I have written about investing in gold through gold ETFs, and gold monthly income plans in the past, but there is a more direct way to invest in gold, and that is by buying gold coins. I use the word direct because you buy physical gold, and don’t have to pay fees to the middle-man, thereby eliminating at least one layer in between.
The flip – side is that you will have to store physical gold with you, but most of you would have bank lockers to store jewelery anyway.
Here are a few things you should know about buying gold coins in India:
1. Reputed banks sell gold coins: The most important thing to me is that reputed banks like SBI also sell gold coins, and that reduces the chances of fraud, and someone selling you something which is of less purity than they claim. A lot of banks have entered this space, and they sell gold coins through their branches. Not every branch will sell you gold coins, so you need to go to the bank’s website and find out the closest branch that will do so.
2. Different sizes: Gold coins are available in different sizes, so you can buy the ones that suits your needs the most. The usual sizes are coins of 2, 4, 5, 8, 10, 20 and 50 grams. The coins are 24 carats, and the banks guarantee their purity too.
3. PAN needed if you are buying gold coins worth more than Rs.50,000: If you plan to buy gold coins worth more than Rs.50,000 then the bank will ask you for your PAN details. I don’t think a jeweler will ask for similar documentation, and that might be one reason to go to a jeweler to buy a gold coin.
4. Banks won’t buy – back your gold coin: I have not seen any banks that you can sell your gold coins to. They are happy to sell you their gold coins, but you can’t go to them and sell it back to them. You will have to sell the gold coins to the jeweler, and this is probably another reason for buying gold coins from jewelers in the first place.
5. You might pay a premium for buying gold from a bank: Now, I started off extolling the virtues of buying gold coins from reputed banks, and I will end this post by mentioning that if you compare prices between your local jeweler and some banks – you might find a difference. There will be a difference even when they guarantee the same purity. A lot of people think that this premium is worth it because the price is higher when you go to sell the gold, but that is not always true. You don’t get this premium while selling off your gold coin. In effect, buying gold coins from your jeweler might turn out to be cheaper than buying it from a bank. It is up to you to decide whether the difference in price is worth it to you or not.
These were just some points that you should keep in mind while buying gold coins – I am going to write more about this topic in the future because a lot of people are interested in this, and would love to hear if any of you have had any experience with buying gold coins.
Please go through the Retail Sale of Gold coin scheme and GAQ on that on SBI’s website http://www.sbi.co.in. There are around 1200 authorised branches all over India authorised to sell Gold coin. You can contact the nearesrt branch of SBI or the contact centre Helpline 1800 11 22 11 (Toll Free from BSNL / MTNL landline) or 080-2659 9990 (other lines) for nay query. Daily rates of Gold coins are also being displayed on the website.
Thanks for taking time out and giving such a detailed reply Avinash.
List of authorised branches selling Gold Coins in SBI are also displayed on the website http://www.thebankingbible.com on the following link
http://thebankingbible.com/list-of-authorised-branches-of-sbi-for-retail-sale-of-gold-coins-1227
Thanks for the link Avinash.
I want to buy gold coins in SBI ..how can I buy?can anyone tell me about this?
You can go to a SBI branch and get it Deepika. I do hope that you have gone through the comments and seen the issues people face with selling the coins though.
I want to buy gold for my sisters marriage which will be in december 2012.
So i am planning to buy gold(in solid form) for making jewellery for her wedding.
Please let me know which month is the best to buy gold in solid form.
Dear Amit,
First of all, it is highly unpredictable to say in which month the gold rate will be lesser/ optimal so that you can buy buy pure gold .
I suggest you the below options by which I hope that you can take advantage of current high gold rate fluctuations and also get some benefit from jewellers schemes
1. You can go with monthly savings scheme / monthly fixed amount investment scheme with reputed jewellers in your city, the advantages of such type of schemes are
a. These monthly fixed amount investment schemes give you a bonus amount at the end of the scheme.
