Buy gold online amid Covid-19 lockdown on Akshaya Tritiya

gold



New Delhi

If you are planning to buy gold on Akshaya Tritiya, which will be observed on Sunday, you will have to go online as gold shops will remain shuttered amid the lockdown to break the chain of coronavirus infections.

The price of gold in India has shot up over the last few months. Gold futures were up 0.17% or Rs 78 to Rs 46,505 per 10 grams on Friday. In the previous two sessions, gold prices had rallied about Rs 1,300 per 10 gram.

On the Multi Commodity Exchange (MCX), June gold contracts were trading higher by 0.16% at Rs 46,501 per 10 gram at 9:30am.

Here’s how you can buy gold digitally as well as in its physical forms online during Covid-19 lockdown:

Physical gold

You can buy it in the form of jewelry or gold biscuits and coins from jewelers. Certain banks also sell gold coins.

There is no investment limit but this form of gold has a higher risk of theft than others. Returns on the physical form are lower than actual return on gold. The actual return per gram is assumed as the price of gold per gram on the trading exchange on the date of sale and is the cost of that gram of gold.

It can be used as collateral for a loan and long term capital gain or LTCG is applicable after three years.

Purity check is a big concern and you have to pay a storage cost, which can be high if kept in a locker.

Gold exchange-traded funds (ETFs)

Gold ETFs can be bought and sold on stock exchanges and you can buy it close to the actual price of gold as the benchmark of gold ETF is the physical gold price. You will need a trading Demat account to buy gold ETFs.

There is an investment limit of a minimum of 1 gram but doesn’t have any maximum limit.

ETFs are safer in terms of reduced risk of theft but like physical form, this has to have a lower than actual return on gold. LTCG is applicable after three years but cannot be used as collateral for a loan. It can be traded on the exchange and there is no lock-in period.

The purity of gold ETFs is high because it is held in electronic form. Its storage cost is low as it’s held in Demat form. The charge for a Demat account may be spread over several securities.

Sovereign Gold Bonds (SGB)

These are government securities issued in multiples of one gram of gold. These bonds are issued by the Reserve Bank of India (RBI) on behalf of the government of India and are traded on a stock exchange. These can also be used as collateral for taking loans.

There is a minimum of 1 gram and a maximum of 4kg investment limit for an individual according to rules for SGB 2020-21.

Sovereign Gold Bonds are safer in terms of reduced risk of theft and they have a higher than actual return on gold because of the interest paid on the bond during the holding period.

The interest in SGBs is taxable. The capital gains tax arising on redemption of SGB to an individual has been exempted.

They can be used as collateral for a loan and can be traded on an exchange. Their maturity period is of eight years but you can also exit after the fifth year.

Their level of purity as high as they are held in electronic form. Their storage cost is also very low as they are issued by RBI and held in the books of the central bank.


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