Is It Strange to Buy Gold Coins as an Investment?

Buy Gold Coins as an investment

While many people have been known to preach, saying things like "seize the day" and "don't let money stop you!" they never intended to imply that you should spend all of your money on daily pleasures.

When one receives their first wage, it is recommended that they spend only half of their after-tax earnings and save and invest the remainder. It is also true that, after all, necessary expenses and debt repayments, the majority of your money should be invested if you wish to prosper financially.

Aside from typical investment vehicles, a new trend in the market has emerged: purchasing gold coin as investment.

Why is Gold Coins Better than Traditional Gold Buying?

Most investing strategies, such as stocks and bonds, only return the investor's money if they are patient. It takes time to establish and build up the return amount. In the case of mutual funds, there is also a considerable probability that you will lose a significant portion of your principal if your company's stocks fall.

On the other hand, if you invest in gold coins, it will always provide you with substantial profits, depending on the market rate of the metal at the time. You can also feel confident that your investment will not lose money because the price of gold rarely falls.

An investor's alternatives for purchasing gold coins are limited at this moment. Banks and jewellers are the two most prominent. While most banks will sell and accept gold at market price (with a nominal service charge, of course), jewellers have been known to reserve certain amounts. Many jewellers would not even take gold coins sold at full market value from a customer's home. Furthermore, when comparing the worth of jewellery and coins, the former may lose value over time. Coins, on the other hand, only increase in value through time.

What are the Advantages of Purchasing Gold Coins as Investment?

Gold and other hard metals have long been a staple of conventional financial portfolios.

This is why:

  • When other investments fall in value, gold tends to rise, where you can buy gold coins and make your portfolio remain stable.
  • Gold acts as a deterrent to inflation.
  • You are not required to pay capital gains tax until you sell your property.
  • You can buy and sell gold and silver under worst-case financial conditions, such as massive currency devaluation. That may appear absurd, yet it has occurred in other countries.
  • It's also worth noting that purchasing or investing in gold coins is less difficult than purchasing or investing in jewellery. The coins allow you to purchase the purest 24KT gold for only about 8% of the cost of the coin, a cost that rises with the level of craftsmanship involved in manufacturing jewellery such as rings and necklaces.

What is the Purity of Gold Coins?

When you buy gold coins, the most important factor to consider is the purity of the gold. Gold Coin Purity is a term used to describe the purity of gold coins. To determine the purity of gold, units such as carat and fineness are commonly employed. The purest type of gold is 24 carat (KT).

The 24KT gold variety is the only one that matters in terms of quality. Impurities can be found in even the purest 24K gold. 22KT gold is used in manufacturing pieces of jewellery. Thus you will not be able to get a pure form of gold. Whereas, when you consider gold coins as an investment, the purest form of gold is delivered.

If you can't find 24KT gold jewellery, 24KT gold coins are always available.

Do Gold Coins have a Hallmark?

Hallmarking is the process of confirming the purity and fineness of gold. When you see the BIS hallmark on gold jewellery or a gold coin, it implies it meets the BIS's criteria. Consumers can be assured that the gold they purchased is pure by hallmarking it.

Under the BIS Act, the Bureau of Indian Standards, India's National Standards Body, is in charge of hallmarking gold and silver jewellery. The seven components to look for when buying gold (as indicated in the laser etching of a hallmark seal) are as follows:

  • BIS Hallmark: Indicates that the purity of the product has been certified in one of the company's approved laboratories.
  • Karat purity and fineness (corresponding to given Karatage KT).
  • 22K916 (91.6% Purity)
  • 18K750 (75% Purity)
  • 14K585 (58.5% Purity)
  • The mark of the Assaying & Hallmarking Centre.
  • The unique identification mark of a jeweller.

Why is Investing in Gold Coins Cheaper?

You can buy gold coins with less difficulty than purchasing jewellery. It allows you to purchase the purest form of gold at a minimum weight of 0.5 grammes with cheaper manufacturing costs than decorations such as earrings and rings. According to Sinha, the making (or manufacturing) cost for gold coins typically ranges from 8% to 16%.

How can I Buy Gold Coins?

There are a variety of ways to get gold, but only a few are secure and legal. In India, gold coins can be purchased via a local jeweller, authentic internet merchants, the Stock Holding Corporation of India, the MMTC, a government-authorized public sector institution that handles gold and silver sales and marketing, and various private third-party organizations.

Most banks and jewellers sell gold in denominations of 5g, 8g, and 10g.

Gold Jewellers

Local and national gold jewellers, in general, trade in gold coins. However, the gold rate offered here is higher than that of a bullion trader. Jewellers charge a significant mark-up (varying from Rs 1000 to 2000 or more) to make a profit and protect themselves from fluctuating gold prices.

Furthermore, as gold prices rise, jewellers often increase their gold-selling rates but do not drop them when prices fall. In comparison to bullion traders, gold jewellers are not recognized for offering a good buy-back rate.

