Commodities

(Excluding precious metals used as currency)

Commodity prices are highly sensitive to (speculation about) the supply situation (relative to demand). This leads to great volatility.

Long term investment suitability

Historically, most commodities have only keep up with inflation. In the long term, Investing in commodities is essentially betting against inflation (and to an extant human ingenuity given war, disease etc).

Oil

Oil is used in distribution of goods and services. Only a few nations produce it, and they form a cartel - OPEC - which can often arbitrarily increase price as a way to bargain for concessions from their buyers. But, the cartel is slightly inefficient because various producers often violate agreements due to self interests.

When its price increases, the value of all common goods increases.

Gold

Purities

  • 24K gold - 99.95% pure (99.99% pure gold is difficult to find these days)
  • 22K gold – is used to make most jewelry in India
  • 18K gold – is 75% pure gold
  • 14 K gold – is 58% pure gold

Certification

  • Hallmarked per BIS standards in India.
    • BIS triangular stamp.
    • BIS hallmarking center logo.
    • Jeweler’s identification mark of BIS certification.
    • Purity in karat and fineness. Hallmarked gold jewellery is now available in three grades, with the following numbers: 22K916 = 22K, 18K750 = 18K, and 14K585 = 14K.
      • HUID number on jewell can be verified on app.
      • Prior to January 1, 2017, the numbers were as follows 958 = 23K, 916 = 22K, 875 = 21K, 750 = 18K, 585 = 14K, and 375 = 9K.
  • Buy in tamper proof packaging.

Jewelers in India try and mislead customers by telling them hallmarking is a huge expense that increases the cost of jewelry. Actually, it only costs 35 rupees to get a piece of gold jewelry hallmarked.

Price

  • Tied to international rate.
  • Jumps during festivals.
  • price of gold varies in different cities
  • Price comparison - GR

Safe Gold and MMTC-PAMP

No annual storage fees for 5 years, 0.3 - 0.4% annually after. 3% GST at time of purchase.

Both MMTC-PAMP and Digital Gold India have appointed IDBI Trusteeship Services Ltd as their trustee. Among other things, the trustee ensures the quality of the gold and that the gold sold to investors is segregated and available in the vaults. The gold held in the vaults is also insured against any loss.

Leasing

  • Safegold - Lease your gold to Bluestone and earn 4% p.a. in the form of gold.

Redemption

You can redeem the gold by either selling it back to the vendor at applicable prices, or take the delivery of physical gold.

  • Minting charge = 1 gm: 450, 550 for 2 gm, 919 for 5 gm, 1500 for 10 gm, 2300 for 20 gm. + delivery charges.

Funds

  • ETFs - 1% expense charge.
  • Sovereign Gold Bonds (SGB).

Jewellery

Shops

In Mumbai, head to Zaveri Bazaar (opposite Crawford Market), which is the oldest and largest gold market in India. In Delhi, Karol Bagh and South Extension have many gold jewelers. In Chennai, try the gold stores in T. Nagar. In Bangalore, gold is plentiful on Commercial Street and nearby Dickenson Road. Also check out Raja market in Bangalore’s Chikpet area.

SahakAranagara BIS licensees (द्रष्टुं नोद्यम्)
  • SAI JEWELLERS, GROUND FLOOR NO 3/11 SRI SAI KRUPA 1ST MAIN ROAD, AMCO LAYOUT SAHAKARNAGAR POST BANGLORE
  • BASAVASRI JEWELLERS, 53/1, 6TH CROSS 20TH MAIN SAHAKARNAGAR
  • KRISHNA JEWELS, SHOP NO 5 PROPERTY NO 547, A BLOCK, SAHAKARANAGAR BENGALURU,
  • SRI RAGHAVENDRA JEWEL PALACE, 558 F BLOCK 13TH MAIN SAHAKARA NAGAR ,
  • VAIBHAV JEWELS, 801, 18TH CROSS, 14TH MAIN, A BLOCK, SAHAKARNAGAR
Recommendations
  • Navratan, Bhima
  • Abaran jewelry, Praveen Jewels
  • Shubh Jewellers (which is the outlet of a manufacturing firm) used to charge a bit more extra on gold rate but no making charges
  • GRT but have not tried in Bangalore.
  • Jayanagar 4th block has series of Gold Jewellery shops. All are reliable from quality standpoint, one can bargain based on making charges and design.

Strategy

  • Look for the making charges when you invest. It can go upto 36%..😣. Be very clear in your mind that you will not get carried away with the designs and will stick to basic designs with very low making charges. You can tell them beforehand that you are looking for making charges below 10% or 5%. (5% is a very optimistic figure .. All these big brands have high making charges)

Silver

sahakAranagar shops
  • VAIBHAV JEWELS, 801, 18TH CROSS, 14TH MAIN, A BLOCK, SAHAKARNAGAR