya Tritiya this Friday. It is considered the most auspicious day in the Hindu calendar to buy gold or any other asset, or do any important work.

For investors looking to buy -- not for jewellery but for investment -- several options are now available. However, before you make such an investment, you need to keep your goal in mind. That helps you decide the route that you would take for buying and the form in which you would but it.
 
Going by the record of last few years, the average buying on has been between 15tonnes and 25 tonnes. Last year, according to estimates by GFMS Thomson Reuters, 17 tonnes of was purchased by Indians on By today's market price, this is Rs 5,000 crore, and market experts are expecting an even higher demand for this time -- more than a billion dollar worth of sales.

 
People also buy for trading or for hedging against inflation, as the yellow metal price is still decided on the basis of international price and takes care of any inflation caused due to the rupee’s depreciation; the Indian currency’s weakness against the dollar means higher prices in rupee terms. People also accumulate for marriages in future as is still a big-ticket item for families across income levels in India. Also, poor and rural people still trust more than other financial assets.
 
For portfolio diversification to hedge volatilities or uncertainties in financial assets and comparatively illiquid real estate, financial planners often advise keeping an average 10 per cent of portfolio in
 
Sovereign bonds are considered the best option so far as investment is part of portfolio diversification. Such bonds get a 2.5 per cent annual interest on investment. Since they can be kept in the demat form, they don’t require payment of making charges or VAT, unlike in the case of purchase of physical And, they get listed on stock exchanges which makes them liquid. The holders of these bonds get cash equalling the price of at the time of maturity 8 years later. Holding bonds for 8 years is free from capital gain tax, too. These can be bought from banks, online bank accounts, post offices, and so on.
 
When compared with bonds, buying paper or exchange-traded funds offered by mutual funds has some disadvantages. An asset management company or mutual fund running ETF doesn't give you interest rates like sovereign bonds, but it does charge fund management fees for providing its services to investors The treatment in ETF, however, is different from sovereign bonds, and investors looking to sell paper in a shorter timeframe of about three years can consider this. In terms of liquidity, ETFs and bonds are both listed.
 
Things to keep in mind
* Sovereign bonds are good because they are offered at a discount, the government pays the interest, and they can be held in demat. Besides, since they are listed on stock exchanges, they give liquidity
 
* ETFs are less attractive than bonds
 
* Buying coins online is a convenient option, but do check the best price option and who is selling the jewellery through the e-commerce site – jeweller or refiner. Prefer a BIS-certified or hallmarked refiner. If it’s a jeweller selling online, it should be reputed. Don't consider only price while buying coins. Also check purity of used in the coin.
 
For example, 999.9 has the highest purity. Not all jewellers would sell that. Standard 999 purity per 1 g, according to IBJA’s opening price on Tuesday, is Rs 2,922, while standard 995 purity price is Rs 2,907. The 22 carat or 916 purity gold, which is used for jewellery making, costs Rs 2,677 per 1 g. So, check purity and match prices and decide how much you are paying and whether it is worth what you are getting.
 
* Check purity and compare that with the prevailing market price
 
* Buy in tranches: It is usually advised that you buy in tranches – on an average, one sovereign bond issue is announced every 6 to 8 weeks, giving investors the average cost of buying and regular returns after maturity of eight years
 
* Paper gold: To promote paper demand, stock exchanges keep market for ETFs and sovereign bonds open for late hours, instead of the normal 3.30 pm closing.
 
* Physical coins: This is still the most preferred mode of buying, despite better options like sovereign bonds. While buying coins, first check the prevailing price of various purities on Ibjarates.com as even for fixing the bond price, price of IBJA, a body of bullion traders and jewellers, is considered as a benchmark. Prices on the site are excluding tax. Jewellers selling coins might charge more as making charges, etc, but if the coin is made by a BIS certified refiner, try to pay as little making charge as possible.
 
* Ahead of Akshaya Tritiya, many jewellers are offering discounts on making charges or charging less. Nowadays, several e-commerce sites are selling coins. Check who has made or refined coins? 

