Buying gold and silver: jewellery, coins, funds and what each costs
Written and reviewed by Omm · Last reviewed · General information, not investment advice
Gold and silver are bought in several forms, and the form you choose changes what it really costs you. Two people who buy gold on the same day can end up with very different results years later, even if the price per gram is the same on the day they sell.
What you pay when you buy
Jewellery. The bill is the metal value (weight × rate × purity), plus making charges for the design and work, plus GST on the total. Making charges are shown as a percentage of the metal value or as rupees per gram, and they vary a great deal by jeweller and by design. Simple pieces cost less to make than detailed ones.
Coins and bars. These have a smaller premium than jewellery, but still carry GST and a margin. Buy from a source you trust and keep the bill and the original packaging.
Gold and silver funds and ETFs. These hold the metal for you and charge a yearly cost (an expense ratio), plus the brokerage or other charges of buying and selling through your account. There is no making charge, and no need to store anything. They are market-linked products and carry market risk like other funds; see expense ratio and exit load for how fund costs work.
Other ways to hold gold, such as government gold bonds that are already issued or gold held through apps, each have their own rules and risks. Check who regulates the product and what happens if the provider fails before you buy.
What you get back when you sell
This is where the forms differ most. For jewellery, the buyer pays for the metal at that day’s rate, sometimes less a small deduction. The making charges and the GST you paid are generally not returned. For a piece with 10% making charges and 3% GST, the price of gold has to rise by about 13% before selling it returns what you paid. For coins, bars and funds, the gap between what you paid and what you get back is smaller.
The jewellery price calculator shows the bill split into metal, making charges and GST, what the metal alone would fetch, and how much would not be recovered. The gold and silver return calculator shows what you actually earn per year after your own buying and selling costs, and the price you need just to get your money back.
Purity
Gold is measured in carats. 24 carat is about 99.9% pure and too soft for most jewellery. 22 carat (about 91.6% pure) is common for jewellery, and 18 carat is used for pieces with stones or detailed work. A lower purity is priced in proportion to the 24 carat rate. Silver is measured in fineness: 999 is fine silver and 925 is sterling silver, the usual standard for silver jewellery.
Questions to ask yourself
- What is it for? Something to wear or give is a different purchase from an investment.
- How long will I hold it? The longer the holding period, the less the one-time costs matter per year.
- What will I get if I sell? Ask the seller what the buy-back rate and deductions are before you buy.
- How much of my savings is in gold? Gold prices rise and fall, sometimes for years. See PPF vs mutual funds for thinking about how to divide money between safe and growth assets.
This guide is general information, not investment advice. Prices change and tax rules differ by product and over time; check the current rules before you buy or sell.