Should you invest in gold this Dhanteras?

Should you invest in gold this Dhanteras?

Monday being Dhanteras, a festival which Hindus consider auspicious to buy precious metals, some of you may be already ready to go out and shop. Typically, a lot of people use the day as an opportunity to invest in the yellow metal.

But with extreme volatility in gold prices recently, should you invest in gold at all? From close to 23,000 per 10 gram in August, it rose to about 29,000 per 10 gram in September. Now it has again corrected and is around 26,000.

What do experts say?

Experts also say the recent correction in prices of gold provides a good opportunity for customers to invest. “The recent correction in gold prices was utilised by speculators to exit the market and only genuine investors are left. As such this is a good opportunity for retail customers to invest in gold," says Debasish Mallick, managing director and CEO, IDBI Asset Management Ltd.

Should you invest?

Yogesh Kumar/Mint

Things to keep in mind

One can invest either in physical gold, exchange-traded funds (ETFs), gold mutual funds (MFs) or e-gold by National Spot Exchange Ltd. You need to consider the cost as well as the merits and demerits of your investment options.

Physical gold: This is either in the form of jewellery or bars and coins. You can get bars and coins from jewellers as well as some banks and post offices.

However, the Reserve Bank of India does not permit banks to buy back gold, so you would have to go to a jewellery retailer at the time of selling. While some retailers do not buy coins sold by other entities, others would buy it at a discount price that could be as high as 5%.

Also, jewellers will deduct making charges when buying back gold jewellery.

Gold ETFs and MFs: There is ease of transaction in terms of buying and selling in gold ETFs and MFs. Gold ETFs are cheaper than gold MFs, which are basically fund-of-funds that invest in gold ETFs. What’s good about gold MFs is that you can open a systematic investment plan in it. Also, you need not invest in complete units of gold as is the case in ETFs. For example, if 10 grams of gold cost 26,000, but you have only 20,000 to invest, gold MFs will come handy. You also need a demat account to invest in an ETF.

E-gold: This enables you to buy gold electronically, which can be converted into physical gold later. Here, too, you may face issues at the time of selling. But you have to pay a charge to the National Spot Exchange Ltd in any case.

abhishek.a@livemint.com

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Discounts on gold coins and bars

In view of high gold prices, some banks are offering gold at a discount. For instance, ICICI Bank Ltd is offering a discount of 8% on the daily selling price when booked online. The gold is 24 carat and 99.99% pure. HDFC Bank Ltd is offering gold on an equated monthly scheme with a 4% discount on gold bars purchased through select branches. Kotak Mahindra Bank Ltd is offering 2-5% discount on gold, depending on the customer category and quality purchased.

Tip: Gold prices vary from seller to seller. Several retail jewellers, too, are giving discounts.

—Bindisha Sarang

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