3 Reasons To Avoid Buying Gold Coins From Banks

With gold prices in India looming around Rs 50,000 per 10 grams, you may have reconsidered your investment portfolio to include the precious metal in it. It is likely that your relationship manager at the bank is also be pitching gold coins as a good investment option or for your childs wedding. However, if it is your first gold purchase at a bank, you may want to rethink. If you have completed KYC (Know Your Customer) formalities with the bank, you can just walk into a branch of your bank and purchase gold coins. Some banks also allow such a purchase from the net banking portal.PAN details are required for purchases worth over Rs 50,000.Advertisement While there are many ways to purchase gold in this day and age, coins can be used as an efficient way to buy the metal in physical form.If you are looking to start saving for your childs wedding, coins can be an efficient way to accumulate gold instead of buying jewellery as 1) It is a noble metal. Does not rust or tarnish for years. 2) The purest form of gold (99.9% purity) can be purchased in coin form. 3) Reduces wastage charges, making charges otherwise lost when selling/remodelling jewellery. 4) You can sell coins to purchase the latest designs in gold jewellery at the time of the wedding. Bullion coins are the most common type of coins sold for gold investment/trading purposes. These are tested for purity at government approved centres (check for BIS marking). These are not generally known as collector coin.Avoid numismatic (rare) coins, unless you are looking to become a coin collector. While some dealers will convince you to buy them (as these are charged a premium amount), if you not sure of its doing you it is best to avoid what you cannot fully understand.Pricing of bullion coins, especially those minted by a government facility, have straightforward standard pricing based on market rates. You can also buy gold coins online, however, these will also be priced at a premium.In India, gold coins are also sold by banks. They offer 24KT gold but here are reasons why should avoid purchasing them from a bank. Coins sold by banks are of the highest quality. These are generally imported from Switzerland and other international mining companies in the West, which is why banks charge 7 to 10 percent higher than the market rate.You must be aware that market rates of the metal are already quite high and paying a premium on a highly-priced commodity will not prove profitable if you are looking to invest. As per the Reserve Bank of Indias (RBI) directive, banks cannot buy gold coins. Even if you buy or have already bought gold from a bank, you will not be able to sell it back to them.This would mean that you will have to go to a jeweller or a pawn shop, where you will be offered only the market rate, despite the premium price that you paid to the bank. Also, note that reputed gold jewellery chains do not buy gold for cash. The metal can be sold to them but in exchange for jewellery only. As mentioned above, you will not be able to encash gold coins from a bank or a jeweller. You will have to go to a pawn shop if you are in urgent need for cash or to a local shop. It is, therefore, advised to buy gold coins from a trusted jeweller and maintain its bill for resale.You may also want to ask the jeweller if they will buy the coin back from you for cash, to avoid the future hustle and get a better price.DisclaimerThe article is purely informational and is not a solicitation to buy, sell in securities mentioned in the article. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author do not accept culpability for losses and/or damages arising based on information in this article. nbsp;