Even if you're not planning to buy gold – this is a good thing to be aware of.
Dear Amit,
First of all, it is highly unpredictable to say in which month the gold rate will be lesser/ optimal so that you can buy buy pure gold .
I suggest you the below options by which I hope that you can take advantage of current high gold rate fluctuations and also get some benefit from jewellers schemes
1. You can go with monthly savings scheme / monthly fixed amount investment scheme with reputed jewellers in your city, the advantages of such type of schemes are
a. These monthly fixed amount investment schemes give you a bonus amount at the end of the scheme.
Ex: Deposit Rs.5000 / month for 13 months and get a bonus of Rs.5000 at the end of 14th month , so you will be benefitted to buy gold worth Rs.70000/- though you have deposited Rs.65000/- in total for 13 months.
b. These schemes have some discount on the making charges*
* The discount should be taken in written on the day when you start the scheme.
c. Usually the gold price is taken on the final day on which you purchase the jewellery.
d. Make sure that whether the jeweller is offering the bonus only on purchase of gold jewellery or also on purchase of on gold bullion( 24kt gold ).
e. The jewellery which you purchase should be all BIS 916 hallmarked on every product.
Ex: If you buy a 6 piece bangle set, EACH BANGLE should be 916 BIS hallmarked for 22kt gold and 958 Bis hallmarked for 23kt Gold.
2. You must have decided how many grams of gold jewellery you are planning to buy for your sisters marriage, so for Example , If I assume it to be 200 grams and you 20 more months in hand.
So, you can buy just 10.000 grams 24kt pure gold of 99.50 purity or above every month on a fixed date , this way you will make an average price at which you buy gold and also it won't overload your investment portfolio/monthly budget.
At the end of Nov.2012 you will accumulate 200.00 grams of 24kt gold, now when you go to a jeweller to exchange this 22kt gold jewellery , make sure of the below mentioned points.
a. Your 24kt gold should be converted in cash at that day's prevailing 24kt gold purchase rate of the jeweller.( Rs.100 – Rs.300 / 10 grams is difference between sale and purchase price of 24kt gold at reputed jewellers )
b. You pay ornament rate + making charges to the jeweller for the jewellery you purchase , in this total amount your 24kt gold total value should be deducted.
c. Again make sure you buy in Bill/ and all the jewellery is 916 BIS hallmarked.
Hope the above information is useful to you…
I think there is value in exploring this option not so much because of the math of it but because of the psychological benefit of setting aside a certain sum every month for a very specific purpose with a jeweler. If you decide to get into a scheme with a jeweler where you invest a sum regularly to get a bonus at the end, then make sure to compare that with at least a bank recurring deposit, and see that it's not too far off.
Be it stocks or other assets – regular investing is likely to trump timing the market as far as the retail investor is concerned.
Finally – thank you to Niraj for sharing his experience with everyone.
