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Due to its high market value and cultural importance, purchasing gold continues to be a common tradition for Indian investors. A prospect of higher returns and a comparatively hassle-free storing procedure makes gold coins an ideal alternative in this regard. 

Moreover, as the leading financial organisations are offering beneficial gold loansbuying gold coins can help borrowers avail of a lump sum credit by pledging these as security. 

7 Things to Consider Before Buying Gold Coins

Before investing in gold coins, purchasers must keep in mind certain crucial factors to ensure they are making a highly remunerative decision. 

So, the top seven aspects to consider before making a gold coin purchase have been listed below.

1. Purity of Gold Coin 

The purity of a gold coin is measured by two different scales – its carat and fineness. A 24-carat coin, consequently, is the purest form of gold in this context. To elaborate, a 24kt coin signifies that it has 24/24 part gold. However, as zinc or silver etc., metals are used to make the gold product more durable, 22kt coins are also considered significantly pure. 

Interestingly enough, even 24 Karat gold can contain within itself impurities which were not removable from the manufacturer’s end. That is why the scale of fineness is used to measure the percentage of this precious metal’s weight to the total weight of the product in question. So, a 24kt product, in general, has 999.9 parts per thousand purity. 

2. Hallmark of Gold Coins

Buyers have to keep in mind the risk factors involved when purchasing gold coins, such as getting conned by a dubious seller. To safeguard the buyers from such incidents, the government of India has mandated a hallmark stamp to guarantee the value of an adequately appraised product.

The Bureau of Indian Standards or BIS is the monitoring body in this nation responsible for verifying the quality of gold jewellery and other products to provide it with the hallmark. Notably, it is not mandated that gold coins have this stamp. Nevertheless, such coins with a fineness of 999/0995 can be hallmarked by certain mints or refineries that the bureau approves.  

There are three components of a hallmark, which are embossed on a gold product:

  • BIS logo

  • Purity of gold

  • A unique six-digit alphanumeric code for each article 

3. Denomination of Buying Coins

A customer must also check the proper weight of a product before buying gold coins. In general, manufacturers produce gold coins in a wide range of 0.5-100 grams. Nevertheless, such denominations can vary from one jeweller to another. 

4. Options for Buying Gold Coins

In India, a customer has several options when deciding from whom he or she should be purchasing gold coins. The most common alternative in this regard remains the leading jewellery brands of the nation. However, purchasers can also get the same done by getting in touch with the following:

  • Online e-tailers

  • Traditional Financial Institutions 

  • NBFCs

  • Minerals and Metals Trading Corporation (MMTC)

5. Charges for Buying Gold Coins

Purchasing any kind of gold product comes with additional costs, such as making and wastage charges. That is why a customer must check the rate of these charges as levied by the seller when he or she is buying gold coins

Notably, these charges, in general, are significantly lower for a gold coin than they are for jewellery. Additionally, as makers often provide lucrative discount rates on these charges, a customer can benefit exponentially by investing in gold coins. 

6. Billing of Buying Coins

During a gold coin purchase, a customer needs to keep an eye out for the seller providing a detailed and accurate bill. As this is a binding document about a product’s price and purity, purchasers must ensure all the terms of their legal ownership have been adequately recorded. 

Additionally, customers must not be buying gold coins if they are not adequately packaged by the seller. Getting products with tamper-proof packaging can significantly reduce the risk of counterfeiting. 

7. Ease of Selling 

When an individual is buying gold coins from a bank, they need to keep in mind that RBI regulations prohibit these financial institutions from buying back the coins in the future. So, if an investor intends to resell these coins down the line, he or she will need to purchase them from a certified jeweller.

Notably, a customer has to keep the tamper-proof packaging unopened in order to resell it later on. However, reselling a product to a different jeweller than the original manufacturer can be financially disadvantageous. To elaborate, in such a transaction, the customer will only realise the value of the gold minus the additional fees initially charged.

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FAQs on Gold Coin Investment

Is buying gold coins a good idea?

Buying gold coins can be an extremely favourable investment. Not only can it be an effective measure of asset accumulation, but it also can come in handy if a borrower wants to apply for a gold loan. 

Do gold coins hold their value?

Being a physical asset, gold coins are capable of holding their value in the market.

What is the safest way to buy gold?

Customers can buy gold coins online as it is a safer method of conducting such transactions. 

How much gold can I buy without reporting?

In India, the amount of gold an individual can have without an invoice is as follows:

  • Married women – up to 500 grams

  • Unmarried women – up to 250 grams

  • Married or unmarried man – up to 100 grams

Does the value of gold appreciate each year?

The value of gold tends to appreciate over time, however, this is dependent on multiple factors. Keep a close eye on the gold rates worldwide and the trends to make a more accurate forecast of whether the value will increase or decrease in the future, before investing.

Why should I buy gold coins and gold bullion?

Gold coins and bullion are secure and easily tradable forms of investment which have the potential to grow in value over the long term.

Gold bond vs gold jewellery, which is better?

Gold bonds provide returns linked to gold prices without the concerns of storage and purity associated with physical gold jewellery. However, buying gold jewellery enables you to not only invest in gold but also utilise it by wearing it whenever you like. Choose between gold bonds and the purchase of physical gold, depending on your requirements and preferences.

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