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  • Category: Investments

    Physical Gold vs Gold ETF vs E-Gold - which one is better

    Unsure of whether to invest long term in Physical Gold or Gold ETF or E-Gold? Expert advice and suggestions are provided here.

    I was thinking about investing for my daughters marriage and would like to plan for buying the Gold. I have a 13 Years of horizon for planning. Which one is better: should I invest in Physical Gold or Gold ETF or E-Gold?

    If I go ahead with buying physical gold, like 5 gm gold coins or 10 gm biscuit etc, then will this shiny metal becomes dark over 10 years time?

    Can you share your views and give guidance.
  • Answers

    18 Answers found.
  • Buying gold jewelry is not an investment at all in terms of returns. The catch lies in the making charges which is a euphemism for profit for the seller and may vary from 10% to up to 35% in case of a complex design. Buying jewelry is only an expense for pleasure, symbolizing wealth.

    Buying jewelry at present for daughter's marriage is likely to involve an exchange of the same with new jewelry at the actual time of marriage as the designs are likely to become obsolete. At that time the making charges paid at present will become zero and fresh making charges will have to be paid again.

    Barring few corporate jewelry houses, the old jewelry will be exchanged after deduction of 5 % to 7% as wastage.

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  • I have heard that some reputed jewelries are offering a deposit scheme in which you can deposit cash as and when you have and buy jewelry when you need it at the rate that existed when you joined the scheme or at the time of purchase whichever is lesser. I am not sure about the making charges, but I think that it is quite a good scheme, provided, the jewelry offering the scheme is established and reputed.
    But thirteen years of planning and preparation for your daughter's marriage do appear to be taking things a bit too far.

    'Any fool can know. The point is to understand."- Albert Einstein

  • My personal suggestion is to buy the hallmarked maximum purity gold coins from banks or other similar established outlets. The only risk there is the safe keep. This can betaken care of by hiring safe deposit lockers at one or more banks. As per the age of the child some ornaments can be added for wearing. Making jewels when needed, by melting purity gold coins with a trustworthy goldsmith will not incur much.
    But if needed to sell and get money for that also gold coins is better.
    Gold will not lose colour or corrode. It needs just a surface cleaning to look clean and new again
    Physical gold has more liquidity and convenience than the Gold ETF or E Gold. But you can also invest some surplus in these as a prudent alternative.

  • The following are some of the disadvantages associated with buying gold coins from banks -

    1. Banks charge 5% to 7% ( sometimes up to 10%) more than the net cost of gold .
    2. Banks cannot buy even their own coins.
    3. Gold coins cannot be encashed. The jeweller will exchange the same for jewellery only.

    Thus while buying up to 10% premium is required to be paid and while exchanging for jewelry up to 15% discounts may be involved as the jeweler may talk about melting charges (1.5% to 2%), wastage etc.

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  • Well since the author wants to have long term investment, then considering gold as the investment is not the viable subject. The central government is offering debentures with good interest and one can even invest in public sector banks with five and more year investment plans which would get greater interest. What I feel that if the author wants to invest in gold only means, then opt for gold coins being offered by some reputed jewelers with hall marked quality. When ever you want to make real purchase of gold, the original value of gold coin is redeemed on that day and thus there is no loss.

    K Mohan
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

  • Gold bars are also sold by the banks which come at a price cheaper than the gold coins. However, for the purchase of gold costing above Rs. 50,000, PAN card details are a must.

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  • E-Gold is better in many ways. First you do not need to handle it physically and no chances of any type of Risk. E-Gold comes with many benefits.

    Dr. Paresh B. Gujarati.
    Mechanical Engineer.
    'I'mprovement always begins with 'I'.

  • Its very good that your planning for your daughters future. I think buying buying gold coins as per your requirement would be good, because these are like fixed assets to your child and as well to you. In case if your in need of money you can sell the gold with the current market price. Suppose if you have ornamental gold definitely there will be some waste and etc charges that will be compulsory deducted from your ornamental gold, other than this the patterns also keep changing. So pure gold coins are better for investment and they will not loose their shine even after years.

