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Can gold be carried across international borders?

By Finserv MARKETS - Aug 1,2019
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Can gold be carried across international borders?

If you had to choose an object that symbolizes marriage, what would it be? Most probably, a gold ring with a glittering diamond on it. Diamonds have come to symbolise marriage due to their presumed longevity. People wish marriages to last a lifetime and which material could represent it better. Diamond is the hardest naturally occurring mineral on the Earth’s crust. The popularity of diamonds can also be credited to a slick marketing campaign, with the slogan, “A diamond is forever”, which was coined 1947 and has been used by the diamond miner and retailer De Beers ever since. The tagline changed public attitude towards diamonds and made it a symbol of long-lasting love.

For a large part of the 20th century, the business of diamonds was a monopoly, which distorted the price of the precious stone. To be clear, diamonds have symbolized royalty and luxury for a very long time. But it was not very popular with common people, unlike gold. The propagation of diamonds as prerequisites for engagement rings and their expensive nature led many people to use diamonds as an investment. The forever connotation with diamonds stuck and made people think that diamonds as an investment could be as rewarding as diamonds as jewellery. The important question is—do diamonds last forever—not just as jewellery, but as an investment.

Diamonds are forever - or are they?

Source: Lionel Ramsey on Slideplayer.com

Lack of measuring standards

Investments in precious gems and metals could be a rewarding exercise. Even though they don’t generate regular income like stocks, the appreciation in value is enticing. However, it is very important to possess genuine gems or metal to be able to sell it in the market. Gold is one of the most sought after investments. Besides, its value, it is very easy to differentiate between fake and genuine gold. A system of hallmarking and certification, along with other simple chemical reactions help in determining the purity of gold. The diamond industry does not have a uniform system of hallmarking and certification. Many jewellers provide their own certification, but there is a lack of standardized system. The value of a diamond is based on its clarity, cut, colour and carat weight, which makes it very tricky for an average investor to determine its worth. Even when a lab grades a diamond, it issues the certificate with a disclaimer that the actual colour and clarity may differ.

Pricing Opaqueness

The pricing mechanism of diamonds is not transparent and easily accessible. A good investment asset needs to have a transparent pricing system so that investors can easily liquidate the asset when required. For instance, gold prices can easily be accessed and checked through various sources. Digital gold, the newest form of gold investment, is highly transparent. Digital gold can be easily bought at Finserv MARKETS, and the price is prominently displayed on the portal. Diamonds retailing is vastly different. Diamond dealers generally buy diamonds at a discount as it is very difficult to ensure the stone’s genuineness. Typically, a dealer would buy a diamond at 75% of the prevailing market rate after subtracting making charges. This substantially erodes the value of the investment. The ambiguity and lack of standardization raise a question over the safety of the capital.

Presumed Toughness

Diamond is the hardest naturally occurring mineral is known to all. What is not known is that a diamond can fracture in the normal course of wear. The diamond derives its strength from the ultra-strong bonds between its atoms. Due to the unique structure of diamonds, there are certain points where the atoms are not tightly bonded. When a huge amount of force is applied to those points, it can fracture the diamond. Chipping of a diamond is not very common, but it cannot be ruled out.

Diamonds are forever - or are they?

Source: Nikhil Narayan on slideshare.com

Conclusion

The common notion around the durability of a diamond as an investment is largely a product of clever marketing. Except for the appreciation in price, a diamond does not have other features of a good investment. It is not a liquid, as not many people buy diamonds and their high prices make it more difficult to sell. In case a diamond gets chipped, you do not have many options. It will have to be recut, which will decrease its size and value. If investing in precious gems or metals is the aim, gold is a better option. Damage in gold jewellery can easily be rectified. The introduction of digital gold has made investing in the metal very easy. Digital gold prices are transparent and the buying process is very easy. You can buy digital gold from Finserv MARKETS in two easy steps.

“FinsThe captivating appeal of gold has made it a valuable commodity. Gold will retain its value in the future for the simple reason that it always has. It is also an excellent wealth and portfolio diversifier. You can buy digital gold online to increase your assets and contribute to your financial portfolio.

