Are you planning to invest in gold? Here's what you should keep in mind

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Gold prices have jumped to nearly 6 percent (it is now Rs 31,708 per 10 grams), so before you invest in gold, ask yourselves the purpose and volume of purchase

We Indians love our gold. In fact, we love it so much that we not only buy gold for regular wear but also hoard it as 'future investments.'

But as gold prices jump to nearly 6 percent (it is now Rs 31,708 per 10 grams), is it then advisable to invest in gold right now?

We suggest that before you make up your mind about buying gold, remember that you should not be deterred by the noise of returns. After all, gold is a much more reliable investment than the stock market.

So instead, consider these things.

  • One, the purpose of purchase and second, the volume of purchase. These will help you determine first-hand whether you are ready to invest in gold, which is clearly highly priced at the moment.
  • If more than 15 percent of your assets include gold, then you can liquidate them right now and instead invest in E-Gold or Gold Exchange Traded Funds (ETS). Here, E-Gold is the electronic way of buying gold and is in the form of a demat account that can be converted to gold anytime. Whereas, Gold ETFs are the same as mutual fund units where each unit is equivalent to one gram gold.

Apart from these, we recommend these 5 important things to remember before you invest in gold right now.

#1 Is the gold BIS Hallmarked?

This is a basic point that we sometimes neglect, especially when it comes to local jewellers. So when this jeweller insists on a so called discount on making charges, know that it might means that you are being given a low quality product. If you insist that the jeweler give you a BIS hallmark stamp on each and every product you buy, it will ensure its proper resale.

Continue reading to know the other four important things to remember when you invest in gold.

#2 Have you checked its price per 10gm?

This time of the year is quite tricky for gold because the prices have anyway skyrocketed. Right now the price of gold is Rs 31,708 per 10 grams in India. So when you go to a shop for purchase, make sure you are aware of that day's price. Also remember that the price may differ from city to city since various gold associations decide the price based on their market.

#3 How much gold will you actually get?

The pricing of a gold item can be quite complicated. On every 10 gram of gold, the jeweller pays some amount for wastage (when the ornament is prepared). Additionally, you also pay for the making charge. But when you get the final bill, chances are you end paying for the wastage as well. So check the actual per gram rate for that day and check how much more you are expected to pay.

#4 Have you checked the buy-back terms?

When you are buying your gold ornament, ask your jeweller if he will take the same item back if you can intend to resell it later. Chances are that most high-end jewellers will say "yes." This will allow you to come back later and buy something of similar value with a different design. However, please remember that you might have to pay for making charges of the new item.

#5 How much are you being taxed on the bill?

To ensure that all the promises made by your jeweller are fulfilled, make sure to insist on a bill. This is especially true if you are buying gold from a 'family jeweller.' You will have to pay value-added tax and also 1 percent for cash transaction if your total amount exceeds Rs 5 lakh.

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(Image courtesy: Yahoo)

Written by

Deepshikha Punj

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