Physical Gold as Investment?

raksrules

raksrules

Level N
First I want to clear that I am aware that SGBs is ideally a very good way to have gold exposure in your portfolio. But lately, there has been no new tranches and also there is lock-in period of 8 years (to avail tax free returns). I am trying to diversify my portfolio which is equity heavy, into a fixed amount in gold purchase every month (or collect money and buy every quarter or something).

I know buying jewellery is a bad idea from investment perspective. I am leaning towards 10 gms bars or coins or so instead as they should have almost no making charges. I plan to reduce my mutual funds investment by 20K per month and collect this money over say 4 months and then buy a 10 gms coin / bar.

I would appreciate views of people who know better than me in this regard.
 
raksrules said:
First I want to clear that I am aware that SGBs is ideally a very good way to have gold exposure in your portfolio. But lately, there has been no new tranches and also there is lock-in period of 8 years (to avail tax free returns). I am trying to diversify my portfolio which is equity heavy, into a fixed amount in gold purchase every month (or collect money and buy every quarter or something).

I know buying jewellery is a bad idea from investment perspective. I am leaning towards 10 gms bars or coins or so instead as they should have almost no making charges. I plan to reduce my mutual funds investment by 20K per month and collect this money over say 4 months and then buy a 10 gms coin / bar.

I would appreciate views of people who know better than me in this regard.
Click to expand...
Check with PNG stores they have 2/3 such schemes which not only allow monthly gold buying (like the marathi "Bhishi") but also have plans like buying jwellary in future that discounts on making charges or 10% addition post 12 installments etc. DOubt its infor is available on web....
 
Vagabond said:
Check with PNG stores they have 2/3 such schemes which not only allow monthly gold buying (like the marathi "Bhishi") but also have plans like buying jwellary in future that discounts on making charges or 10% addition post 12 installments etc. DOubt its infor is available on web....
Click to expand...

Most of the jewellery shops like Tanishq, Malabar does have monthly schemes only problem we have purchase some kind of jewellery with them which will have wastage, making charges also u will gain much profit there which in my opinion is not worth.

If some stores provide coins by chance that's better investment which at least in my city none of the jewellers does that .
 
I checked the mmtc website (found the name on reddit) that people told is govt of India entity. But their price is too high like 88K for 10gms.
People have told it is of top purity so worth it. I am not sure.
 
Start SIP in Gold ETFs as per cash flow. When your total investment exceeds 10g gold price, withdraw 10g price amount and get 10g Gold Coin. Continue, rinse, Repeat.
 
Your idea is good. Do note that taxes on redemption or sale is high. If you plan to use the same to make a jewellery, trust is a key issue of which Goldsmith.
Biggest risk is security of having such items in the house. Also if you are going abroad, you can buy them from there. Dubai and SG are good places to get them. Plan it in such a way to take advantage of Shopping festivals at that time.
I know of someone who had invested 10L retirement amount in 1st SGB and relishing the future profit scenario. Also another Kerala NRI who has been saving his money in gold Jewellery for 15 years for his daughter's marriage. He now has 120 sovereigns. Putting these two reflects the mindset of people.

Gold ETF and others, Tax on sale or redemption is to be noted yearly. Never trust any Govt. ?
 
AgentBane said:
Most of the jewellery shops like Tanishq, Malabar does have monthly schemes only problem we have purchase some kind of jewellery with them which will have wastage, making charges also u will gain much profit there which in my opinion is not worth.

If some stores provide coins by chance that's better investment which at least in my city none of the jewellers does that .
Click to expand...
Thats one of alternatives I mentioned, You can take away the pure coins or rolled rings which will not have making charges or wasteges...
Kevin Lane said:
Start SIP in Gold ETFs as per cash flow. When your total investment exceeds 10g gold price, withdraw 10g price amount and get 10g Gold Coin. Continue, rinse, Repeat.
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Does buying such coins with card discounts etc work while selling locally later? Always had these doubts and never tried due to impurity concerns
 
Vagabond said:
Thats one of alternatives I mentioned, You can take away the pure coins or rolled rings which will not have making charges or wasteges...

Does buying such coins with card discounts etc work while selling locally later? Always had these doubts and never tried due to impurity concerns
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If sell to the same place where you bought from, there won't be a purity issue.
?dOuBtFiRe? said:
Gold ETF and others, Tax on sale or redemption is to be noted yearly. Never trust any Govt. ?
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You have to take a hit of CGT while withdrawing if any. I suggested this method as Physical gold requires comparatively large amount than your normal SIP. If one has financial space to invest >50k per month, he/she can directly buy physical.
 
