Why don’t the banks buy back the gold coins they sell?
When u go to the banks to purchase gold they fall over each other to attract u. But in times of need when u approach them to sell the gold u bought from them, they point blank refuse to buy the same back, although the cold coins or ingots are in their original so called ‘tamper proof’ packing.
One should never buy physical gold from bank or ornaments for INVESTMENT purpose. You can buy it if you like the pleasure of owning gold.
To invest in gold always use ETF.
Here are the important reasons
1.Banks sell gold coins at a premium of 10-20 percent over the gold rate at that time. This premium is taken for giving the guaranty of purity.
But they will not buy it back, because they do not want to pay you that 10-20 percent premium. So you are forced to sell it elsewhere and lose the premium amount.
So if you buy gold worth 11500 from a bank. The next day if you sell it to some other source you will get only 10000 rupees.
2.In case of Gold ETF, if you hold it for more than 1 year it is considered as a long term capital. Any profit you get from selling it will be taxed at 20 percent. But in case of gold bar or coin, you need to hold it for 3 years for it to be considered as a long term asset. If you sell it before that time then you have to pay a income tax at 30 percent on the profit.
3.But the tax problem does not end here. After 3 year’s you need to pay a wealth tax on gold bar or coin at the rate of 1 percent every year which is not needed in case of gold ETF.
4.Finally, gold can get stolen. Bank locker or insurance can cost you a tidy sum.
So in short if you invest in gold then invest in gold ETF not in gold coin or bar.
One more point here is that gold is a good asset for times of crisis. In good times it is better to invest in share market. You will get far more retuns from it.
you can check out the investment strategy given in this page.
http://www.invest-in-shares-in-9minute.com
This strategy tells about how common investors can invest based on their own judgment spending just 10 minutes a day and get 40 percent annual returns consistently
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