  • Since you have thirteen years time for the finalisation of your daughter's marriage and is the practice in Hindu - customs, the parents are bound to shell out Gold - ornaments during the marriage. Keeping in view of price fluctuations of this precious metal on year to year basis, there has been substantial rise in the price. Let us take an example, the price of Gold per ten GM was around 800/ - in 1980 and the same was around 10000/- in 2007 for the same quantity and now it is hovering around 30000 for 10 GM of Gold for 24 carat. Anticipating the further unusual surge during the time of your daughter's marriage, it would be better to purchase Gold periodically with the affordable cash and go on adding this precious metal so that you are not overtaxed in the needy hours.
    One scheme flouted by Tanisq is to open up an account of certain denomination where the instalments for 12th, 24th, 36 th and onwards are being paid by this company to purchase gold after the expiry of the period. Such facility can be availed of in order to lessen the future burden.

  • Which one is better: should I invest in Physical Gold or Gold ETF or E-Gold?
    Ans-It will be better to invest in ETF rather than physical gold. Very soon modi is going to bring to capture black gold like Rs500 and 1000 notes, what happened to hoarders that is going to be with gold and benami property. So be wise not to store gold. Sip is a better option to get better return in long term. You can explore better options.

    The greatest wealth in this world is mental peace and good health.

  • Regarding this thread I would like to know the difference between Gold ETF and E-Gold.

  • Investment in gold is one of the best option at this time as the market is little low when compared to the equity. If you are looking for investing in gold for your daugther marriage you can buy the gold in the form of coins from reputed gold company where they would accpet the gold coin in the same Gold shop. So that you can make ornaments after a few years for your daugther's marriage.

    Investing in Gold-ETF would also benefit you so that you can invest now and later sell in the market. The price of the gold may go up or down depends upon the market analysis. You either may be profited or average according to the market price, so you must have cash in hand to do that.E-Gold is also one of the paper gold same as the Gold-ETF.

    If you are looking for your daughters marriage investment better to buy as the physical gold and keep it safe and protect until you make it as ornaments with proper billing and tax, so that you can sell it whenever you want. Consult a persons who makes gold and knows more about the physical gold to buy it.

  • I think instead of opting to purchase gold ornaments or gold biscuits or even gold coins, the author may invest in the government bonds or even in the Indira Vikas Patra which would ensure return of investment double in a fixed time. Moreover the IVP is transferable and can be given to others by the bearer , so there is no question of risk or challenge in future in IVP.

    K Mohan
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

  • Gold ETF or E gold is better than physical gold. when you buy physical gold in the form of jewellery you have to invest for making charges also. when you buy E gold in forms of gold bond, if you buy it at a low price you can sell it when its market price is high as you have quite time in hand. then you can buy more physical gold for your daughter with that extra profit.

  • From investment point of view if gold prices increase in the future ( which seems to be a likely expectation) and share markets also rise reasonably ( which also seems a good possibility) then all the three options will yield gains. Let us analyze one by one.
    Physical gold is unsafe if kept in home. However it can be kept in the bank locker by paying some locker rental charges. If it is in shape of coins or biscuits the selling will fetch the full amounts. On the contrary if it is in form of jewellery it will be converted in money after some deductions in the range of 5-10 % depending upon the purity of gold.
    Gold ETF is also dependent on gold prices and can give a handsome return depending upon the gold market growth. Here the hidden charges are brokerage and service charges at the time of selling gold ETF units.
    e-Gold is also based on the market rate of gold. The gold bonds issued by Govt of India are e-Gold and also carry a nominal interest of 2.5 to 2.75% p.a. These are locked for 7-8 yrs. However investor can exit through market as these bonds will be listed in stock exchange.
    In case the gold prices tumble all these plans will come in negative territory and on exit investor will book loss.
    As returns under these plans are almost similar, as per once convenience one can opt for any of the above plan.

    Knowledge is power.

  • TThis response is marked as DELETED by the admin.

