At the onset of the festive season, Indians rush to buy their favourite yellow metal. But do people see gold as an investment option during the festive season or buy it for the sake of buying? Read on to find out more about it.

Gold Investment During Festive Seasons

India is one of the world’s biggest consumers and importers of gold. With the festive season like Navratri, Karwachauth, Diwali, and Dhanteras approaching, people are already flocking to the market to buy gold. And there are a lot of Indian festivals where it is considered auspicious to buy gold. Dhanteras and Akshay Tritya are known as the festival of gold. This is the right time to make gold investments.

Confused if this is the right time to buy gold or not? Watch embed video: Is this the Right time to buy Gold? | CA Rachana Ranade 

The yellow metal has held an important place in our culture for centuries. Many people buy gold as jewellery form during the festive season. But gold investments in physical gold may not be the right choice. Not necessarily one has to buy the physical gold during the festive season. The physical gold investment is the most popular form, but there are other forms of gold investments like gold mutual funds, gold ETFs, and sovereign gold bonds.

Also Read: How to invest in gold or silver ahead of the festive season? 

Why Is There a Shift In Digital Gold From Physical Gold?

Purchasing physical gold, especially gold jewellery, is not a wise investment. Investing in digital gold always trumps physical gold. Why? Simply because physical gold may not give better returns than digital gold. Read on to know more.

Gold Price Is Not Fully Recoverable

Gold prices do not matter if you buy gold purely for ornamental reasons, but if you see gold as an investment option, it is imperative to look at the precious metal’s price. People think they can buy gold in physical form and liquefiable it in times of need. Some associated costs of the physical gold, like making and waste charges, add to the gold prices but are not recoverable. You may not get better returns if you make gold investments in jewellery form.

Also Read: Here's the gold price prediction for Indian Markets in the coming weeks.

Quality Lowers While Making Gold Jewellery

To make jewellery, the yellow metal needs to be conditioned; thus, there’s a depreciation in the gold quality. Moreover, in gold jewellery, some stones are added for ornamental reasons. This increases the weight of the gold. So, the price is not for the physical gold you buy. Instead, you can invest in any jewellery brand to add to your investment portfolio. On the list of stock exchanges, jewellery business is publicly listed; therefore, it is a sound option for gold investments.

Also Read: Top Indian jewellery brands to invest in.

Change In Gold Price

Gold prices change every day and are priced differently for different purity. Investor behaviour, inflation, rupee strength, market, supply, and demand also determine gold prices. If you buy gold jewellery at a higher price today, resell it tomorrow when the price decreases.

Also Read: Gold investments poised to shine as equity indices move into unchartered territory  

Impact Of Currency

Moreover, there’s a currency impact on the changing gold prices. The rupee price we pay to buy gold depends on the exchange rate. And now that the Indian rupee’s value is depreciating, in India, we end up paying higher gold prices for every purchase. As compared to the Indian price, the dollar price is always 10% lower. As India imports gold, an import duty layers up the gold price, which is unavailable in digital gold.

Small Size Purchases Do Not Have A Stable Price

In some festivals of gold, like Akshay Tritya and Dhanteras, many people buy gold in small denominations like bars and coins. The smaller the denomination is, the gold price is always high. This type of purchase of yellow metal is not a good option for gold investment in India because all over the market, they have a premium price. For example, on August 28, 2022 in Mumbai, the cost of 24K gold was Rs. 52,990 for 10grams. All over India, the prices range from nearly Rs.56,000 approximately.

The selling price is always low. You must pay a premium to buy one gram of gold coin. It will not be the same when you sell or pledge these smaller denominations of the yellow metal as a loan. If you buy this type of gold as an investment option, you might not get the same value.

Also Read: Should you invest in gold this Dhanteras? 

Final Words

Indians have an ancient love affair with yellow metal. The yellow metal has a religious and traditional significance in India. The answer to the question is gold a good investment is yes, but if done in digital forms. But, rather than falling for the shine of the yellow metal, you should weigh all your options and be aware of everything.

Gold investment in India can never go wrong unless done in the wrong form. Physical gold has storage issues, purity issues, and storage costs. If you decide to invest in digital gold, you can eliminate these fears and make the most of your gold investment. We hope this article helped you make the right choice. Enjoy this festive season by making gold investments but be informed of everything.

Disclaimer: This blog is just for educational purposes and should not be considered a piece of expert advice. All finance schemes are subject to market risk. Hence investments should be made at your own risk.