Bullion Traders

Bullion brokers mark up gold coins between Rs 200 and 700 to sell them close to the present gold rate. They not only purchase it back, but they also give superior buyback prices as jewellers. Bullion dealers' business relies heavily on purchasing and selling gold in large quantities. Thus they can afford to work on tighter margins than jewellers or banks.

Banks

Many Indian banks offer 24-karat gold coins but do not buy them back. Furthermore, when compared to bullion traders and jewellers, the gold rate supplied by banks is not only higher than the market rate but also the highest.

What are the Drawbacks if I Buy Gold Coins?

If you are planning to invest in gold coins, consider these factors beforehand to avoid any discrepancies.

  • If you're not careful, a robber could steal your gold.
  • Unlike stocks and bonds, gold is not an investment in the success of a firm. There are no dividends or interest paid on actual gold.
  • It could take years for gold to appreciate.

Do Gold Coins Have a Denomination?

Gold coins are created and sold in India in weights ranging from 0.5g to 50g. However, it is recommended that all gold coin purchases be conducted with suitable packing to avoid any type of fraud or harm to the metal. Tamper-proof packaging serves as a physical deterrent to counterfeiting and is thus a crucial component of the entire process. It goes without saying that one should purchase more gold if one wishes to make significant gains in the gold market.

Is Packing of Gold Coins Important?

It is recommended that gold coins be purchased in tamper-proof packaging. The packaging protects against counterfeiting, fraud, and damage. If you want to resale a gold coin, jewellers advocate not tearing or opening the tamper-proof packaging since it ensures the purity of the gold coin.

In India, How Many Grams of a Gold Coin Can I Buy?

Gold coins in the 5 gram, 10 gram, and 20-gram weight ranges are available for purchase. This gives you the freedom to make wise long-term investments without depleting your savings.

How is Selling Gold Coins Simple?

If one loses patience when it comes to buying gold coins as investment, they may never generate a significant profit. When you believe the time is right, though, you should trust your instincts and make the deal.

Certain conditions apply when selling your gold coin, which you should be aware of. For example, if you buy a gold coin from a bank, the bank will not accept it back because of a decision from the Reserve Bank of India. Furthermore, depending on the market price of gold at the moment, gold purchased from a jeweller will command a lower resale value when sold to another merchant. You should try to sell your gold coin to the same merchant from whom you originally bought it.

What is a Gold Coin Scheme?

Jewellers, banks, non-banking financing companies, and increasingly even e-commerce websites sell gold coins.

The Indian gold coin and bar will have a purity of 24 karats and a fineness of 999, as well as superior anti-counterfeiting technology and tamper-proof packaging. All coins and bars will be hallmarked in accordance with BIS guidelines. These coins are distributed through authorized MMTC stores, as well as some bank branches and post offices. Through its own showrooms across India, MMTC also offers a transparent 'buy back' option for Indian Gold Coins. The Indian Gold Coin will be repurchased by MMTC at the current gold base rate, in its original tamper-proof packaging and with the original invoice.

  • By using your Individual Retirement Account (IRA) to purchase coins (IRA). These coins will not be able to be taken home with you.
  • Your IRA administrator will store them for you in a vault. To qualify as IRA investments, coins must meet purity requirements.
  • You can always invest in gold without bringing any gold coins home with you.
  • You can obtain the benefits of gold's inflation hedge by purchasing gold mining shares, gold certificates, or exchange-traded products, for example, without dragging heavy gold coins around or worrying about where to keep them.
  • Gold coins are a relatively new investment trend. They are not only more trustworthy than other types of investments such as stock holdings and real estate, but they also demand the least amount of study on the part of the customer and, in most circumstances, offer a high return.

Explore More: Ways to Invest in ETFs & Choose the Best Gold Funds?

FAQ

What is the process of Hallmarking?

BIS grants jewellers licenses, and they can have their jewellery hallmarked at any of the BIS-approved assaying and hallmarking sites.

How can I know if the jewellery store where I'm buying gold is BIS-certified?

The official website of BIS has a list of jewellers who have been certified and licensed by BIS. Aside from that, the list includes the jewellers' names and addresses, as well as the expiration date of their BIS license.

Is it wise to invest in gold coins?

Unlike stocks and bonds, gold coins as investment does not rely on the success of a firm. There are no dividends or interest paid on actual gold. It could take years for gold to appreciate.

Will the value of gold coins rise?

Sure, the coin's worth fluctuates with the price of gold, but you'd have to sell it to profit from price gains. So, you can always think to buy gold coins without worrying about it.

What is the best way to purchase cheap gold coins?

The simple principle is that buying in bulk is almost always less expensive. When you buy a specified amount of bullion at once, most dealers provide a lesser premium per ounce (or other units of weight you measure). This principle holds regardless of the type of gold you purchase.

Is it a good time to invest in gold?

Gold can now be used as a hedge against both inflation and deflation, as well as a portfolio diversifier. Gold can give financial security during times of geopolitical and macroeconomic turmoil since it is a global store of value.