We take a look at the different ways to buy physical gold and some important things you should know before purchasing it through each of these routes.
GOLD COINS, BARS AND JEWELLERY
Jewellery can be bought from any reputed jeweler while banks sell gold coins and bars now. The single-most important thing to check is the product's 'Assay Certification', indicating quality. When buying coins and bars, make sure the product is in a tamper-proof pack that prevents damage during transit.
FROM THE MAGAZINE: Tired of investing in gold? Try platinum
Coins and bars come in weights ranging from 0.5-50 grams. Some sellers also have schemes, such as Tanishq India's Gold Harvest, Muthoot Fincorp's Swarnawarsham, Bajaj Capital's Easy Gold, that sell gold on equated monthly installments.
If you decide to buy gold coins or bars worth over Rs 50,000, banks will ask for PAN card details and identity proof, while a jeweler does not.
E-GOLD:
Last year, in March, the National Spot Exchange Limited (NSEL) introduced the e-series products for commodities, including e-Gold. This scheme enables you to buy gold and hold it in a demat account, which can later be converted into physical gold. This means that you can invest in small chunks to accumulate a sizable investment.
FROM THE MAGAZINE: Why e-commodities make for good investment
You'll have to open a trading account with an authorised NSEL depository participant. Once you have the account, e-gold units can be traded on the exchange (NSEL) just like shares where one unit of e-gold is equal to 1 gram of gold. Geojit BNP Paribas, Religare Securities and Anand Rathi Commoditiesa are some participants.
Check the NSEL website for the complete list. An investor can buy and sell demat units during market hours and transactions are completed within two days.
To take physical delivery, you should have a minimum of 8 grams or in multiples of 8, 10, 100 grams or 1 kg. Since you hold the metal in demat form, rematerialisation charges will apply and VAT, which is 1 per cent of the value of goods. The exchange presently has only three delivery centers at Ahmedabad, Delhi and Mumbai.
HALLMARK AND CERTIFICATION
BIS certified jewellers can get their jewellery hallmarked from any BIS recognised Assaying and Hallmarking Centre.
A Hallmark consists of five components-BIS mark, the Fineness number (corresponding to given caratage, see table), Assaying and Hallmarking Centre's mark, Jeweller's identification mark and year of marking (in a code decided by BIS-A for the year 2000, B for 2001 and J for 2008). The marking should be embossed on the product.
PRICING
Gold prices differ from city to city owing to difference in procurement costs, transportation, etc. Always check spot gold price on MCX and NCDEX to avoid abnormal variations in rates. Making charges also differs.
