Buying physical Gold: Is it a good investment?
Actually we are paying around 18 to 20% extra as wastage, making charges or value adding cost. That means for every 100 rupee we pay to gold jeweller we get gold worth approximately Rs.81. If we are going with their investment scheme he is ok to lose 1.5% for guaranteed customer who is willing accept gold worth Rs. 82.5 by paying Rs. 100. What is this difference of Rs. 17.5? It is emotional value which is intangible. If I can use corporate finance term, it is called “Goodwill”.
If we can remove nontangible emotional value, it is clear investing in physical gold is a bad investment.
If we want use it as hedge against other investments, better option is Sovereign Gold Bond scheme of govt of India which guarantees appreciation value in gold (100% unlike physical gold ornament) plus 2.5% guaranteed interest.