Today’s Gold Rate in Kerala

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.

There are certain factors discussed below that causes the gold rate in Kerala and worldwide to fluctuate:

• Geo-political crises: Gold has typically been seen as a hedge against inflation and a safe haven during economic uncertainty. Rising tension between US-Iran, the recent outbreak of Coronavirus has caused the gold prices to go up.
• Import Duty: India currently imports gold to meet its existing demand. Increase in import duty will directly affect the gold rates in Kerala and across India to increase.
• US dollar- Rupee equation:  Gold and the US dollar share an inverse relationship. Any change in the US dollar-rupee equation will directly impact gold rate in Kerala and across India. If the dollar rises, the price of gold tends to fall
• Interest rates: It is usually seen that Interest rates have a negative correlation with gold prices. When central banks increase interest rates, people start to flock to fixed income investments which decreases the demand for gold that in turn decreases the price of gold

There are two ways through which an individual can own gold-physical and paper. One can invest in gold through gold jewellery or buy gold coins but if physical storage is an issue then s/he can own gold in the paper form, i.e. gold ETFs and sovereign gold funds, etc. These investment options are discussed below:

1. Gold Jewellery: It is basically purchased for consumption purposes, although it serves as an investment product in itself. However, owning gold in the form of jewellery has its own concerns which one should be aware of. High cost regarding physical storage, outdated designs, making charges to name a few are some of the concerns which make investing in gold jewellery a costly affair. For e.g. making charges on gold jewellery generally are in the range of 6-25% of the cost of gold are irrecoverable. At the time of selling, making charges will be deducted before the jeweller quotes the final price to you.
   Where to buy gold jewellery from?

   One may either reach out to their neighborhood jewellers or buy gold jewellery from online jewellery portals such as bluestone, Caratlane, etc. To save cost, one can participate in gold saving schemes offered by most of the jewellers such as Tanishq, Jos Alukkas, Malabar, etc. Here, the customer needs to make a deposit of a fixed amount every month for the chosen tenure. At the end of the term, jeweller will add a bonus amount which can be in the form of a month’s installment or 75% of that amount.

2. Gold coins/ Gold bars: They are a more profitable investment than jewellery as it doesn’t come with any making charges. Now even the government of India has launched gold coins of 24K purity and 999 fineness which one can buy through recognized MMTC outlets or through specified bank branches, and post offices.
   Where can I buy gold coins or bars from?

   Gold coins/bars can be bought from jewellers, banks, and now even from ecommerce websites such as Paytm, Amazon, etc. They are available in different denominations such as 1gm, 2 gm, 5gm, 10 gm, etc. which one can choose as per their budget. Their cost differs due to the purity and fineness; it is always recommended to go for 24KT with 999.5 fineness.

3. Gold ETFs: Gold ETFs are funds that invest in physical gold of 99.5 percent purity. It is similar to buying an equivalent sum of physical gold but minus the hassle that comes with keeping it. Gold ETFs invest 90-100% in physical gold sourced directly from the RBI approved banks and rest in debt instruments. It is for this reason that returns from Gold ETF are mostly in line with the prices of physical gold. Moreover, the expenses incurred in buying and selling Gold ETF are much lower than the cost incurred in buying/selling and insuring physical gold
   How to get started with Gold ETF?

   Since the units are listed on a stock exchange (BSE/NSE), one needs a demat account to purchase and sell units of a gold ETF on the stock exchange. It also means one can do the transaction in quantities lower than expected in physical jewellery, bars and coins. If you buy mutual funds through online platforms, you would be able to buy units of ETF hassle free as well.

4. Sovereign Gold Bonds:Offered by the RBI, SGBS is another way to own gold in paper form. These bonds pay an interest of 2.50 per cent on initial investment which is payable every six months. SGBs don’t come with any expense ratio, unlike gold ETFs. What’s more, these bonds are exempt from capital gains tax on redemption. However, one should know these bonds are not available on-tap basis but are notified by the government (Usually happens every 2-3 months and the window will remain open for a week).
   How to buy Sovereign Gold Bonds?

   One can buy SGBs from designated banks and post offices after completing your KYC. The value of one bond will represent the price of 1 gm of gold. The minimum one can invest is 1 gm and maximum up to 4Kg in a financial year. It comes with a tenure of eight years with an exit option available from the fifth year.

5. Gold Accumulation Plan (Also known as Digital gold):Virtual Wallets such as Paytm, GoldRush, FreeCharge are allowing customers to start accumulating gold in digital form from as little as 1 gram. However, it varies from platform to platform. What’s more, one is not obligated to make fixed or periodic payment.  These platforms are in association with MMTC-PAMP, thus are safe to invest through.
   How can I get started with digital gold?

   Different platforms have different minimum requirements. For instance, you can get started with Paytm gold with as low as Rs.1 but the minimum amount on GoldRush is Rs.1,000. Depending on the amount, a gram of gold will be added to your wallet. When prices of gold appreciate, you can sell the accumulated gold and prevailing gold value will be credited to your account.

There are certain things you should know before investing in gold or gold jewellery

• Price of gold depends on its purity. If 24KT gold price is Rs.43,280 /10 gram, then 22KT gold will be priced lower i.e. 41,320. At the time of billing, make sure you are charged for the purity of the gold you have bought. However, this amount can vary if the gold jewellery comes with intricate design
• When buying gold coins/gold jewellery for selling purpose, understand buy back policy from the jeweller you are buying from
• Tenure of Sovereign Gold Bonds is eight years but the exit option is available after 5 years. So, if you are investing in SGBs with a specific purpose in mind, make sure your goal is at least five years away
• If you are buying gold, it is important to get a hallmark certificate from the buyer as it ensures that the gold used in making, adheres to the international standards of purity

One can check the purity of gold through the hallmark sign. Hallmarking is done by the BIS, the governing body which certifies the purity of the gold used in making gold coin/gold jewellery. One must check the following components on the hallmarked gold jewellery/coin (these details are engraved on the jewellery or coin):

For Gold Jewellery

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

For Gold Coins

• BIS Mark
• Karat
• Fineness

Note: From January 15, 2021, it will be mandatory for jewellers to sell only hallmarked 14K, 18K, and 22K jewellery

In case of financial emergency or immediate fund, one can use their gold jewellery as collateral to get a gold loan in Kerala. There are a number of financial institutions such as Muthoot, Manappuram, etc. and various banks which offer gold loans. The gold loan will be sanctioned based on the purity, weight of the gold jewellery and the loan amount requested. 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.