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October 25, 2010The Indian Post Office entered into the business of selling Gold Coins in 2008 after tying up with Reliance Money which is part of the ADAG Group.Amongst the Investment Options in Buying Gold in India,Trusted Family Jewellers had seemed the best option in buying physical gold in India.However a number of investors might not have that option so the next best thing in my opinion to buying physical gold is from the Indian Post Office.The reason is that the margins charged is around 7% which is less than the 12% being charged by the Indian Banks.Note these gold coins are certified by the top notch Swiss name and have the endorsement of the World Gold Council as well.
Costs and Benefits of buying gold from the Indian Post Office
1) 24 carat gold coins of 0.5 gram, 1 gram, 5 grams and 8 grams are available
2) Gold coins packed in a sealed cover with the certification from the Swiss precious metals refiner Valcambi
3) 40,000 customers have bought gold till May 2010 since the scheme started in October 2008
4) The Gold Coins sport a Indian Post Logo these days
5) Commission of 7% compared to 12% charged by the Indian Banks
6) The Post Office is offering a discount of 5% on purchases of 10 gm or more to customers and offers a 6% discount to government employees currently.This scheme was offered in 2009 as well
Golden opportunity for govt staff,pensioners – TOI
If you are a government employee or pensioner,grab this opportunity to buy gold coins.You will get these at 6% discount at the GPO and 26 other head post offices in the state till the end of November.Though this discount offer is for state and central government employees and PSUs,others buying gold coins over 10 grams receive 0.5 grams of gold free,working out to a discount of close to 5%.The latter offer is not meant for government employees.
7) Indian Post Office does not seem to have an option of purchase of its sold gold coins.This is the same case with Indian Banks as well.
Summary
While Gold ETFs are the proffered investment of choice while buying paper gold,it makes sense to have some physical gold in your portfolio as well.There are both pros and cons in holding physical gold,so depending on the investor’s attitude one can hold a certain percentage of his gold holdings in physical gold.The Indian Post Office seems a good bet on buying physical gold compared to the Indian Banks.