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Planning to buy gold this Dhanteras? Experts explain what’s worth your money
Love the tradition but short on locker space? Here is how young India is buying gold this festive season without hitting the jeweller’s shop
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Buying gold on Dhanteras is an emotion, but for youngsters, storing heavy jewellery or paying hefty making charges isn’t always practical. The good news? You can still bring home Shubh (prosperity) on a budget, starting with as little as ₹10 to ₹100!
If you want to honour the festival while keeping your money flexible and digital, here is your guide by experts
What are the different ways to invest in gold?
The most popular and traditional investment is physical gold, which comes in the form of jewellery, coins and bars.
Another option, Gold ETFs, allow investors to invest in gold without physically buying it. Investors buy units through a demat and trading account, without having to store the metal themselves.
Then, Sovereign Gold Bonds (SGBs) are government securities linked to gold prices and offer 2.5% annual interest on the original issue price. However, with no fresh issuances currently available, investors can only buy existing bonds through the stock market.
Lastly, digital gold allows users to buy small quantities of gold through mobile apps, sometimes starting at just ₹1.
Financial gold 101: What’s your best bet?
“Jewellery will always have emotional value, but financial gold is becoming a preferred choice for investing,” says Rajnish Mehan, Executive Director and Chief Investment Strategist at Prudent Asset India. There are three types to consider: Digital Gold, SGBs and Gold ETFs.
Digital Gold, he says, is a young man’s game. “It had become popular especially with younger investors, because it allows people to buy gold through mobile apps with as little as ₹1. But unlike Gold ETFs, Digital Gold is not regulated by SEBI. Investors also pay 3% GST on purchases, along with potential price differences between buying and selling, which can reduce returns. My concern is that many investors focus on how easily they can buy gold without understanding the risks involved.”
As for Gold EFTs and SGBs, he says, “If the purpose is purely long terms investment, my preference today would be Gold ETFs, followed by SGBs. Gold ETFs offer liquidity and convenience without storage costs or making charges. SGBs provide additional interest but have limitations around availability, liquidity and taxation. If you’re in a crunch, the most efficent thing to do is invest in Gold EFTs.”
What should young buyers keep in mind when buying gold for the first time?
Gold has historically been an important store of value for Indian households and continues to play a role in wealth preservation and portfolio diversification. For Dhanteras, the right kind of gold depends on your budget and why you are buying it. Despite higher gold prices, festive demand remains strong. Sen reported a 25%+ rise in sales by value compared with the corresponding period last year, alongside an increase in store footfalls. His main demand, he says, has come from both wedding shoppers and families buying gold as part of their savings plans, with consumers adjusting the weight, purity and design of their purchases to fit their budgets.
“22-karat gold is traditionally preferred for festive purchases, weddings and long-term ownership. 18-karat gold is popular for contemporary, lightweight jewellery, while 14-karat and 9-karat pieces offer more affordable entry points for younger and first-time buyers. Smaller pieces such as pendants, rings and earrings are also a way to buy gold without making a large-ticket purchase. Those looking to invest in physical gold can also consider 24-karat coins and bars,” says Mr Suvankar Sen, MD & CEO, Senco Gold Ltd.
What is the long-term outlook for gold?
Gold can play a role in diversifying a portfolio, but investors should not assume that recent gains will continue at the same pace. “Gold is expected to remain a valuable investment over the long term because of global uncertainty and its ability to protect investments during market ups and downs. However, after rising sharply and then correcting, prices may remain unstable or move sideways in the short term. Instead of investing a large amount at once or trying to guess when prices will fall, investors should buy gold gradually and hold it for several years.
Across physical gold, digital gold, Gold ETFs and SGBs, returns will largely move with gold prices, but costs, liquidity and taxation will affect the final gains. Gold ETFs offer relatively cost-efficient exposure, while jewellery involves making charges and storage costs. Digital gold comes with GST and buy-sell spreads, while SGBs offer 2.5% annual interest but have liquidity and tax considerations. Investors should build exposure gradually and treat gold as a portfolio diversifier rather than their primary source of wealth creation,” says Ssonit Rajpurohit, business partner at Motilal Oswal and CFO, Career Pandit.
So, what should you buy this Dhanteras?
“For most young investors, a Gold ETF is the best buy this Dhanteras. If you want physical gold, buy a hallmarked 24-karat bar or biscuit, not jewellery. Jewellery can be more expensive with making charges, 3% GST and resale deductions eat into your money from day one. ETFs are SEBI-regulated, liquid and need no locker, and the recent fund-of-funds pause doesn’t affect buying them through a demat account. Old Sovereign Gold Bonds on the exchange are excellent if you find volumes. Digital gold is unregulated, so keep it for gifting. And stagger your buying, since a December US rate hike could keep gold volatile,” says Akshay Gulati, founder, SuperInvesting.ai.
The advice is simple: buy jewellery to wear, coins if you want physical gold, and Gold ETFs if you want to invest in gold. The objective should be to own gold efficiently, not simply to accumulate it.
