Besides visiting a jeweller and investing in gold ETF, here is a new way of buying gold for as little as Re 1
There is a new, convenient way of buying gold – you can buy online, any quantity and store in digital form in vaults. Paytm and Stockholding Corporation of India are providing this service where you can easily acquire the shiny yellow metal online. We explain how:
Your options for buying gold in India currently include:
This usually involves a trip to your nearest jeweller and then buying a gold bar or coin at a hefty premium. Assuming that you trust the jeweller and hence the gold’s purity, you still have to figure out where to store it. Doing so at home exposes it to theft. Doing so in a bank locker adds another layer of effort – open a locker, don’t lose the key, make trips to the bank.
You can do this in five ways.
Unlike mutual funds where you need to provide a bunch of documents to get your KYC done and then fill another set of forms to actually invest, you just need a phone number to download a basic Paytm wallet. Norms are changing for these wallets also and this may not always be the case.
You can also sell the gold back to Paytm through the app. However, trading gold through the app is not cost-efficient because there is a 3-4% difference between the buying and selling price in Paytm’s favour (called a ‘spread’). You also need to share your bank account details including IFSC code when you sell the gold.
If your cumulative purchases of gold exceed Rs 50,000, KYC norms become applicable. This is also true if a single purchase exceeds Rs 200,000. You will have to submit your PAN details.
If you want to trade gold, consider a gold ETF or even opening an account on a commodity exchange like MCX.
The gold you buy is stored in the vaults of MMTC-PAMP (A joint venture between the public sector MMTC and its Swiss partner PAMP) and can be left there for up to five years. After this period you need to either sell the gold back to Paytm or take delivery of the metal.
You have to keep the Paytm Gold account alive by transacting in at at least once in six months. If you don’t do so, the gold is sold at the prevailing selling price and the proceeds are transferred to a special GAP account maintained by MMTC-PAMP. You can collect it from MMTC-PAMP later by showing various types of ID proof.
You need to submit ID and address proof for opening an account with the public sector Stockholding Corporation of India. NRIs are eligible for this feature, unlike Paytm which does not offer the digital gold facility to NRIs. NRIs will have to submit a copy of their passport.
The gold you buy online from the Stockholding Corporation is stored in the vaults of MMTC-PAMP just as in the case of Paytm. At least one gold withdrawal has to be paid in every six month period. If your gold is less than one gram or in fractions of a gram, you can sell this fractional gold back to the Stockholding Corporation at the prevailing price.
You can buy gold worth Rs 1,000 and multiples of it, thereafter. If you want to take physical delivery of the gold, the minimum quantity is 1 gm. You can transact in gold any time of the day, any day of the year. Gold prices are quoted in rupees after converting the international dollar price of gold and updated daily.