Atul Karmarkar.Com

I recently received mails from two large banks in the private sector, offering a chance to buy pure 24 carat gold from them, with proper certification. What’s more, if bought using that bank’s credit or debit card, there was a small discount.

Now I do believe that gold should form a part of a regular investor’s portfolio because, as an asset class, it is completely different from all others and allows one to have a diversified portfolio.

Banks offer gold in the form of coins or bars as compared to the Indian fondness for buying it in jewellery form. The main problem with gold in it’s ornamental form is that there are charges at the time of purchase as well as at the time of selling, causing the overall returns to diminish. There are no such problems with gold bought from banks.

Secondly, banks offer these bars/coins in a tamper-proof packing along with a hallmark which certifies the purity of the gold, so there are no issues later on.

The problem, however, lies in the fact that the banks charge a hefty premium for both the above. In an even more unkind cut, you cannot sell the gold back to the bank, but will have to make do with your local jeweller, who will purchase it at the prevailing rate, causing you to lose out.

Gold ETF’s are a possible solution, but when they see the light of day is anybody’s guess… Till then, the local ‘pedhi’ would have to suffice !!