I am no expert however I would like to share how things have worked for me in Gold coin trades.
Usually, I would purchase Gold coins to sell them soon after getting delivery, hence thinking of it as a trade, where we get out of a holding as soon as we find fit, rather than investment, where we sit tight and let the asset’s price appreciate.
Assuming 10 grams of gold is priced at 50000 INR in the market (not MCX as there is usually a gap between the two, the market price being higher more often than not), I’ll try to calculate two things: how much over 50000 I have to pay to get the gold and how much I’ll get when I sell it off.
Mostly, Gold coins from various brands are priced 8 to 13% over the market price on online portals. Also, while you are selling it, various buyers will deduct a varying amount and you’ll get anywhere between 3 to 10% less than the market price in the case of 24 Carat. This deduction may be more than that for items with 22 carats or less purity.
So you will be paying around 54000 to 56500 and you’ll get 45000 to 48500 – roughly.
Now, is the discount we are getting covering this gap – is a good question to ask. At times when we can combine offers or once in a while when they price it 3 to 5% over market price like it used to be 4 – 5 years ago, it’s a different ball game.
PS. I have considered my trading intention here. A different perspective may need a different set of calculations. I haven’t included the details like which brand, where to sell/where I sell, taxes, and why deductions for simplicity. On MCX, trades are done in lots, taking minimum tradable amount into lakhs unless you go for options, as far as I know.
This content was originally published here.