Gold Coins from Banks. Review on Tips on Buying Gold from Bank

Banks are selling Gold Coins for quite some time. And many people are buying them getting lured by Bank publicity that the Gold is imported from Switzerland and 99.99% pure with ASSAY certification.

This is all true, and there is no challenge in that. But why do people buy Gold Coins? For investment and high return and easy liquidity. I would like to share some IMPORTANT information which would show that all 3 gains are a SHAM. There is no high return and no easy liquidity.

1. Firstly banks are selling 24 carat gold coins at 10-15% premium in the name of purity. Premium or no-premium is not the question here. Gold is a commodity and everybody including banks have liberty to sell at their own rates. You should buy only after comparing 2-3 banks and leading jewellery shop rates.

   
   




2. Latest ICICI rates are available at: https://icicibank.com/Personal-Banking/investments/icici-bank-pure-gold/gold-rat
   e.html

   
   




3. The real problem is banks don't buy back gold, [https://business.rediff.com/report/2009/dec/17/no-takers-for-gold-sold-by-banks
   .htm

   
   

] so whatever price you bought it from them you lose in two ways. I will explain why and give an example.

1. At today’s rate if you bought 10 gms gold from ICICI it would cost Rs 31573.60 - 2525.89(their discount)+ 1161.90(4%tax)= Rs 30209.61. I checked with PC Chandra Kolkata(biggest gold shop in Kolkata) for price of 24 carat gold today, their price was Rs 29235 including tax. So you lose Rs 974 here for 10 gms.

   
   




2. Now, I asked PC Chandra what was the price for gold-exchange for 10 gm gold from ICICI, and to show them my onus I showed them 10 gm gold coin(which I foolishly bought from ICICI 2 years back and have been carrying in the same pouch along with a few copper and nickel coins from British India), they reviewed, saw the seal pack, the certificate(which the bank is so proud of 99.99% ASSAY) and gave me 2 rates - Rs 27541 for gold exchange from their shop or Rs 27291 for cash-back.

   
   




3. So if you buy today from ICICI and sell today at PC Chandra and try to get cash-back(most people would want liquidity and want cash back and not exchange for gold) this is what I loose. Rs 30209(cost price at ICICI today) - Rs 27291(sell price at PC Chandra today for cash-back)= Rs 2918 for 10 gms gold.

   
   




4. Isn't this interesting and funny! So much so for all that certification of purity and pride of imported gold from Switzerland!. If you like to create a personal collection of bank gold coins for your personal museum then you don't lose anything though!

   
   




5. PS: I then asked PC Chandra what would happen if I buy gold coin from you today and sell tomorrow. They went quite eager(salesmanship you know!) and said you just need to keep the cash memo safe along with the gold and we would buy the gold back at sell price of that day.

   
   




6. So you got the moral of the story, never ever but gold coins from bank or anybody who don't buy them back and give you liquidity.

   
   




7. Instead if you want the safety and purity of banks buy Gold ETF bonds instead. They don't have all this hassle. Buy today, sell tomorrow, no premium, no certification, just market cost price today and sell price tomorrow.