Gold coins have emerged as a favourite buy in these uncertain times

With Indians tradition-ally buying gold during Diwali, not surprisingly, jewellers and banks have pushed gold coins this season too, and are likely to continue to do so.

After all, given the global economic uncertainty, gold has emerged as a favourite investment option of late although its prices have been fluctuating sharply. Take this month alone, when the yellow metal touched a high of $918 on October 9-10 only to slide down to just below $700 by October 23-24.

Now, if you don’t want to invest in the yellow metal through a gold exchange-traded mutual fund and prefer to hold it in physical form, you can purchase gold coins either at a jeweller or from banks or even through financial intermediaries like Reliance Money.

As always, banks will push gold coins on the platform of guaranteed purity. But do they really offer the best rates?

Consider this: On October 27, the day before Diwali, a 10gm 24-carat gold coin of 99.9 per cent purity was available at Calcutta’s Nemichand Bamalwa jewellers for Rs 12,430. The jeweller offers a certification of purity.

In contrast, State Bank of India (SBI) was selling its 24-carat 10gm gold coin for Rs 13,226 on the same day. This included the 1 per cent value-added tax (VAT). SBI also offered gold coins of 5gm and 2gm, priced at Rs 6,661 and Rs 2,712 respectively on October 27. The bank sells gold coins from Switzerland and provides a certification of purity.

HDFC Bank meanwhile priced its gold coins at Rs 13,833 for 10gm, Rs 6,884 for 5gm and Rs 27,530 for 20gm on October 27. The bank has a festive offer on gold coins for its credit and debit card holders.

This entails a 2.5 per cent discount on 5gm coins and 4 per cent discount on 10gm coins. Additionally, credit card-holders can convert their gold coin purchase to three monthly instalments — they need to put in a request for the same.

Similarly, ICICI Bank too has pushed gold coin sales with discount offers this season. For instance, it had a 3 per cent discount on 5gm and 8gm gold coins till Diwali, which were priced at Rs 7,323 and Rs 11,588 respectively (including VAT but before discount) on October 27. Again, it offers Swiss gold coins with certified 99.9 per cent purity.

Reliance Money too is selling gold coins ranging from 0.5gm to 10gm. Its 0.5gm coin was priced at Rs 806 after a five per cent discount on October 27 while its 5gm coin cost Rs 6,642 and 10gm coin, Rs 13,203 on that day. Reliance Money has recently started selling gold coins through post offices across India though the West Bengal postal department has not yet commenced gold sales.

So why is there such a discrepancy between the gold rates offered by different banks and jewellers? Well, the fact is that banks incur sales and administrative expenses for selling gold coins, which get passed on to customers. And jewellers too levy making charges.

But while jewellers will buy back the gold coin you purchased from them, banks are not allowed by the Reserve Bank of India to do so.