Gold News

Dhanteras: Smart Ways to Buy Gold

India's switch from jewelry to cheaper, more efficient Gold Investment products...

, which falls on Wednesday 3 November this year, is an occasion for Indians to Buy Gold as they consider it auspicious for such investments, says Commodity Online in Mumbai.

The yellow metal is a sign of prosperity in India, the world's largest consumer, and people buy it during these festivals. Banks and jewelry shops are now decorated with marigolds for the festival season, and typically remain open till late evening on Dhanteras and Diwali, when such establishments witness the highest footfall.

Gold sales this week (Oct. 31-Nov. 6) may rise by 40% from last year, supporting the outlook for record imports to India in 2010, says the World Gold Council's local office. In normal circumstances, Hindus buy the most gold at this time. However, this year it seems buyers are shying away from jewelry shops.

Some jewelers have said that retail sales are slowly picking up before Diwali – the festival of lights, falling on Nov. 5th – but they are sure that the sales will not set any new record. Jewelry is the most common gift during religious events such as Dhanteras and Diwali, and it's an essential wedding present. But buyers are becoming increasingly aware of the benefits of holding gold in other, more efficient forms – like Gold Bars, coins and even exchange-traded trust funds (Gold ETFs).

More and more people are buying small-denomination Gold Coins for instance. Some banks have offered a discount on coins. Because in this time of festivities and weddings, consumers can be found doling out a fortune for buying jewelry and ornaments. But industry experts believe the right mix of fashion and investment gold can potentially bring better profits.

That's why market-development organization the World Gold Council has provided some tips to help buyers get a little extra from their Gold Investments this year.

  • The more intricate the pattern, the greater the fabrication cost. Adding the semi-precious stones, gems and crystals used to create the exquisite jadau or kundan work on jewelry raises the final cost further. And as the WGC maintains, "When you sell your jewelry, you will lose the value of the making charges, precious stones and tax."
  • Ensure quality – probably the most important aspect of Buying Gold jewelry, regardless of the occasion. "Buy Gold from a Bureau of Indian Standards (BIS) certified jeweler and you won't go wrong," advises the WGC. The jewelry will come with a Hallmark that assures you of quality. The Hallmark includes the BIS mark, the Assaying and Hallmarking Centre's mark, the jeweler's mark, the caratage of the gold and the year of marking in code form.
  • Don't go overboard on jewelry: While gold jewelry can make a good investment, it is not advisable to purchase too many bridal sets. This is because overspending on jewelry, with its higher fabrication costs, is not as good as investing in Gold Bars or coins. Bars and coins are generally 24 carat (which is the purest form), while bridal jewelry is made from 22 carat. As a result, when you sell your jewellery, your return is less.

However you Buy Gold, the World Gold Council says it remains a great investment, because it is the only investment that has consistently given strong returns, now up 23% year on year for Indian buyers. It ranks over real estate or the equity market. Also, it is a pseudo currency that retains its value and helps balance other investments too. It protects against inflation too.

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Commodity Online is a leading online, print and content provider of news, information and research reports on the commodities sector. With offices in Mumbai, New Delhi, Ahmedabad, Cochin, Bangalore and Dubai, it also powers content in the SME sector, as well as the insurance and banking industries.

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