Gold has always been in demand. From 2001 to 2011, the price of the metal globally went up from $250 to $1900 per ounce.
In India however, this trend remains even more pronounced. Since time immemorial, Indians have historically been attracted to the shiny yellow metal.
Experts keep talking about gold as a rock-solid investment option. But is it really so?
We believe it is. And we believe that gold coins are a more sensible investment bet than gold jewelry. In the rest of this post, we’ll discuss five reasons why.
1. Gold coins are tangible
In today’s day and age when most of our transactions are digital and even passbooks are considered passé, one won’t be mistaken to think that money has become make-believe. Add to that stocks, mutual funds and similar investment vehicles, and we often can end up asking ourselves, “Where is the real money?”
At such times, a tangible asset like gold is reassuring. Visiting a jeweler and taking away a bag with some weight in it feels satisfying. No matter how modern we Indians become, nothing comes close to physical touch and feel.
And gold gives us that feeling.
2. Gold rises when the market falls
When crude prices fall or when the stock market panics due to various macroeconomic reasons, gold moves in the upward direction.
For instance, gold prices rallied during during the subprime crisis. It rose from $869.75 in 2008 to $1405.50 in 2010. Each time there is trouble in the Middle East due to which the supply of crude oil could get disrupted or the market looks gloomy, people rush to purchase gold and push its price up.
3. Gold price rises with inflation
For a long time, gold has matched inflation and retained its value. This means that an ounce of gold essentially has been equal to the value of the same quantity of goods over time.
This is something no other currency has been able to match. In fact, even the US dollar has lost 95 percent of its value over the last century, especially since it dissociated itself from the gold standard.
4. Gold is a tax-free investment
Gold is a safe investment even from the taxation purpose. This is because you get taxed on capital gains, that too only when you sell the metal.
Gold coins and bullion were items whose demand skyrocketed when Prime Minister Narendra Modi demonetized certain denominations. People rushed to purchase the metal even at twice the price because it could not be seized by the government.
Even land can be traced back to an owner. But gold, once in a locker, leaves no trail.
(Note: We do not condone the illegal purchase and hoarding of gold. We encourage responsibility in purchase and paying relevant taxes for the same.)
5. Gold coins are cheaper than jewelry
Typically, the cost of gold jewelry is as follows:
Rate of gold + Hallmarking charges + Jewelry making charges + GST = Total Cost.
Gold coins, on the other hand, doesn’t include hallmarking charges, and has little making charges (in the range of 4-5 percent as compared to 11-15 percent for jewelry).
Also, the purity of gold bullion is higher than that of jewelry. Gold jewelry is generally 22 Karat pure which offers a maximum of 916 purity. Gold bullion, on the other hand, can be up to 24 Karat, which offers a maximum of 999 purity. This means that gold bullion (or gold coins) is bound to offer better return on investment compared with gold jewelry.
Buying gold coins online is no longer dangerous, thanks to websites like Coin Bazaar, which assures complete security of authentic gold coins being delivered right to your doorstep. By investing in gold coins, you can safeguard your investments from inflation and torrid macroeconomic events, without having to worry about lugging heavy gold bars everywhere.
This is why gold is a smart investment option today, and for times to come.
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