GOLD - Path to Financial Independence #5

Gold is one of the greatest investment choice. It is one of the famous investment choice. Almost every family have already invested in it. Knowing all this lets get deep into gold.

WHAT IS GOLD:

Gold (Au) is a chemical element. In a pure form, it is a bright, slightly reddish yellow, dense, soft, malleable, and ductile metal.

Throughout the history of our planet, almost every established culture has used gold to symbolize power, beauty, purity, and accomplishment. Today we continue to use gold for our most significant objects: wedding rings, Olympic medals, Oscars, Grammys, money, crucifixes and ecclesiastical art.

No other substance of the same rarity holds a more visible and prominent place in our society. Gold is a memorable metal that occupies a special place in the human mind.

GOLD as a ornament vs GOLD as a investment

Ornament

Most of us consider gold as an ornament which we use as a ring, neckpiece, earing, bangles etc. Gold ornament is probably the most popular and fastest selling type of the yellow metal in India. But what are we missing?

The Gold we are buying is mostly 22 karat, which is not a pure form of gold. Because gold in its pure form is very delicate, so to make it stronger and suitable for jewellery it is alloyed with other suitable elements such as copper, nickel, silver etc. The gold content in a ornament is mentioned by karat. If a piece of ornament is made of 22 karat gold, it means that the ornament consists of 22 parts of gold or 91.3% gold and the rest constitutes of other metals. The purest gold will be of 24 karat.

What are the other charges:

Wastage charges
Making charges
Value added Tax

Wastage charges - There is a lot that happens while making a gold ornament. While moulding gold into an intricate ornament a lot of gold will be wasted while cutting, shaping, melting the gold into the desired design. A lot of gold is wasted while making an ornament and jewellery makers charge a fee for the gold wasted in the process of making the ornament known as wastage charges. The wastage charges depends on the type of ornament and can be anywhere between 2% to 25%.

Making charges - Making charges indicate the fee paid to the goldsmith for the services rendered while making the gold ornament out of raw gold. The more intricate and complex the design of the ornament, higher the making charge.

Value Added Tax - Value Added Tax is a type of indirect tax levied by the government on purchase of products. VAT is very different from sales tax and the VAT charged in every state is different from another. Many states in India charge VAT on gold ornaments.

Investment

When considering gold as an investment, you should avoid acquiring it as jewellery because there are numerous expenses involved with it. One of the greatest ways is to purchase gold coins, which have lower manufacturing and wastage charges.

CONCLUSION:

I just want to wrap up this blog with a personal journey. I recently sold a gold chain weighing over 8 g. The value I got for it is almost around 30K, whereas the jewellery was purchased for 1K when I was little. Though it's price is considered to be volatile in short term, it has always maintained its value over long term.

So Happy Investing

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