Ex: Deposit Rs.5000 / month for 13 months and get a bonus of Rs.5000 at the end of 14th month , so you will be benefitted to buy gold worth Rs.70000/- though you have deposited Rs.65000/- in total for 13 months.
b. These schemes have some discount on the making charges*
* The discount should be taken in written on the day when you start the scheme.
c. Usually the gold price is taken on the final day on which you purchase the jewellery.
d. Make sure that whether the jeweller is offering the bonus only on purchase of gold jewellery or also on purchase of on gold bullion( 24kt gold ).
e. The jewellery which you purchase should be all BIS 916 hallmarked on every product.
Ex: If you buy a 6 piece bangle set, EACH BANGLE should be 916 BIS hallmarked for 22kt gold and 958 Bis hallmarked for 23kt Gold.
2. You must have decided how many grams of gold jewellery you are planning to buy for your sisters marriage, so for Example , If I assume it to be 200 grams and you 20 more months in hand.
So, you can buy just 10.000 grams 24kt pure gold of 99.50 purity or above every month on a fixed date , this way you will make an average price at which you buy gold and also it won’t overload your investment portfolio/monthly budget.
At the end of Nov.2012 you will accumulate 200.00 grams of 24kt gold, now when you go to a jeweller to exchange this 22kt gold jewellery , make sure of the below mentioned points.
a. Your 24kt gold should be converted in cash at that day’s prevailing 24kt gold purchase rate of the jeweller.( Rs.100 – Rs.300 / 10 grams is difference between sale and purchase price of 24kt gold at reputed jewellers )
b. You pay ornament rate + making charges to the jeweller for the jewellery you purchase , in this total amount your 24kt gold total value should be deducted.
c. Again make sure you buy in Bill/ and all the jewellery is 916 BIS hallmarked.
Hope the above information is useful to you…
Thank you for your comment Niraj – I’ve not seen such elaborate thoughts on the subject ever – really impressive thank you!
Just got duped..
Bought 500 gms silver @ 3370/50 gms (discounted for being a classic customer)
paid 67400 /kg vs market price of 49915/kg
we should sue these banks.. will go to bank tomorrow & see if anything can be done.. will keep you all posted
HDFC Rates
http://www.hdfcbank.com/common/gold_rates.htm
Market price
http://www.sify.com/finance/gold_rates/
Banks are selling silver also? Which bank is it and in which city?
Only HDFC bank is selling silver as 50g bars.
Oh – I didn’t know about that – and they are charging a fat premium I guess, and then won’t be able to buy it back either?
exactly!
Well then I better get ready for some more angry comments now!!!
my dear friends HDFC selling silver and gold in temper proof packing but on hgh rate and you can not sell to the bank , ultimately you go to the market for selling .
Dear Everybody, I see that there has been a query on the quality of gold /silver and pricing , being a jeweler I would suggest is always buy either Silver / Gold from a reputed jeweller and stress for the NIBR 999 SILVER BAR of 1
Dear Everybody, I see that there has been a query/concerns on the quality of gold /silver and pricing , being a jeweler I would suggest is always buy either Silver / Gold from a reputed jeweller and stress for the NIBR( National Indian Bullion Refinery) 999 silver bar of 1 Kilo in Silver and NIBR 9950 gold bar of 100 grams in Gold, this way you are assured of purity and also competitive pricing.
Thanks for this info Niraj – does this come as a certificate? How does this compare to the gold that banks sell?
Dear Manshu,
The bars of 99.50 purity from NIBR do not come with any kind of seperate certificate but the purity of the gold is mentioned on the bars itself.
Usually if a jeweller / company / banks sell gold with tamper proof packaging and gold purity mentioned on the package they start charging premium for this kind of service ,and the premiums vary from Rs.50 – Rs.250 per gram and my honest suggestion is there is no point in buying gold bars by paying such high premiums , because these institutions either don’t buy back the gold they have sold and the customer has to sell in local jewellery market , where the jeweller will buy gold at the current rates only.So your entire pemium for 100 grams which is Rs.5000 – Rs.25000 is LOST!!!
Also , some people always stress for 99.90 / 99.99 pure 100 gram gold bars, but as per indian governments BIS hallmarking norms gold bar of 99.50% is also 24kt gold and it is also called “Standard Gold”( Usually mentioned in leading newspapers under gold rate section ). Any jeweller the ultimate purchaser of gold from any customer will pay you full amount for 99.50% assayed 24kt standard gold bars.
