Jewellers woo consumers this Dhanteras but experts advise caution

• Jewellers, like every year, have come up with offers to make gold buying attractive on Dhanteras.
  
• Experts say that if you are buying jewellery for personal consumption then it is a good time to buy.
  
• However, if you are buying for the purpose of an investment, there are other investment avenues.
  

What’s more auspicious than gold, especially as we step into the festive season. Indians believe that the more gold you buy during Dhanteras, the better would be your fortunes. While experts are unsure of how good physical gold is for your portfolio, jewellers are doing their best to bring in consumers into their stores.

Capitalising on the love for bling, and women who want to add to their jewellery box, retailers are wooing hard this season. Be it free 1 gm gold coins on purchases, or discounts in making charges — most jewellers want consumers to go for physical gold.

“In addition to our collections, we are offering discounts to our valued customers. We are providing discounts on the making charges for gold jewellery. Our goal is to enable customers to make the most of this auspicious opportunity and get the best offers, particularly for the upcoming wedding season,” says Suvankar Sen, MD & CEO of Senco Gold & Diamonds.

Tanishq is currently providing a discount of up to 20% on the making charges for gold jewellery.

“Most of the jewellers, be it online or offline offer discounts on making charges to attract customers in the festive season. Some jewellers are offering various freebies, premiums over used gold and even a chance to design a unique piece of jewellery this Diwali,” says Sachin Kothari, director At Augmont Gold For All, an integrated gold player.

Now, comes the question of gold as an investment. In spite of gold gaining ground as a safe haven asset in times of volatility and a new war, global gold demand in Q3 2023 dropped by six percent, on reduced interest in gold bars and coins, as well as diminished demand from central banks.

As Diwali approaches, the price of gold is on the rise thanks to geopolitical tensions and the US Federal Reserve decision to hold on to high-interest rates.

However, India, world's second-largest consumer of gold, is bucking the trend. There is an increase of 10% in gold demand in the same period. Globally, jewellery demand dipped by 1% on account of high gold prices. But here too, Indian jewellers hope that consumer love for gold demand will hold on.

Experts not keen on physical assets

So, should consumers give in to the temptation of building physical gold assets amidst volatile prices and uncertainty?

“Dhanteras is basically a time to make a purchase to grow your wealth. What you should do is an investment and not an expenditure. Jewellery is an expenditure. Making charges can be about 25% and further when you sell it you can lose another 10-15%. So it is not worth it,” says B Srinivasan, director and founder, Shree Sidvin Investment Advisors.

Som if you are buying some jewellery for the sake of buying jewellery or as a gift, you can do it. With the various offers jewellers are providing it might be a good time to do that. But this will not serve the purpose of an investment.

For those looking at an investment, there are better options than bangles, earrings or necklaces.

“If you are buying for consumption then obviously physical gold has no other alternative but if your purpose is pure investment then the best is sovereign gold bond (SGB),” says Anant Ladha, founder, Invest Aaj For Kal, a financial advisory firm.

There are three major advantages of SGBs. First, there is no making charges or risk of purity. Further one may get 2.5% additional interest over and above per annum. Though the interest is entirely taxable at current tax slabs, any capital gains earned at the end of eight years is entirely tax free.

Investing in gold through digital gold platforms, gold Exchange-Traded Funds (ETFs), and gold mutual funds also offer flexible options to invest in gold. Digital gold allows for easy, small-scale investments, while Gold ETFs provide the convenience of stock market trading. Gold MFs, on the other hand, offer professional management of your gold investments.

But then again, will it give the same satisfaction of it hanging on your neck as it will in the portfolio? That’s a call that consumers will have to take.