Gold rates surge!! Ladies gather up !!

Let’s delve into the fascinating world of gold—a woman’s second-best friend after diamonds. As Indian women, we adore gold jewelry. It serves multiple purposes: enhancing our beauty, impressing relatives, and even acting as an investment. But are we truly optimizing our investment potential when it comes to gold jewelry?

While gold’s value as a precious metal appreciates over time, let’s examine this from a woman’s perspective. Should we diligently allocate funds each year to purchase gold? And how does this impact our financial well-being?

Today, we’ll dissect the cost breakdown of gold jewelry:

Metal Purity:

• Gold jewelry is typically 22kt purity (slightly less than the complete purity of 24kt gold).

• The rate of 22kt gold on a specific date multiplied by the weight in grams gives the metal cost. Making Charges:

• Making charges in India range from 6% to 14% of the jewelry’s value.

• These charges cover craftsmanship, design, and labor. GST (Goods and Services Tax):

• A 3% GST is levied on both the metal and making charges.
  

Now, let’s address the flip side: selling gold jewelry. When you sell:

• You receive the metal’s value based on the selling rate of that day (usually lower than the buying rate).

• Unfortunately, making charges and GST are not recoverable during the sale.

• While you benefit from the inflated metal value, it takes time to offset the loss due to making charges and GST.
  

Example:

Let's say you buy a gold ring of 2 gram, and the price of 10 gram gold of 22kt purity is on that day is Rs 70000, and making cahrges are 10%

Cost break up is:

Metal : 2 grams x Rs 7000/- Rs 14,000/-

Making Charges : 10% of 14,000 Rs 1400/-

GST : 3% of (14000+1400) Rs 462/-

Total : Rs 15862/-

Lets say you sell the ring after 1 year, when the price of gold is Rs 80,000 per 10 gms of 22kt purity .What returns do you get?

Metal : 2 grams x Rs 8000/- Rs 16,000/-

That is it the net profit you would have earned is Rs.2000/- but you have also lost the cost of making charges and GST Rs 1862 and net profit in your hand is only Rs 138/-

Had the Rs.1862 also been invested an additional benefit of Rs 130 would be received * (expected return rate taken as 7%)

So you get my point?

There are indeed better alternatives to traditional gold jewelry. Let’s explore some of them:

Gold Coins:

• Gold coins are a straightforward investment option.

• They don’t involve making charges and are available in various weights.

• Consider them for pure exposure to gold without any adornments. Silver Bullions:

• Silver bullions are an excellent alternative.

• They typically have minimal to zero making charges.

• Silver can also appreciate over time, albeit at a different rate than gold. Digital Gold:

• Digital gold platforms allow you to buy and hold gold online.

• Compare costs with physical gold (including making charges) before investing.

• The advantage: no risk of theft or physical damage. Sovereign Gold Bonds (SGBs):

• SGBs are government-issued bonds denominated in grams of gold.

• They not only appreciate in value but also offer an annual interest of 2.5%.

• Ideal for combining investment and interest accrual.

Remember, while exploring these alternatives, it’s essential to strike a balance between financial wisdom and the occasional indulgence. So, whether it’s a gold anklet or a digital gold investment, pamper yourself wisely!

Lots of love

Mariya