• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Shanthi Venkataraman

IT'S the wedding season and that means a rush to buy gold, no matter what the price. At least that's how it is with us Indians, who are sentimental about the yellow metal, besides treating it as an investment option.

But if you are tired of shopping at crowded jewellery shops, are never too sure of the quality of gold you are purchasing or would just like to take your time in picking the jewellery that meets your taste, then maybe you could consider buying gold coins instead.

Buying gold coins is, nowadays, quite easy. Just walk into ICICI Bank, for instance, and purchase it over the counter. The bank provides 24-carat gold coins imported from Switzerland.

The product

The bank sells gold coins in denominations of five, eight and 10 gm. Recently, it introduced a 1 gm gold coin targeted mainly at smaller towns. The coins, imported from Switzerland, come with an "assay certification", which indicates highest level of purity, as per international standards.

This certificate would help at the time of resale of the coin. The price is based on the daily international bullion market prices. You would also have to pay sales tax, which varies from State to State.

The bank customers can issue a cheque from their savings account or simply buy it through debit instructions to their account. Non-bank customers can also buy it through cash or cheque. You can also make payments by way of third-party cheques.

In such cases, the gold can be collected after realisation of the cheque, which normally takes 3-4 days.

The bank does not buy back the coins that it sells. But you can easily sell them at a jewellery store. The disadvantage that you may face is in bearing the sales tax.

Generally, jewellery is purchased without a bill, and customers get to evade sales tax.

Buying gold coins/bars

If you were looking at buying gold purely as an investment, then buying gold coins or bars would be advantageous compared to jewellery.

One, you would not have to bear the making charges, which are loaded onto the jewellery piece.

Second, although gold is valued for its liquidity, at the time of resale, you may not always get the best price, given the volatility in gold prices. On resale of jewellery, the jeweller would typically deduct `wastage' charges, which could further erode your return. This is not so in the case of selling a coin or bar.

If you still favour jewellery, you can consider buying gold coins as and when the prices are low. You have the flexibility of designing your jewellery according to the fashion in vogue rather than selling old jewellery every few years to keep up with the times.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Fine-tuning the Takeover Code — Better bargain for shareholders

Copyright © 2005, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line