Today’s Gold Rate in Indore

With the introduction of the GST (Good and services tax), excise duty, VAT has been replaced with the GST of 3% on the price of gold including making charges.

• Gold as an asset class has a negative correlation with other assets. In times of geopolitical tension, economic slowdown, and increased volatility in financial markets, the demand for gold usually increases which also pushes up the prices of gold as well.
• While domestic factors such as an increase in import duty on gold, from 10% to 12.5%, do contribute to the gold price, the majority of the reasons behind this rise are global. Whenever the global economy faces a crisis, gold prices always benefit as more and more people look to park their funds in safe haven.
• Globally, rising tensions between the US and Iran, Coronavirus outbreak, uncertainty over US-China trade war and its impact on the jewellery industry  may lead to volatility in gold prices in 2020.

This is not the first time it has happened. In 2008 crisis, gold prices were up by 29% while equity markets around the world tanked

Here’s a comparison between gold investment options on the basis of key parameters:

1. Sovereign Gold Bonds: They are government-backed and the price of these bonds is linked to the price of real gold. It is based on the average of the closing gold price of 999 purity published by the Indian bullion and Jewellers Association limited for the preceding 3 working days. In order to buy these bonds, one needs to be a resident of India. The minimum one can invest in SGBs is 1 gram with maximum up to 4kg.
   

   Parameters	Details
   Cost	No cost
   Returns	Returns are based on price of gold + assured 2.50% interest p.a which is paid out once every  six months
   Where to Buy	Most banks let you buy SGB online. Otherwise, they can also be bought from the stock exchange & post office.
   Liquidity	Limited as it comes with the tenure of 8 years with exit option available after 5 years
   Taxation	Tax exempted on maturity. If you sell them before maturity, capital gains taxation will be similar to gold funds or physical gold

Important Aspects Before Investing in Sovereign Gold Bonds

1. • Not available ‘on-tap’ basis but are notified by the government periodically.
   • Buying SGBs online makes you eligible for an instant discount of Rs. 50/gram
2. Gold ETFs (Exchange traded funds): These funds invest in physical gold of 99.5 % purity sourced directly from the RBI approved banks and rest in debt instruments. When you invest in Gold ETF, you receive units in an electronic form representing physical gold but minus the hassle that comes with keeping it. One gold ETF unit represents 1 gram of gold on paper. However, one should know that a Demat account is a prerequisite to buy/sell Gold ETFs.
   

   Parameters	Details
   Cost	Since it is held in demat form, it does come with demat charges and total expense ratio.
   Where to Buy	Buy/sell on the NSE/BSE
   Liquidity	Tradeable on exchange at the same price pan-India through the broker by using a demat account
   Taxation	If you sell them after 3 years of holding, capital gains are taxed at 20 % after indexation benefit. If you sell them before that, capital gains will be taxed at the applicable slab   rate.

Important Aspects Before Investing in Gold ETFs

• If the gold ETFs are under 1 KG, one cannot redeem them for physical gold but will receive the cash equivalent. However, Most gold shares offer you an option to redeem your units of a minimum quantity of 10 grams in bars.
• If you want to invest in gold via SIP, then invest via gold funds as it is not possible in Gold ETF

Other than investing in gold through paper form, one can also consider physical gold: gold coins and gold jewellery.

Gold Jewellery: One can buy gold jewellery either from a nearby jeweller or through their website. However, it is advisable to stick with reputed jewellers and those who offer hallmark certificates to ensure purity. One should know that the cost of jewellery depends on the purity of gold used in it and how intricate the design is.

Gold Coins: They can be bought from Jewellers (online or offline as well) and banks. Now even e-commerce websites such as Paytm, Amazon, Snapdeal also offer the facility where one can buy gold coins and bars in different denominations such as 1gm, 2gm, 5gm, 10 gm, etc. which one can choose as per their budget.

• If you sell your gold after 3 years of holding, long-term capital gains will be applicable and are taxed at 20 % after providing indexation benefit. If you sell them before that period, capital gains will be taxed at the applicable slab rate.
• One should know that the resale value of jewellery is comparatively lower if compared with other forms of gold investment due to the addition of making charges
• Purity of gold being bought can be a big concern. Hence, one should always buy hallmark jewellery
• It is always recommended to go for 24KT gold coin with 999.5 fineness

Now, one can accumulate gold in digital form and sell when the price of gold appreciates. Virtual wallets such as Paytm, GoldRush, Freecharge are allowing customers to accumulate gold in their wallets from as little as 1 gram. However, one must know that it won’t earn you any interest but an alternative to help you invest in gold. What’s better is, one is not obligated to make fixed or periodic payment.

To start investing in digital gold, visit the website or download the application of the apps given above and click ‘Invest in gold’. Choose the amount you want to start with and depending on the amount, corresponding grams of gold will be credited in your account.

Gold is considered an effective portfolio diversifier that is why most of the people prefer to keep a part of their savings in gold. Moreover, the price of gold and equities are mostly negatively correlated. Meaning, if equity markets fall, the price of gold tends to go up and vice versa. Thus, gold acts as a hedge against market volatility. As an investor, it is suggested to allocate a small portion of your entire investment portfolio (between 5% to 10% and not more) to gold either through gold mutual funds or Gold ETF and Sovereign gold bonds.

It is important to buy hallmarked jewellery so that one can be assured that it will fetch the right value when sold. Hallmarking is done by the BIS, the governing body which certifies the purity of the gold being used. To ensure one is not cheated while buying gold jewellery, here are the components one must check

1. BIS Mark
2. Purity in Karat and fineness corresponding to different purity level
   • 958-23 Carat
   • 916-22 Carat
   • 750-18 Carat
   • 585-14 Carat
3. Jeweller’s Identification mark/number
4. Assaying and Hallmarking Centre’s Identification mark/number

Note: The above mentioned details are engraved on the jewellery

In case of financial emergency, one can use their gold as collateral to get a gold loan in Indore. To avail gold loan, one needs to take their gold they are ready to pledge to the financial institution. The gold loan will be sanctioned based on the purity and net weight of the gold. The minimum and maximum requirement of loan amount varies from bank to bank. In return, the borrower needs to pay the interest on the loan and until it is paid, the gold will be kept in a secured vault.