Mistakes when purchasing gold

Gold loans have seen a quantum shift in India. This significant increase in the interest rate on gold loans is further fuelled by the COVID-19 epidemic. The low-interest atmosphere is primarily the reason for its overall vogue among Indians. Unlike unsecured loans like private loans, the interest rate on a gold loan is incredibly lower. However, clients need to keep some important aspects in mind while buying gold jewellery in order to get a gold loan without difficulty, & Mistakes when purchasing gold.

Gold as a good investment plan

Gold stocks are usually more attractive to growth investors than income investors. Gold stocks generally rise and fall with the price of gold, but there are well-run mining companies that are profitable even when the price of gold is falling. An increase in the price of gold often increases the price of gold stocks. Relatively small increases in the price of gold can lead to significant gains in the best gold stocks, and owners of gold stocks typically get a much higher return on investment (ROI) than owners of physical gold.

What to buy Gold Bars or Coins? 

Choosing between gold bars and coins depends on many factors. Gold bars attract a lower premium because they are convenient to pack in large quantities.

However, gold coins are quicker and easier to dispose of than gold bars. For a beginner investor, it is better to start investing in gold coins than gold bars, especially if you are on a tight budget. A more experienced investor may purchase large quantities of gold bars as they have lower storage costs than coins of a similar quantity.

What is the Cheapest Way to Buy Gold? 

Depending on your investment strategy, gold bars seem to attract lower premiums than coins, even though coins have a higher overhead to produce. However, most reputable dealers often offer lower premium fees in order to provide competitive prices. Also, buying gold bars or gold coins attracts lower storage costs. For most traders, it doesn’t matter whether you buy coins or bars. You should also consider whether to invest in gold stocks or physical gold. Gold ETFs or stocks are more traditional stocks. They are cheap to invest in but attract fees that increase your effective cost per ounce. As with gold futures, you will also receive returns in cash value and not in physical gold. However, for speculative purposes, they are a better option than gold bars.

Some Mistakes to avoid before Buying Gold

The following are some mistakes that buyers make while Buying Gold:

• Not confirming the Gold Weight: In India, gold ornaments are sold by weight. If precious stones and gems are set, they further add to the weight. When purchasing such gold ornaments, clients are often unable to evaluate the weight individually. And one ends up spending more than the real thing because most jewellers weigh in a bit as a whole.

• Not verifying its Worth: The standard purity rating for gold jewellery is 22 karats, or 91.6 per cent gold. Although 24 karat is the purity grade of pure gold (99.9%), it is not suitable for making ornaments. Because one karat of gold is equivalent to 4.2 per cent pure gold, 14-karat and 18-karat gold contain only 58.33% and 75% pure gold, respectively. Because 24-karat gold cannot be used to make jewellery, jewellers use 22-karat, 18-karat, or 14-karat gold.

• Buying from a random Ornamental Store: Given that there are multiple ornamental plant stores, it can be difficult for people to choose the right one. Respected jewellers place their acronym or hallmark logo on gold jewellery for easy identification. Famous jewellers will also not risk their fame in the market by passing off contaminated gold as pure. This is mostly the case with small traders. Clients who are planning to buy gold ornaments seek the importance of a jeweller for maximum protection.

• Purchasing at a Higher Rate: Another aspect that needs to be verified is the manufacturing process of the gold jewellery to be purchased. Nowadays, it is common to come across jewellers creating machine-made jewellery. The charges for such jewellery are comparatively less than for artificial jewellery. Speaking of demanding fees, it’s worth noting that since these costs reflect current gold prices, one is often forced to produce higher quantities. Therefore, it is necessary to demand fixed production costs to guarantee cheaper investments.

• Not confirming if the Jewellers suggest Buyback: Likewise, it is necessary to guarantee that the jeweller will propose buyback options. Despite the fine numbering and BIS markings, there is more speculation when one chooses a different banker to sell gold jewellery. Let’s say people can exchange their old gold ornaments for new ones from a precision jeweller. In such a situation, speculation is on the borderline and, therefore, people can get the highest value for their traded items.

• Not seeking a BIS hallmark: BIS is the only GOI-certified quality sealing and testing organisation (BIS Hallmark). Clients securing BIS-hallmarked gold jewellery will help them convey a higher value per gram. Similarly, choosing BIS-hallmarked gold jewellery will easily reduce gold loans at lower interest rates without much hassle.

How to avoid getting scammed for Buying Gold? 

The best way to avoid being scammed is to buy gold from a reputable broker. The broker must have the required experience, be a large lender, or be certified by a professional body. For example, make sure the broker is licenced by the National Future Association (NFA) and has a clean record with the Better Business Bureau (BBB).

Also, when deciding between a local dealer and an online dealer, always consider a reputable online broker. In addition to the variety of products you can choose from, your transaction is much more secure. If you are going to receive your gold order at home, choose a broker that offers fast delivery. However, there is no reason to store gold in your home, especially in large quantities. It is much safer to rent a safe instead.

Conclusion

It goes without saying that applying for a gold loan is a better option than buying gold in several growth-oriented cities in India. Avoid such mistakes when buying gold with our article, or just choose a gold loan to make better use of gold.