Monday, April 23, 2012

All about investing in Gold Coins in India

gold investment options
There are various options for investors for investing in Gold: Gold ETFs, Gold Funds, eGold, Gold coins etc. In this post, we are going to detail all the information about investing in gold through gold coins.

Gold coin is a direct way of investing in gold apart from buying gold jewelry. Gold coins are available in different sizes of 0.5, 1, 2, 4, 5, 8, 10, 20 and 50 grams. The coins are of different purity of 22 and 24 carats and some of the sellers like banks guarantee their purity too. Bank and some retailers ask for PAN details, if one plans to buy gold coins worth more than Rs 50,000. One has to take care of storing and safety of these gold coins unlike Gold ETFs or eGold where some organization takes care of storage and safety. However, lot of people prefer gold coins because they want to invest in physical gold which can also be used later for purpose of gifts etc.

So, where can one buy Gold coins in India?

1. Buy gold coin from a local jeweler:
Lot of people will have a favorite local jeweler where they typically purchase gold jewelry. One could consider purchasing gold coin from them but there cannot be any guarantee about the purity of the Gold. They may have different pricing for purchasing and selling. This may seem like a cheap option while purchasing but if one does not get the right price while selling, the return may not be proper. One can check the purity of the gold coin only when one takes it to another gold jeweler.

2. Buy gold coin from a nationwide retailer like Tanishq:
One can purchase gold coins and bars from a reputed nationwide jeweler like Tanishq. They tend to have a strong reputation, announce gold prices daily (though they add some premium to the market price) and have good distribution network so one can buy in one city and sell in another city through the same retailer. This is a much more convenient and safe option than buying it from a local jeweler. Gold price will be slightly more than local jeweler but offers peace of mind in return.

3. Buy gold coins online:
There are few websites offering gold coins online. But the purpose of buying gold coin is lost if one purchases it through websites online. The prices offered by websites are similar if not less than price offered by banks and there is no option of buyback.

4. Buy gold coins at the post office:
Indian Post Office also decided to sell gold coins through some of their post offices last year. They too charge a premium of around 4% on the gold coins they sell, but it seems that it is less than that charged by the banks. Please note that post offices do not buy back the gold coins.

5. Buy gold coins at the bank:
Lot of Indian banks like ICICI, HDFC Bank etc sell gold coins these days. The benefit of buying gold coins from a reputed bank is that you have a lot more peace of mind, as far as the quality of the gold coins go. They offer a certificate to guarantee purity of the gold. The disadvantage of buying gold from a bank is that they normally charge highest premium on the gold coins among all the other options that we have listed above. The disadvantage is that they don't buyback the gold coin they sell.

Even with the highest premium, buying gold coin from banks would have been the best option except the fact that they don't buy back the gold coin that they sell. Other retailers would reduce the price when purchasing these gold coins. So, buying it from a nationwide retailer like Tanishq seems to be the best option for investing in gold coins.

Recommended Post for you: eGold vs Gold ETF vs Gold Coins
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  1. Great article I definitely agree that investing in gold is a wonderful idea.

  2. I've always thought that investing on gold coins is a good idea. This article just showed different reason why it's a good investment.

  3. You could also buy gold pieces, not just gold coins. Long Island jewelry stores have many interesting pieces you can invest in.

  4. Please tell me where i can see my gold coins at a decent rate.

    Every place i dig, i see only where to buy - no one seems to take it back [if they do it is always at their price and not the market price].

    Please help

  5. In my many years of stay here on earth, I am not ashamed to say that I have never ever seen one gold coin. I don't even know how much it weighs so that I would know when I will be dealt with this one.