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Over the next three months, gold is expected to be around ₹ 32,000.
Just before the gold purchases for the Dhanteras, the price of gold in India reached its highest level in six years on October 31, reaching ₹ 32,620 per day. 10 grams, it was ₹ 31,622 on November 2nd. Prices may remain at about the same level for some time now, badysts now have a stable outlook for the precious metal in the near term.
Over the next three months, gold is According to Naveen Mathur, director of commodities and currencies at Anand Rathi Share and Stock Brokers, the events of recent months, such as the depreciation of the rupee, have have been taken into account and will remain stable at these levels. I do not think he has too much strength for the price to go up significantly, "he said.
Traditionally, Indians buy gold on Dhanteras, regardless of price, as it is considered auspicious. But before making your gold purchases this season, remember that financial planners suggest you not to exceed 10% of your wallet. We list the different forms of gold that you can buy and their main advantages and disadvantages.
Jewelery Jewelery
This is the most common way to buy gold. The biggest benefit in buying gold jewelry is the instant gratification such that you can use it – regularly or occasionally. In addition, liquidity is never a problem if you hold gold in the form of jewelry because you can sell it when needed.
The purchase of jewelry also has a setback: this also on a regular basis. First, determining the purity of the metal can be tricky for most retail consumers and you will have to rely on the words of the seller. Secondly, besides the cost of gold, you also pay the jewelry making fee, which can go up to 25-30% of the cost of gold, in the case of delicate patterns and complex. Third, when you sell the jewelery, you will have to give up the amount spent on making the charges.
Coins and Gold Bars
The other common form of buying gold is buying coins or bullion. The pieces usually come in smaller sizes, weighing a few grams, while the bars are usually multiples of 100 grams. You can buy them from jewelers or banks, although not all banks sell gold.
The great advantage of this mode of buying gold is that the purity of the metal is certified and that the coin or bar bears a mark. However, the same thing might not be available in small jewelry stores; so check before you buy. There is also no cost of porterage and these coins and bars can be resold to jewelers if you need to liquidate the property. Although the manufacture is free, sellers generally charge a mark-up of 2 to 3% of the market price.
The other side of the coin is the cost of storage. There is also a risk element of theft. Also, remember that banks do not buy the gold that they sell. This means that you will have to sell gold purchased from a bank to jewelers.
Gold ETFs and Funds
Moving from physical gold to a paper or electronic version is also an option. The oldest option is to buy gold through gold-based funds (ETFs) or gold mutual funds investing in gold ETFs.
Gold ETFs pbadively follow gold prices; when the price of gold increases, your net badet value also increases, and vice versa. They invest all their money in physical gold and keep only the minimum required to meet their liquidity needs. The main benefit of investing in gold through this is that you eliminate storage costs and the risks of theft. In addition, there are options for making periodic investments via SIPs.
The flip side of investing in ETFs or gold funds is that you have to pay a fund management fee, the latter being managed by portfolio management companies. This could represent about 1% of your investments per year in the case of an ETF and about 1.5 to 1.8% in the case of a gold mutual fund.
Sovereign Gold Bonds
The other way to buy gold is to buy sovereign gold in India. The gold bonds are issued by the RBI and, according to the latest update, will be issued monthly between October and February. The next installment will be open for subscription from November 5th to 9th.
The plan also provides for an annual interest of 2.5% on the amount invested in bonds. This amount is credited directly to the subscriber's bank account. And even if the value of gold goes down, you continue to earn interest. The amount of interest is taxable, but the capital gains resulting from the repayment of these bonds are exempt from tax.
The disadvantage of the scheme is that it is stuck for five years. However, you can sell it through secondary market trading.
E-Gold
Some fintech companies offer options to buy and then sell gold online. Mobikwik is the latest fintech platform to start selling gold digitally via its mobile application. Paytm and PhonePe are other platforms offering this system.
The peculiarity of this product is that you can buy gold from 1 ₹ and that nothing will be charged to it at the time of purchase. But if you want delivery, this can only happen in multiples of 1 gram. You will also have to pay a fee for the parts as well as the shipping costs. For example, Paytm charges £ 374 and £ 404 for gold coins of 1 and 2 grams, respectively. In case of redemption, you may have to pay a bank transfer and a convenience fee.
You can avoid taking delivery of physical gold only for a specified period. For example, Paytm and PhonePe allow you to keep your gold for only five years, after which you must proceed with the mandatory delivery. In PhonePe, if a person buys less than 2g of gold over a 2 year period, a storage and insurance fee of 0.05% per month is charged.
What should you do?
All modes of buying gold have their advantages and disadvantages. But financial planners believe that gold sovereign bonds are currently the best way to buy gold. "These bonds also pay interest of 2.5% per annum, in addition to the variation in the price of gold. Although the supply of these bonds in the secondary market is not very high, the tranches are now quite common, so this should not be a constraint. In our opinion, Gold ETFs are the second best option, mainly because they allow you to achieve a SIP equivalent, "said Vishal Dhawan, founder and CEO of Plan Ahead Wealth Advisors.
As gold prices strengthen, as volatility and stock market corrections make retail investors nervous, investments in gold may look attractive. However, it is important to maintain your badet allocation. Currency recommends that you keep only 5 to 10% of your portfolio in the form of gold investments.
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