RECOMMENDED FOR YOU

Planning to buy gold this Akshaya Tritiya? Keep these key things in mind

An explainer on how to go about making investments in gold ahead of Akshaya Tritiya

An explainer on how to go about making investments in gold ahead of Akshaya Tritiya
For investors looking to buy -- not for jewellery but for investment -- several options are now available. However, before you make such an investment, you need to keep your goal in mind. That helps you decide the route that you would take for buying and the form in which you would but it.
 
Going by the record of last few years, the average buying on has been between 15tonnes and 25 tonnes. Last year, according to estimates by GFMS Thomson Reuters, 17 tonnes of was purchased by Indians on By today's market price, this is Rs 5,000 crore, and market experts are expecting an even higher demand for this time -- more than a billion dollar worth of sales.
 
People also buy for trading or for hedging against inflation, as the yellow metal price is still decided on the basis of international price and takes care of any inflation caused due to the rupee’s depreciation; the Indian currency’s weakness against the dollar means higher prices in rupee terms. People also accumulate for marriages in future as is still a big-ticket item for families across income levels in India. Also, poor and rural people still trust more than other financial assets.
 
For portfolio diversification to hedge volatilities or uncertainties in financial assets and comparatively illiquid real estate, financial planners often advise keeping an average 10 per cent of portfolio in
 
Sovereign bonds are considered the best option so far as investment is part of portfolio diversification. Such bonds get a 2.5 per cent annual interest on investment. Since they can be kept in the demat form, they don’t require payment of making charges or VAT, unlike in the case of purchase of physical And, they get listed on stock exchanges which makes them liquid. The holders of these bonds get cash equalling the price of at the time of maturity 8 years later. Holding bonds for 8 years is free from capital gain tax, too. These can be bought from banks, online bank accounts, post offices, and so on.
 
When compared with bonds, buying paper or exchange-traded funds offered by mutual funds has some disadvantages. An asset management company or mutual fund running ETF doesn't give you interest rates like sovereign bonds, but it does charge fund management fees for providing its services to investors The treatment in ETF, however, is different from sovereign bonds, and investors looking to sell paper in a shorter timeframe of about three years can consider this. In terms of liquidity, ETFs and bonds are both listed.
 
Things to keep in mind
* Sovereign bonds are good because they are offered at a discount, the government pays the interest, and they can be held in demat. Besides, since they are listed on stock exchanges, they give liquidity
 
* ETFs are less attractive than bonds
 
* Buying coins online is a convenient option, but do check the best price option and who is selling the jewellery through the e-commerce site – jeweller or refiner. Prefer a BIS-certified or hallmarked refiner. If it’s a jeweller selling online, it should be reputed. Don't consider only price while buying coins. Also check purity of used in the coin.
 
For example, 999.9 has the highest purity. Not all jewellers would sell that. Standard 999 purity per 1 g, according to IBJA’s opening price on Tuesday, is Rs 2,922, while standard 995 purity price is Rs 2,907. The 22 carat or 916 purity gold, which is used for jewellery making, costs Rs 2,677 per 1 g. So, check purity and match prices and decide how much you are paying and whether it is worth what you are getting.
 
* Check purity and compare that with the prevailing market price
 
* Buy in tranches: It is usually advised that you buy in tranches – on an average, one sovereign bond issue is announced every 6 to 8 weeks, giving investors the average cost of buying and regular returns after maturity of eight years
 
* Paper gold: To promote paper demand, stock exchanges keep market for ETFs and sovereign bonds open for late hours, instead of the normal 3.30 pm closing.
 
* Physical coins: This is still the most preferred mode of buying, despite better options like sovereign bonds. While buying coins, first check the prevailing price of various purities on Ibjarates.com as even for fixing the bond price, price of IBJA, a body of bullion traders and jewellers, is considered as a benchmark. Prices on the site are excluding tax. Jewellers selling coins might charge more as making charges, etc, but if the coin is made by a BIS certified refiner, try to pay as little making charge as possible.
 
