3 Best Ways To Buy And Sell Gold For Maximum Profit

Indians have always had an emotional link with gold. The precious metal is purchased at every important life event from the celebration of the birth of a child to weddings. While such purchases are made with a sense of financial security in mind, the metal, in its physical form, cannot be efficiently used to make a cash profit.

Disadvantages of investing in physical gold

Just to clarify, by "investing" we mean buying an asset for making a profit by selling it in the future, after it appreciates in value. Physical gold could be purchased for sentimental value but there are some drawbacks when it comes to buying for investment purposes.

• It needs a safe storage facility to protect it against theft.
• You cannot buy physical gold in the purest form. Jewellery is only 91.6 percent pure gold as the metal is soft in its purest form and needs to be mixed with silver or copper to make it harder. The closest you can come to pure gold would be 24KT coins (which is 999.9 parts per thousand gold).
• If you buy gold coins from banks, you will pay more than the market rate. A bigger disadvantage is that you cannot sell it back to the banks as they are not allowed to buy back coins.
• In most cases, jewellers do not accept jewellery, coins or any form of physical gold in exchange for cash. You will have to melt the metal and purchase gold in exchange. This means that you may be stuck with physical gold and not make a cash profit out of it despite the appreciation in value.
• When you sell jewellery, you lose on making charges, melting charges, etc.
• It is a passive form of income asset. You cannot earn any regular income from it.
• Its is not highly liquid, which means you cannot easily sell it for cash for immediate needs.

Movement of gold prices

In theory, gold's value is linked to its simplicity. It is valuable because it is a scarce metal with durable quality and recognised for its value all around the world. However, many fail to understand how the stock markets and geopolitical events dictate the international rates of the precious metal and even more unclear on how those international rates set the base for gold prices in India.

This year, the price of the precious metal soared to new highs due to the uncertainty brought by COVID-19 worldwide, but this could drop when the global economy gets back in shape, which means that those looking for profit bookings need to act fast.

If you wish to make the most of the price movement in gold, you need to buy it in the most liquid forms- which is not physical gold. Your options could be:

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Conclusion

Gold investment is not as simple as it looks. Price movements of the metal are associated with multiple factors. Rupee's value, US dollar's movement, inflation, interest rates of central banks around the world, political conflicts, economic tensions, and more impact its movement, which could get hard to keep a track of.

It is, therefore, advised to not put more than 10 percent of your total investments on the precious metal.

Disclaimer

The 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.