Let’s start from the top and understand what gold plated jewellery is. Gold plating is essentially when a jewellery item of one metal, for instance an alloy, is plated to give a look of another material such as gold. The quality of the gold plating can differ, but the principle remains the same. Buying gold plated jewellery can also be a tricky thing for someone new as there are a few important factors to consider before buying gold plated jewellery.
On the other hand, gold jewellery has always been considered an investment, but is it still true? Here are some parameters you should consider before investing in gold jewellery if you are hoping for big returns.
Gold price fluctuations
The first thing that everybody looks into before buying gold is the price of it. Gold prices fluctuate daily, and are constantly increasing. There is a lot of planning that goes into understanding how the gold markets before you can buy gold, which can get stressful. With gold plated jewellery, you don’t have to do that. You can invest in jewellery that is affordable and is always going to have a stable rate.
Another additional cost that comes with fine gold jewellery is making charges. What are making charges? It’s the cost that goes into designing and producing gold jewellery. It can range from anywhere between as low as 3% to as high as 25%. Making charges include certain factors like the intricacy of the design, whether it’s handmade or machine made. Another important aspect to keep in mind with regard to making charges or wastage charges is what a specific jewellery is offering- do they have a flat rate per gram of gold or do they do a porgressive percentage? These will help you in the final cost of any gold jewellery you purchase and remember, making charges are levied before Goods and Services Tax (GST) which is 3% and 5% on making charges. All this is cancelled out when it's a matter of gold plated jewellery.
Tax implications on selling gold
One of the other reasons a huge majority of people invest in gold is for its liquidity rate. It is a highly liquid asset that you can use to get loans against in case of a cash crunch. Sale of gold jewellery/bullion/gold EFTs/ Gold MFs is taxable under Capital gains.
But what are the tax implications on selling your gold? Firstly, the tax rate is determined by which tax bracket you fall into. You also have to have proper documentation in case you receive gold as gifts from family during your wedding and such. This is an area that requires you research and understand before you take any further steps. However, this is beyond what you have to consider if you were investing in gold plated pieces.
With gold plated jewellery, there is greater accessibility in the sense that it is more affordable to a larger group of people, unlike fine gold jewellery. If you have a limited budget that can be invested in jewellery and you want to make the best use of it in the long run, investing in gold plated pieces is something you can explore. It is still high quality and with proper care can last a lifetime.
Gold Jewellery VS Gold Sovereign Bonds
In a country like India, buying gold jewellery will always be a part of our lives at some stage or another. However, that doesn’t make gold jewellery the best investment you could make out of your gold purchases. The best way to invest in gold for purely investment with high returns purposes is by investing in Gold sovereign bonds issued by the RBI. There is a lengthy lock-in period, and you get a yearly interest on the current gold rate, and you never end up spending money on factors like making charges. Because this is the case, for jewellery purposes, investing in gold plated poces saves you enough money to invest in gold bonds that will fetch high returns.
Investing in anything is a highly subjective and personal matter. What that investment means to you is not the same as what that means for anyone else. It is not only a lot of money, it also has a component of risk and time that you have to shoulder, based on what is the best step you can take, for you. While gold jewellery will always be an integral part of our lives, it may not always be the best investment you can make on gold. Consider all factors before you dive in. For jewellery pieces like earrings and necklaces, investing in gold plated pieces gives you access to a lot of variety, affordability and relatively less risky purchases as you build yourself a good jewellery collection that you can adorn for years to come.