* Ahead of Akshaya Tritiya, many jewellers are offering discounts on making charges or charging less. Nowadays, several e-commerce sites are selling coins. Check who has made or refined coins? 
image
Business Standard
177 22

Planning to buy gold this Akshaya Tritiya? Keep these key things in mind

An explainer on how to go about making investments in gold ahead of Akshaya Tritiya

For investors looking to buy -- not for jewellery but for investment -- several options are now available. However, before you make such an investment, you need to keep your goal in mind. That helps you decide the route that you would take for buying and the form in which you would but it.
 
Going by the record of last few years, the average buying on has been between 15tonnes and 25 tonnes. Last year, according to estimates by GFMS Thomson Reuters, 17 tonnes of was purchased by Indians on By today's market price, this is Rs 5,000 crore, and market experts are expecting an even higher demand for this time -- more than a billion dollar worth of sales.
 
People also buy for trading or for hedging against inflation, as the yellow metal price is still decided on the basis of international price and takes care of any inflation caused due to the rupee’s depreciation; the Indian currency’s weakness against the dollar means higher prices in rupee terms. People also accumulate for marriages in future as is still a big-ticket item for families across income levels in India. Also, poor and rural people still trust more than other financial assets.
 
For portfolio diversification to hedge volatilities or uncertainties in financial assets and comparatively illiquid real estate, financial planners often advise keeping an average 10 per cent of portfolio in
 
Sovereign bonds are considered the best option so far as investment is part of portfolio diversification. Such bonds get a 2.5 per cent annual interest on investment. Since they can be kept in the demat form, they don’t require payment of making charges or VAT, unlike in the case of purchase of physical And, they get listed on stock exchanges which makes them liquid. The holders of these bonds get cash equalling the price of at the time of maturity 8 years later. Holding bonds for 8 years is free from capital gain tax, too. These can be bought from banks, online bank accounts, post offices, and so on.
 
When compared with bonds, buying paper or exchange-traded funds offered by mutual funds has some disadvantages. An asset management company or mutual fund running ETF doesn't give you interest rates like sovereign bonds, but it does charge fund management fees for providing its services to investors The treatment in ETF, however, is different from sovereign bonds, and investors looking to sell paper in a shorter timeframe of about three years can consider this. In terms of liquidity, ETFs and bonds are both listed.
 
Things to keep in mind
* Sovereign bonds are good because they are offered at a discount, the government pays the interest, and they can be held in demat. Besides, since they are listed on stock exchanges, they give liquidity
 
* ETFs are less attractive than bonds
 
* Buying coins online is a convenient option, but do check the best price option and who is selling the jewellery through the e-commerce site – jeweller or refiner. Prefer a BIS-certified or hallmarked refiner. If it’s a jeweller selling online, it should be reputed. Don't consider only price while buying coins. Also check purity of used in the coin.
 
For example, 999.9 has the highest purity. Not all jewellers would sell that. Standard 999 purity per 1 g, according to IBJA’s opening price on Tuesday, is Rs 2,922, while standard 995 purity price is Rs 2,907. The 22 carat or 916 purity gold, which is used for jewellery making, costs Rs 2,677 per 1 g. So, check purity and match prices and decide how much you are paying and whether it is worth what you are getting.
 
* Check purity and compare that with the prevailing market price
 
* Buy in tranches: It is usually advised that you buy in tranches – on an average, one sovereign bond issue is announced every 6 to 8 weeks, giving investors the average cost of buying and regular returns after maturity of eight years
 
* Paper gold: To promote paper demand, stock exchanges keep market for ETFs and sovereign bonds open for late hours, instead of the normal 3.30 pm closing.
 
* Physical coins: This is still the most preferred mode of buying, despite better options like sovereign bonds. While buying coins, first check the prevailing price of various purities on Ibjarates.com as even for fixing the bond price, price of IBJA, a body of bullion traders and jewellers, is considered as a benchmark. Prices on the site are excluding tax. Jewellers selling coins might charge more as making charges, etc, but if the coin is made by a BIS certified refiner, try to pay as little making charge as possible.
 
* Ahead of Akshaya Tritiya, many jewellers are offering discounts on making charges or charging less. Nowadays, several e-commerce sites are selling coins. Check who has made or refined coins? 

image
Business Standard
177 22