Is Buying Gold Coins A Good Way To Invest In Gold?

Gold is one of the most popular investment avenues in India, the second-largest importer of gold in the world. The yellow metal gives a sense of wealth and prosperity and is used as a status symbol by many.

Owing to its colour, brightness and rarity, gold is often used in various forms of art and commonly used as jewellery. Gold has been used across the world as some form of currency in the past and is still being used in some parts.

Gold has been a very common investment option for centuries for many good reasons. It is held as a hedge against inflation, meaning investing in gold could protect one from the depreciating value of the currency.

Moreover, gold retains its value in difficult economic conditions. Because of gold's reputation as a safe-haven asset, gold could appreciate even when other investments such as equities and bonds are heading downwards.

Gold is used to diversify one's portfolio as it is bet against an economic downturn. Investors often use gold in their portfolios to help preserve wealth during market corrections.

Gold Coins As Investment

A common way of investing in gold is to buy gold coins, which come in a variety of sizes, weights, and purity levels. Indeed, a gold coin is one of the best ways to invest in the yellow metal.

Besides the inherent values of gold as a safe haven and hedge against inflation, gold coins give certain specific advantages over jewellery.

Gold coins are easier to buy and sell. Gold coins will always fetch higher value than jewellery of similar purity. Moreover, jewellery typically has higher making charges than coins that push its overall cost higher.

Prospective investors looking to buy gold coins as an investor should consider a few things before making the purchase.

Hallmarking and Purity

One should make sure that the gold they purchase has specific hallmarks or certificates authenticating the purity of the gold coins. The Bureau of Indian Standard tests the purity and fineness of gold in various centres to certifying they are authentic.

The BIS conducts a comprehensive quality check to verify the gold's purity and fineness and makes it easier for consumers to be sure about the quality of the gold they buy. One must always look out for a BIS hallmark when purchasing gold coins. The ones that aren’t certified might be fake or lacking in quality.

Purity of Gold

One must ascertain the purity of gold before buying gold coins. Gold purity is generally measured in two ways, karats and fineness.

Karat is a measure of the purity of gold. 24-karat gold only contains gold and no other metals and is considered the purest form of gold. 22-karat gold refers to 22 parts of the metal being gold and the other 2 parts comprising other metals like silver and nickel.

The fineness of gold indicates the purity of gold in parts per 1,000. An alloy having 75% gold (18 karats) would be referred to as 750 on this scale. 24-karat gold can be refined up to 999.9 fineness.

Weight and Size

The most common denominations of gold coins that are sold by jewellers and banks are 1 gram, 5 grams and 10 grams. Various other denominations and sizes also exist.

Making Charges

Though making charges still exist for gold coins, they tend to be much lesser than the charges a jeweller would charge for gold jewellery. Generally, making charges for gold coins range between 3% and 11% of the value of the gold.

Conclusion

Gold can be a valuable investment in your portfolio since it is relatively stable and diversifies your portfolio. Purchasing gold coins is one of the best methods of investing in gold. Gold is considered as a safety net against future emergencies. Gold coins can be easily sold or used as collateral for gold loans.

Many lenders provide easy and quick loans against gold coins. IIFL Finance, which has a vast network across the country, provides gold loans at attractive interest rates through a fully digital process that can be completed within days from the comfort of one’s home.