Keeping gold at home is not at all advisable. After all, you bought it as a long-term investment. Still many do so because they do not want to pay rent on a bank locker.
What if you invest that gold in the bank? You can keep it safely without paying any charge and receive an interest amount at the same time. This is a guaranteed way to make the gold earn for you when gold prices soar.
You can tap into the central government’s Gold Monetisation Scheme (GMS) announced to reduce the import of gold and to make capital out of the gold savings with Indian families. This scheme allows you to receive periodic interest and assures you the market value of gold at maturity.
How to invest
Leading banks including the State Bank of India are receiving gold deposits as part of the scheme. Right now, the number of branches receiving deposits is limited. One can deposit gold under the scheme in the form of bars, coins, jewellery excluding stones and other metals. You have to deposit a minimum of 30 grams of gold. There is no upper limit. You have to also produce a certificate from a recognised purity testing centre to prove the purity of your gold. The certificate must carry the amount of gold and its purity. You can submit the certificate in a bank to open an account.
Deposits can be started as individuals or collectives. Partnerships, Hindu Undivided Families and funds such as SEBI-registered mutual funds and exchange-traded funds can invest. Companies can also deposit gold under the monetisation scheme.
Choose terms
When you deposit gold, you can choose the term of the deposit. However, bear in mind that interest rates could change depending on the term of the deposit. A deposit for a term between one year and three years is considered a short-term deposit. Medium term deposits are from five to seven years. Deposit for a term between 12 years and 15 years, and it will be considered as long term.
In a short-term deposit, the gold will be returned at the end of the term. Or you can opt for its price in money. Medium- and long-term depositors will receive the gold price according to the market value at the maturity of the deposit.
Some banks return the deposit with gold coins and bars as interest. This is an attractive option than leaving your gold at home as a dead investment.
Interest rates
Gold deposit under the scheme attracts an interest rate of 0.5 per cent up to one year. The interest rate goes up to 0.55 per cent up to two years and to 0.6 per cent between two years and three years.
Medium-term deposit attracts an interest rate of 2.25 per cent and long-term deposit comes with a rate of 2.5 per cent. The interest is paid every year. If you choose to receive interest at the end of the term, you are eligible for compound interest.