Indians especially have always been keen on gifting gold coins at weddings or purchasing them as investments. Indian expats, in particular, have also taken advantage of buying gold abroad due to its lower prices. But can gold be carried across international borders?

Is India import-friendly for gold?

  • This year, the Indian government is discouraging people from getting gold to India. The government’s move to hike import duty on gold from 10 to 12.5 per cent in its latest budget has raised fresh concerns over the restricted gold allowance for Indian travellers going home.
  • The UAE is one of the cheapest locations for purchasing gold. However, “an Indian passenger who has been residing abroad for over one year is allowed to bring jewellery, free of duty in his bonafide baggage up to an aggregate value of Rs 50,000 in the case of a male passenger or Rs 1,00,000 in the case of a lady passenger,” according to a Customs Guide for Travellers put up by the Indian Embassy in Abu Dhabi. Rs. 50,000 worth of gold translates to 14 grams of the yellow metal while Rs. 1,00,000 is about 31 grams.

Source: Gold.org

Who can import gold into India?

Any passenger of Indian origin or holding a valid Indian passport who is coming to India after a period of not less than six months of stay abroad can import gold into India, according to the Indian Customs Guide for Travellers.

Conditions of gold import:

  1. Gold duty shall be paid in convertible foreign currency at the current rate (12.5%)
  2. The weight of gold should not exceed 1kg per passenger

What should you do before carrying gold into a foreign country?

1. Check restrictions before you fly

Specifics of gold restrictions differ from country to country. You must check the customs website of the country you travel to although they are not all as clear as the United States’ regulations. If unsure, call them before you travel and ask for specifics.

2. Ensure you have documentation to prove the purity of the gold with you

With some countries such as New Zealand and Australia, there is no tax on gold with a fineness of not less than 99.5%.

3. Carry gold in your hand baggage with your personal items

For security reasons and also for ease of declaration, it is best to carry gold in your hand baggage instead of checked baggage. Some people intend on gifting gold coins to their relatives abroad and are easily able to do so by making use of their hand baggage allowance. When you buy digital gold online on Finserv MARKETS, your purchase is insured and you need not pay a rupee for storage provided by the logistics partner.

Buying and selling digital gold

At an unfavourable time of gold imports for India, digital gold has been gaining popularity since you can invest in gold online. With the prices of digital gold being the same across India, you can buy and sell gold at the market-linked rate, with each quantity of gold purchased backed by actual physical gold on Finserv MARKETS. While you can also purchase the metal in small quantities, there is no limit to your capacity to buy digital gold online.

Can gold be carried across international borders?

Source: Smaulgld.com

Does gold have a counterparty risk?

Gold is the only financial asset that is not simultaneously someone else’s liability. It does not require the backing of a bank, government or brokerage. It cannot suffer a default or allow its value fall to zero. No counterparty risk implies than once you have physical gold in your possession, you do not have to depend on another party to fulfill a contract to retain its value. To begin with, you can be flexible in your purchase by buying gold in sachets on Finserv MARKETS. You do not need to spend thousands of rupees or worry about the authenticity of the gold.

Conclusion

No matter what the social, political or financial climate is in the world, the value of gold has never gone to zero or has not defrauded an investor. Although transporting gold across international borders has some restrictions, digital gold has gained popularity and can be availed by eliminating costs such as making charges, seller and storage fees. Indians invest in the metal as it makes gifting gold coins easier, acts as a reliable asset and ensures liquidity.

“Finserv MARKETS, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. We understand that every individual is different and thus when you plan to achieve your life goals or shop for the gadget of your dreams, we believe in helping you Make it Happen in a few simple clicks. Simple and fast loan application processes, seamless, hassle-free claim-settlements, no cost EMIs, 4 hours product delivery and numerous other benefits. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere”!

erv Markets, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. We understand that every individual is different and thus when you plan to achieve your life goals or shop for the gadget of your dreams, we believe in helping you Make it Happen in a few simple clicks. Simple and fast loan application processes, seamless, hassle-free claim-settlements, no cost EMIs, 4 hours product delivery and numerous other benefits. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere”!

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