?dOuBtFiRe? said:
Your idea is good. Do note that taxes on redemption or sale is high. If you plan to use the same to make a jewellery, trust is a key issue of which Goldsmith.
Biggest risk is security of having such items in the house. Also if you are going abroad, you can buy them from there. Dubai and SG are good places to get them. Plan it in such a way to take advantage of Shopping festivals at that time.
I know of someone who had invested 10L retirement amount in 1st SGB and relishing the future profit scenario. Also another Kerala NRI who has been saving his money in gold Jewellery for 15 years for his daughter's marriage. He now has 120 sovereigns. Putting these two reflects the mindset of people.

Gold ETF and others, Tax on sale or redemption is to be noted yearly. Never trust any Govt. ?
Click to expand...

Are you saying tax on redemption of golf ETF or actual sale of gold?
What if I buy gold with cash and also sell in cash? Can I escape taxes? I have no interest paying Tai anymore tax.

Is the option which Kevin told doable (I know I cannot escape tax in this, if any). I invest say 20k per month in gold etf and say after 4 months, redeem it and buy 10gms coin / bar physical gold?
 
Vagabond said:
Check with PNG stores they have 2/3 such schemes which not only allow monthly gold buying (like the marathi "Bhishi") but also have plans like buying jwellary in future that discounts on making charges or 10% addition post 12 installments etc. DOubt its infor is available on web....
Click to expand...
Bhishi is illegal as its a pvt. circulation of money. People even do bhishis of lacs of rupees and evade taxes. I know few cases where all 10-12 members were behind bars for some time.
Also, if someone runs of your valuables or money you can never ever ask police for help as you are the first one to be filed FIR on and be ready to enjoy prison!
 
nRiTeCh said:
Bhishi is illegal as its a pvt. circulation of money. People even do bhishis of lacs of rupees and evade taxes. I know few cases where all 10-12 members were behind bars for some time.
Also, if someone runs of your valuables or money you can never ever ask police for help as you are the first one to be filed FIR on and be ready to enjoy prison!
Click to expand...
I said like the bhishi, not exactly the same....
 
raksrules said:
Are you saying tax on redemption of golf ETF or actual sale of gold?
What if I buy gold with cash and also sell in cash? Can I escape taxes? I have no interest paying Tai anymore tax.

Is the option which Kevin told doable (I know I cannot escape tax in this, if any). I invest say 20k per month in gold etf and say after 4 months, redeem it and buy 10gms coin / bar physical gold?
Click to expand...

Tax on Gold based Investments:
Income tax on gold: SGB vs gold ETF vs physical gold. Know taxation rules here
How to make gold investments tax efficient after Budget 2024 changed capital gain rules: New STCG, LTCG rates on gold, gold MF, gold ETF, SGB

Tax is on both options either ETF or actual sale of gold. If Banks are involved - UPI, DC,CC, NEFT etc., it gets reflected in your bank statement and thus Income Tax Authorities gets itchy.

Also if the buyer of your physical gold say a shop owner has access to your PAN and reports the same in a statement called Form 61A, then the said transaction gets highlighted to your PAN with Income Tax. Sometimes they show their purchase of gold details, hence its possible.

Gold ETF conversion - redemption/sale is always reported to IT Department.

Buying & Selling Gold through cash is better, save for IT Raid and if they ask for source of the same.
 
Govt. is not offering new tranche of SGBs for some time, heard that they are stopping the scheme.
I think one can still buy and sell SGB in secondary market using their demat account.

Doubts on whether Indian gold ETFs are backed by physical gold, are there any ?

Physical gold coins / bars in a very secure locker is the only viable option it seems.
Heard about Digital Gold (Gold Accumulation Plan) by MMTC, no idea how it works though.
 
raksrules said:
Are you saying tax on redemption of golf ETF or actual sale of gold?
What if I buy gold with cash and also sell in cash? Can I escape taxes? I have no interest paying Tai anymore tax.

Is the option which Kevin told doable (I know I cannot escape tax in this, if any). I invest say 20k per month in gold etf and say after 4 months, redeem it and buy 10gms coin / bar physical gold?
Click to expand...
just look for bullion sellers which are old and reputed pay the cash and keep the bullion in the same pack when you want to return they deduct some amount the return payment is in cash as well. i did purchase gold at 32k and at that time he told me gold will touch 60 and it did within 4 years .Gold performed way better than FD and was way safer than FD.
 
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haha no we are in tumultuous times . In fact most of the countries are preparing for war like situation , China -Taiwan front ,Israel- Iran ( middle East) Ukraine-Russia dragging in the Poland (Nato) .North Korea -South Korea and Japan.

America is prepping its WW2 Islands in pacific

 
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