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I would like to invest in some Gold. The current rate of Gold is Rs 27,800/- per 10 grams. Some banks like HDFC offer gold but at a much higher inflated price of Rs 29,084/-
Some of my questions with regard to this are;
Without getting into whether you should invest in Gold or Not ...
1.Where do I go and make this purchase. I would like to get the best possible price.
If you are talking about Physical Gold then Banks, Leading Jewelry store in your city.
Other options are buying Gold Mutual Fund or ETF from leading fund houses.
2.How do I assure myself of quality. Is there some certificate of quality/purity?
This is mostly on trust. Generally Banks and leading Jewelry stores will not sell of inferior purity. There are certain branded stores that give you certificate of authenticity
3.When I do choose to sell this commodity, when and where will I get the best cost?
If you are talking about selling physical gold, Jewelry store is the only place. Banks do not buy back the gold they sold you. Jewelry stores will buy back any gold, however note there is a buy price and sell price. So if you buy 10 g and sell it back immediately you will not get the same price. If you have purchased Mutual Funds / ETF you can sell in the market.
I do not know anything about retail investing in India, since I am in the US. However, there are a couple of general things to keep in mind about gold that should be largely independent of country.
First, gold is not an investment. Aside from a few industrial uses, it has no productive value. It is, at best, a hedge against inflation, since many people feel more comfortable with what they consider "real" money that is not subject to what seems to be arbitrary creation by central banks.
Second, buying tiny amounts of gold as coin or bullion from a retail dealer will always involve a fairly significant spread from the commodity spot price. The spot price only applies to large transactions. Retail dealers have costs of doing business that necessitate these fees in order for them to make a profit. You must also consider the costs of storing your gold in a way that mitigates the risk of theft. (The comment by NL7 is on this point. It appeared while I was typing this answer.) You might find this Planet Money piece instructive on the process, costs, and risks of buying gold bullion (in the US).
If you feel that you must own gold as an inflation hedge, and it is possible for residents of India, you would be best off with some kind of gold fund that tracks the price of bullion.
You can buy from any of the well known jewelry shops.
Or you can even buy it from banks.
For a 24carat gold purchase, you would normally also get a certificate attesting the quality of the gold item. Also while selling your gold, you can sell to above mentioned jewellers or any decent jeweller as a matter of fact.