    Practically every small business has receivables that it cannot obtain from clients. If your small business doesn't have any such receivables, consider yourself lucky. For those small businesses that suffer from uncollected receivables, solace can be taken from the fact you can claim a tax deduction.
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    Bad Debt Tax Deduction
    A small business can write-off bad debt losses if it meets nominal requirements. To claim such a tax deduction, the following must be shown:
    A. The existence of a legal relationship between the small business and debtor;
    B. The receivables are worthless; and
    C. The small business suffered an actual loss.
    Proving there is a legal relationship between the small business and debtor is fairly simple. You must simply show that the debtor has a legal obligation to make a payment. Most businesses issue invoices or sign contracts with debtors and these documents suffice to prove the legal relationship. If you are not putting your business relationships in writing, you should begin doing so immediately.
    Proving receivables are worthless is slightly more complex. A small business is required to show that the debt has become both worthless and will remain so. You must also show that you took reasonable steps to collect the receivables, but you are not necessarily required to go to court to meet this requirement. A clear example where you would meet this requirement is if the debtor filed bankruptcy.
    While proving that you suffered a loss may sound like the easiest requirement to meet, the issue is a bit more complicated. The Tax Code defines the loss as an amount that is included in your books as income, but is never collected. A classic example of such a situation would be a manufacturer that provides products to retailers on credit. The manufacturer can show a real loss if the retailer files bankruptcy. Unfortunately, there is almost no way to claim a loss if you provide hourly services and use a cash accounting method. The IRS does not consider the expenditure of time and effort to be a sustained economic loss.
    Small businesses suffer all to often from uncollected receivables. If you failed to claim such losses as a tax deduction during your last three tax filing years, you should file amended tax returns to get a refund.

  • According to your plan , the sovereign gold bond scheme of RBI is best. These are government securities denominated in grams of gold.These bonds are issued by Reserve Bank of India on behalf of government of India.
    The maturity time of these bond is 8 years, and the interest rate is 2.75% per annum.
    These bond are trade able in stock exchanges, if held in demat form.
    Please go through the website of RBI for more details.

  • Author discussed the best demanding topic.
    Physical gold may be harmful for anyone as there is chances of loss by means of robbery or depreciation value.
    Gold ETF can be the best option which is absolutely worry free.
    Can be redeemed at any point of need.
    Need not to place any kind of special security fro the same.
    There is absolutely no depreciation attached with the same.
    It is like cash in safer zone which can be used at extreme term and condition while we may have to sell physical gold at lesser rate when we are in need.

  • TThis response is marked as DELETED by the admin.

    Dear Sir,

    Gold Exchange Traded Funds (ETFs) are simple investment products that combine the flexibility of stock investment and the simplicity of gold investments.

    E-gold is more suitable as it provides the option of delivering the yellow metal and, hence, bridges the gap between using it for investment and the traditional, auspicious reasons for buying it.

    My opinion is you can go for Gold Exchange Traded Funds (ETFs).

  • In our India Gold is very important. Gold is purest metal according to our tradition so people give more and more to their daughters at the time of marriage. I think sovereign gold bond scheme is best as it is secured by government and interest rate is fixed.E-Gold is basically through the National Spot Exchange platform which is different from NSE.For this you have to open demat account. To invest in E-Gold you need broker.E-Gold is very similar to ETF .E-Gold is much better investment because of cheaper but the disadvantage is that it is tax inefficient. In E-Gold you can easily convert it to physical gold.Physical gold has many risks like robbery, security risks, depreciation etc

    Ankit Garg

  • TThis response is marked as DELETED by the admin.

    Both forms are having positives and negatives. Physical gold you can purchase and keep with you. The price increases over time. when the need comes, you can get it converted ornaments without spending higher rate. Physical gold has more liquidity and convenience than the Gold ETF or E-Gold. But it is not safe to keep the major quantity of gold in the house. It is more prone to theft. So to avoid this problem you can invest Gold ETF or E-Gold. But liquidation is a little difficult in this case. Tax content will also come into the picture. you can also invest some money in this option also which will be accountable and tax payable.

    always confident

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