In a nutshell , I would sum up my suggestions for anyone purchasing gold in the below points.
1. Purchase gold bars from a jeweller if and only if the jeweller is offering you gold bar from the below listed nationalised / recognised gold refinaries
a. National Indian Bullion Refinary ( NIBR )
b. Narrondass Manordass ( NM )
c. Riddhi Siddhi Bullions Pvt Ltd ( RSBL )
d. Minerals and Metals Trading Corportaion ( MMTC )
2. The gold bar should be assayed with 99.50 purity( marked on the bar ) and purchase the gold with bill from the jeweller.
3. Do not purchase gold bars/ coins from banks / financial institutions because in the name of providing high purity of 99.90 / 99.99 these institions charge you a very high premium which is lost when you sell the gold at a local jeweller. The local jeweller buys your gold at the purchase price of 99.50 standard gold only.
4. When you buy gold with a jeweller also look for his purchase price, usually there is a difference of Rs.100 – 300 / 10 gram between sell and purchase prices depending on market conditions across India.
Tips to buy 1 Kilo silver bar
1. Buy only a 1 Kilo silver bar of NIBR of 999 purity from a jeweller, this is also called “Choursa” in local language.
2. Buy the silver with a bill from the jeweller.
3. Look for the “NIBR 999” SEAL on the silver bar, these bars are available across India with every jeweller.
4. Again don’t buy silver from banks, because you end up paying high premiums.
Dear Neeraj – Thank you for your detailed explanation – this is useful information, and I think a lot of readers will benefit from this.
Dear neeraj ,
thanks for you valuable informatiion. i visited your website. but didn’t find a. National Indian Bullion Refinary ( NIBR )
b. Narrondass Manordass ( NM )
c. Riddhi Siddhi Bullions Pvt Ltd ( RSBL )
d. Minerals and Metals Trading Corportaion ( MMTC )
can u send me link of some of the abvoe mentioned gold bars . so i can make purchase decision from y your online shop http://www.kotharijewelry.com/product.php
We really need Silver ETFs ASAP. When will SEBI get over with the fight and allow Silver Bees to start ops? I could have made over 2X by now 🙁
this is in respect of gold rate also. i feel khazana jewellers is the fair one and it buy back or exchange the gold coins purchased from them. while hdfc bank takes premium amount in purchasing of gold coins,by highlighting purity,and they cant buy back their own gold coins.better to go to famous jewellery shops for purchase.
Same here..Bought 100 gms silver from HDFC at 64000 per kg t a discounted price being imperia customer compared to market rate of 50000 per kg.
Regret buying it from bank Only solace is that its a long term investment. Dont know how long it will take to break even.
Latest is that HDFC is selling 100 gms at 8000 compared to jweller rate of 6200. robbers
Is this the rite time to purchased Gold or we can see more correction in that. At what price we must buy if then.
I don’t comment on price movements of short term so sorry.
Is there any condition when Bank can buy back the gold or they don’t buyback???
If we return gold to Tanishq which was earlier purchased then we will get money in cash or through cheque???
Banks don’t buy them in any case.
Don’t know if they buy it back and give cash or check.
sir,
I purchased gold coin from INDIA post office by cash for rs 23000/- i want to ask from you if there is any tax or something whick i have to pay on it later on?
Tax which you have to pay later….on sale you mean? Yeah when you sell it at a profit it will attract capital gains tax.
You are only partly correct Manshu. If the physical gold is sold after 3 years it does not attract capital gain tax, as I remember reading somewhere.
Somebody correct me if I am wrong.
I may be wrong, so please do share the link where you found this info that capital gains on gold is exempt. I searched a little again today and couldn’t find it.
Here is one link that I found which says that long term capital gains is taxable for gold after 3 years.
http://www.dnaindia.com/money/report_investing-in-gold-coins-etfs-are-4-6pct-cheaper_1487851
What would be the price of 10 grams gold on 31-12-2011
So, price at the end of this year? I don’t know that and if anyone tells you what the price will be that’s just their opinion, which they will give you since you’re asking but keep in mind that no one knows what the price will be for sure. If they knew it they would be busy making money with that info not sharing it on blogs.
