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All about buying Gold Coins in India

In India, gold is one of the most popular metals in terms of both investment and sale. Gold is not only about flashy ornaments, but also about a form of saving and good returns on the money that is invested in it. Gold plays an important role in Indian weddings and during major festivals like Laxmi pooja and Dussehra. These are the times when people want to buy the gold in its purest forms. A gold coin is a direct way of investing in gold apart from buying gold jewellery. The purity of these coins varies from 22 to 24 carats and are available in different sizes such as 1,2,5,10,20,50 and 100 grams. Many sellers guarantee their purity too. In India, retail investors prefer buying gold coins which can also be used to make jewellery.

Things to consider while buying Gold Coins

Remembering a few simple steps while buying gold coins could ensure that you get the best value for money.

  • The purity of Gold Coins: There are primarily two ways to gauge the purity of gold coins. Karat and fineness. Karat is more commonly used to measure the purity of gold. 22 Karat gold contains 22 parts of gold and two parts of other metals such as silver or zinc. It makes the gold more durable while making jewellery. 24 Karat is the purest form of gold which contains 24 out of 24 parts of gold. Fineness is another parameter to measure the purity of gold. According to the World Gold Council, even a pure gold coin may contain a minimal amount of impurity which a manufacturer may not be able to remove. These impurities are generally alloy. Fineness can be defined as the weight of gold in proportion to the total weight of gold coin including impurities. Usually, a 24 Karat gold is 99.9% pure, and 22 Karat gold is 92% pure.
  • BIS certification/Hallmarking: A hallmark or trademark is a purity certification of the gold coins and gold articles in accordance with the Indian Standard specifications. Gold is evaluated and tested at an official hallmarking centre and then certified that the metals used meets the national and international standards of purity and fineness. Gold that is not accredited by BIS (Bureau of Indian Standard) may not be the real deal. Certified gold coins could save you lots of efforts and time in trying to authenticate the gold coin as the quality test is thoroughly conducted for recognition.
  • Making charges: Buying gold coins is relatively cheaper in comparison to gold ornaments. The making charges for gold coins ranges between 3 to 11 percent, whereas the making charges for gold ornaments starts from 8 percent and can go higher depending upon the craftsmanship. Besides, when you resale your gold, the next purchaser will not bear the making charges. Therefore, gold coins give better returns than the other forms of gold.
  • Packaging: It is advisable to buy gold coins in tamper-resistant packaging. It is also recommended not to open or scratch the packaging if you are planning to resale it. Check the packaging of the coin before purchasing it. An Intact packaging assures that no tampering has been done to the product.
  • Ask for a bill: It is important to guarantee your purchase with a bill from the place you purchase the gold coin. Ensure that the bill mentions the critical details such as Karat, weight, and price per gram. It is essential to get a permanent bill that properly documents your purchase. The bill gives proof of purity, proof of legality, the proper value of purchase and evidence of legal ownership.
  • Ease of selling Gold Coins: If you are buying gold coins from banks, it is important to note that the banks will not buy back those coins as per the directive from Reserve Bank of India. Additionally, gold coins or jewellery purchased from one jeweller and sold to another jeweller will fetch you a lower resale value.

Top reasons to buy Gold Coins

There are three main purposes behind purchase of gold coins: personal savings, family gifts or corporate gifts. The demand for gold coins tends to be high during festivals and wedding seasons. Individual investors generally purchase gold coins for saving purpose. Below are the reasons why you should consider buying gold coins:

  • Gold is a tangible asset: The advantage of carrying a tangible asset such as gold coins is that it can’t be erased or hacked. Unlike bank accounts, brokerage accounts and credit cards, gold coins are out of reach from hackers and identity thieves. In today’s digital world, it is a good idea to have some of your wealth in tangible form.
  • It has no counterparty risk: There is no need for the paper contract to make it valid when you hold gold coins. There is no scope for middleman or third-party to fulfill contractual obligations. Gold is the only asset that is not a liability for some other party. Additionally, gold will always have a value. You can sell it when you need money.
  • Gold can be private and confidential: A gold coin is one of the few investments that can be anonymous. If you want privacy regarding your assets, physical gold can provide it. However, you must still report any gain from the sale of gold coins when you pay for the income tax.
  • Liquid and portable asset: Gold coins are ideal because they are the portable and highly liquid asset. The process of selling gold coin is quick than selling stock or debts. Brokerage accounts usually take three business days to settle and transfer the proceedings to your bank account. The portability means you can carry gold with you anywhere in the world.
  • Gold coins come with no maintenance and carrying costs : Gold is a value dense. You can carry lakhs of rupees of gold in your hand palm. While a professional storehouse does come with a fee, you can always store or secure gold in your home too. Unlike real estate and other tangible assets, gold coins don’t need maintenance. You can simply lock your gold until you need it.
  • Gold coins can protect your portfolio in times of crisis: In a world of towering risks on various fronts, gold coins offer lower risk, greater safety, and a significant upside than any other investment. Gold can protect your investment and even standard of living at the time of monetary, economic and geographical crisis. Gold is usually about defence. However, in addition to its staying power, gold coins offer massive profit potential even in the fluctuating nature of monetary and economic system today.

Pros and cons of buying Gold Coins

Gold coins have always been a time-honoured part of traditional investment plans, here’s why:

  • When the other investment options decline, gold tends to go up. It provides stabilization to your portfolio.
  • Gold coins work as a safety guard against inflation.
  • You need not pay capital gain tax until you sell gold coins.
  • You can keep your gold investment confidential – if that matters to you.
  • Unlike gold jewellery, there are no making charges for the gold coins; therefore, they don’t lose money value with reset to time.
  • The jewellery stores will happily take back the gold coins for the current market gold rate.
  • Gold coins are highly liquid assets. They are accepted everywhere.
  • Gold coins are gaining popularity because of different sizes, ease of sale, packaging, and hallmarks as per international standards.

Cons of buying gold coins are:

  • The price of gold coins is known to fluctuate widely. One needs to keep a close eye on the gold prices in order to realize the profit.
  • Gold coins need to be held for at least three years to be sold for the gain. They are not a short-term trading investment.
  • In case you are buying gold coins for more than Rs. 50,000, you cannot use a credit card.
  • If you purchase gold coin from banks, they do not provide a buyback option once it is sold. The gold coin is one of the oldest forms of investment in India. Whether it is jewellery, coins or bars, the demand for gold never ceases. This makes it the great asset that you can encash whenever you are in need, especially the gold coins because they promise easy liquidity. Investing in gold coins is the best way among different forms of gold. The value of gold coins always increases with inflation and help you to take care of your purchasing power capacity

FAQs on buying Gold Coins in India

Where can I buy gold coins?

Gold coins are primarily sold at jewellery outlets. You can also purchase gold coins from the post office and banks and online websites.

What is a better option - Gold coin or gold jewellery?

24 Karat gold coins are a better investment than gold jewellery as making charges for coins are cheaper. However, it is highly subjective and depends on for what purpose you are buying gold.

What do the marking on the gold coin mean?

The marking denotes the purity of gold coins. The most common markings are 24K (Karat) marking, 18K marking, 14 Karat marking, 10K marking, HE marking and GE marking. The purest gold is 24K.

Can I buy a gold coin from city X and sell it in city Y?

Yes, you can. Gold coins are universally recognised, and therefore they are easy to sell.

What are the different denominations of Gold Coins?

Gold coins are prepared in various denominations ranging from 0.5 grams to 100 grams.

Are there any making charges for gold coins?

Yes. The making charges for gold coins generally ranges between 3 to 11 percent.