The government has scrapped the excise duty on branded gold coins, a move that one would assume benefit the industry and consumers alike. However, World Gold Council and Titan are not too enthused about the step, and do not expect to see a major rise in demand for branded gold coins. Commenting on the move, World Gold Council said, “A 1% excise duty cut will not make much of a difference. Branded coins are sold at a very low margin.” However, World Gold Council acknowledged that the step will “surely boost investment sentiment”. Titan does not expect to see any increase in demand due to scrapping of excise duty on branded gold coins. “Branded gold coins form less than 10% of total sales for jewellery companies,” Titan has reportedly said.
But what about the consumer? What should you do? Is gold coin a good investment bet post this excise duty cut? No, says Dhirendra Kumar, CEO of Value Research. “Gold is not a great investment in whatever form you buy. I would not advise people to invest in gold,” Dhirendra Kumar told FE Online. “See, there is also a hierarchy of goodness when it comes to investing in gold. If you are opting for gold, then I would say that one should first look at government gold bonds, then gold ETFs, then gold funds, then gold in the physical form, and finally jewellery. Jewellery has making charges associated with it, and one is not always sure of the purity. But, irrespective, I would say that gold is not a good place to put your money in,” he said.
On the other hand, Naveen Kukreja, the CEO and co-founder of Paisabazaar.com believes that customers shoukd have 10-15% of their investment portfolio in gold. “Customers should have Gold ETFs are the best instruments for investing in gold as they are the most efficient. They are in demat form, have no security risk and have minimal wastage/making charges (FMC). They are most liquid should need to liquidate them in special situations,” he told FE Online.
Meanwhile, the government had last week clarified that it is not planning to impose any limit on domestic gold holding. Prime Minister Narendra Modi had announced on November 8 to demonetise Rs 500 and Rs 1000 currency notes to combat black money and corruption from the economy. Following it, there were anticipation that the next step might be imposing some kind of restrictions on gold holding by individuals, as reportedly many people had converted their black money into gold after the move. However, government sources have denied any such move. India is the world’s second biggest gold buyer, and it is estimated that one-third of its annual demand of up to 1,000 tonnes is paid for in black money – untaxed funds held in secret by citizens in cash that don’t appear in any official accounts.
(With inputs from Agencies)