Rupee Rani
It glitters, but that does not make it a good investment.

Growing up, I often watched my mother save whatever cash she had on hand in a special purse. Once she had saved a certain amount, she would go to her favourite jeweller, and buy gold. This wasn’t because she loved jewellery – she liked the odd necklace, but she bought gold because she believed it was an investment. Her logic was simple: the value of gold would never fall, and it would, therefore, always be a safe investment.

But is this true?

A brief history

Gold has had a significant role in shaping our world. Ever since its discovery, it has hypnotized kings, provoked wars, and broken families. In our country, we view gold as a symbol of status – the more gold a person has and the more gold a person wears, the more prosperous they are, and the higher their perceived social status. So, it’s really no wonder why we have the number of jewellery shops that we do. But somewhere along the way, perhaps to entice those who were uninterested in the metal, gold was peddled as an investment owing to its rising value.

The fact remains, however, that gold, despite all this, is really not the best investment that you can make.

What makes a good investment?

When you invest something, you should be putting away money with the intention of creating a profit. Apart from having a higher value at the time of sale, a good investment should be able to provide an extra source of income, and should be liquid, i.e, converting your investment into cash should be a simple process. 

Gold, or at least the physical purchase of it, does not fulfill all these conditions.

Its resale value has increased considerably over the years, yes, but unless you’re purchasing gold with the intention of selling it, what is the point? Jewellery is probably the worst way to invest in gold, because its cost per gram is far higher than the cost per gram of coins, or biscuits.

Gold doesn’t provide a passive income. Unlike stocks, shares and mutual funds, which pay dividends, or fixed deposits, which pay interest, gold does not earn extra money during the time that you hold it. It will simply sit in your locker (for which you will have to pay an additional monthly fee). While there is practically no risk (except that of theft) associated with gold, there isn’t any prospect of growth either. If you own 30 grams of gold for 25 years, it will remain 30 grams of gold at the end of those 25 years.

What Gold is, though, is its highly liquid. You should be able to convert it into cash with ease. Once again, it is the gold bars and coins (not jewellery) which will be the easiest to liquidate.

In essence, therefore, gold, while a stable investment, does not have any scope for growth, nor does it support you with any additional source of income.

But I must invest in gold!

It is important to remember that if you’re not planning to sell the gold that you’re purchasing, it isn’t really an ‘investment’. However, investing in gold is a good idea when there is inflation abound, or when the economic scenario is unstable, because gold won’t lose its value the way shares and stocks will when there is instability.

Broadly, you can invest in gold in three ways:

Purchase gold coins or bars.  

Purchase Gold Bonds, which are government securities that are issued by the RBI. They’re essentially an alternative to holding physical quantities of gold. The minimum denomination is two grams, and you can go up to 500 grams. You purchase them at the prevailing gold rate, and after that you can trade them in the markets or you can hold them till maturity. They will also fetch you interest at the rate of 2.75%. You can read more about them here.

You can consider the Gold Monetisation Scheme – If you have idle gold jewellery (or just jewellery that you don’t like), you can deposit it with the government under the Gold Monetisation Scheme. You’ll receive interest at the rate of 2.5% on the gold that you’ve deposited, but keep in mind that at the end of the deposit period, you will get cash, and not your original jewellery back. You can read more about them here.

All that glitters

Although the value of gold remains stable, especially during turbulent times, gold is incapable of generating a substantial second income, or growth. So, while that Kaasu Maalai might look shiny and wonderful on you, as an investment, it is totally lackluster.

Rupee Rani is a weekly column on finance for women. Write to us with your queries at