SBI is not cheap. Over the price they add VAT also, so beware. I think best to invest in E-gold as there is no risk of theft.
My only concern with E-Gold is that it’s a relatively new product, so I personally would prefer a gold ETF, but that’s just my choice.
Apply a VAT on sale is legal compulsion and ethical norms. Why to beware ?We must desisit from unethical norms by saving merely by a petty gain of 1%. This type of petty gain for the sake of saving tax is also similar to corruption. These are my sentiments but your views may be different from me.
I want to buy 50 gm gold coins. How much i have to pay for this n from shwee i will get cheap
The cheapest will probably be your local jeweler.
Infact I want to buy gold n silver oins of 50 gms today. so i need the todays price. Iwant to know where i wll get cheaper a comparable statement shud be given to me.
SBI’s website shows that today’s price of 50 grams gold coin is Rs. 104,790
http://www.statebankofindia.com/user.htm?action=goldRates
The Sify website shows that the per gram 24k gold price is Rs. 1962
http://sify.com/finance/gold_rates/
For other prices, you’ll have to visit or call a local jeweler.
Dont buy from banks..
they will cheat u.. be careful
http://www.complaints.com/2006/may/4/GOLD_Coins_from_ICICI_Bank_10540.htm
I have done same mistake as in the blog, lost 150-300 RS per gram.
i need to know the rules of indian government for selling gold,silver coins for a gold smith.i would also like to know some buyers of gold,silver coins in india
You can check with your local jeweler if you are in India, as that might be the most convenient way of buying and selling gold coins. If you are not in India, and need to import it to some other country then it becomes slightly more complicated than that.
hdfc bank now has a scheme where they do buy back the gold coins.
I think the website is still not updated with the info. Can you share your experience with us please?
My experience of buying physical gold is that, a jeweller will claim that his gold is pure & he will buy back at the days price,less 3% if you want to sell it back to the same shop. But he will not honour the gold from another jeweller.
e.g. Tribhuwandas will not buy gold coins of Chintamani jewellers at the same price of the day at his shop, as he will claim that the gold from Chintamani is not pure, and also vise versa. That means that all gold from jewellers is not pure at all.
The price at the jeweller will always be about Rs. 1000 + more than the price in the market, for reasons of making charges, storing, tax etc etc.
The captal gain on physical gold is zero only after 36 months of purchase.
I want to know which is the best Gold ETF to buy. Have learnt that the BEES has the best lowest charges and highest turn over.
Where do I get the info as to how any ETF has performed in the last month, quarter, year etc ?
Can anybody advise where to study the ETFs in the markets for perfomance.
Thanks.
Thanks a lot for sharing your experience Ashok – this is exactly the kind of information I was hoping someone would share based on their own experience.
As to your point about Gold ETFs. I did a post comparing the two year returns of various gold ETFs in April here:
http://www.onemint.com/2010/06/26/2-year-returns-of-existing-gold-etfs/
Then there is a post that also has the volume and expense data on these ETFs.
http://www.onemint.com/2010/04/19/which-is-the-best-gold-etf-in-india/
These posts are a few months old, and if you would like to do current research yourself you can go to nseindia.com and find these under the ETFs tab.
Thanks again for your wonderful comment!
Like to purchase 2gold coins of 10 grams each of switzerland
Ple quote your price
please send the price of gold per 1 and 10 gm in rupee.
buying gold coin with the reputed jeweller is always better. banks are having gold coins. but they are very expensiv e as they charge 8% plus from the gold rate. Any further suggestion you can write to my email.
How we Purchase the gold coin through bank and jewller and who is benificial to us and whats the taxes is applicable by gov and jweller.If i want to sell the coin then how we will sell?
you also contact me my no…7827072609…….
Dear Mr. Ramakrishnan,
In view of marriage preparations i have already started buying gold for my daughter in terms of gold coins from jewellers shop ( 22 carat).The rate at which i typically buy is 10 ~ 20 gms per 6 months.
I am confused as to
a) Should I continue buying 22 carat coin or should i buy 24 carat coin.
b) Is there any alternate better method whereby i can buy gold for my kid.