Why Gold Jewellery Often Takes Years To Deliver Real Returns — Experts Explain

Gold has long been regarded as a symbol of wealth and security, making it a preferred choice among investors. However, experts emphasise that not all gold acquisitions deliver the same financial returns. Jewellery, while visually appealing, often involves hidden costs that can delay wealth creation. According to financial experts, choosing investment-grade gold, gold ETFs , or sovereign bonds offers a more reliable path to long-term wealth accumulation, allowing investors to benefit from price appreciation without unnecessary expenses.

Understanding Gold As An Investment

Gold continues to attract investors due to its historical price appreciation and perceived stability. Experts highlight, however, that there is a clear distinction between gold bought for ornamentation and gold acquired strictly for investment purposes. Pure 24K gold, which is 99.9% pure, qualifies as “investment grade,” whereas common jewellery such as 22K, 18K, or 14K contains significantly less pure gold.

The Hidden Costs Of Jewellery

Purchasing gold jewellery involves additional expenses that can erode potential returns. Making charges on ornaments typically range from 10% to 25%, and designer pieces may carry even higher premiums. A 3% goods and services tax further adds to the cost. Experts note that jewellers often offer buyback rates below the prevailing market price, meaning investors may need five to seven years simply to break even on jewellery purchases.

Historical Performance Of Pure Gold

Looking at long-term trends, pure gold has consistently delivered solid returns. For instance, 10 grams of 24K gold priced at approximately Rs 6,300 in 2004 appreciated to around Rs 78,000 by 2024, representing a compound annual growth rate of 13–14%. Such growth has allowed investments to double roughly every 5–6 years, making 24K gold a reliable instrument for long-term wealth accumulation.

Global And Domestic Significance

India remains one of the largest consumers of gold, with households holding over 25,000 tonnes, which equates to nearly 40% of the country’s GDP. Central banks globally continue to strengthen reserves, acquiring significant quantities each year. Experts emphasise that gold supply is limited, with annual mining contributing just 1.5–2% of total stock, reinforcing its value as a scarce and durable asset.

Smarter Alternatives To Jewellery

For investors aiming to grow wealth rather than simply own ornaments, alternatives like 24K gold bars or coins with the BIS hallmark, gold ETFs, gold SIPs, and sovereign gold bonds provide better financial outcomes. These instruments allow investors to benefit from price movements without incurring heavy making charges or low buyback rates, offering a more predictable and efficient approach to gold investing.

Avoiding Emotional Purchases

Experts caution against conflating the aesthetic appeal of jewellery with investment potential. Jewellery is valuable for cultural and emotional reasons but does not compound wealth effectively. Investors are advised to separate the desire for ornamental gold from investment decisions to optimise financial growth.

Current Market Trends

Recent price movements demonstrate the continued demand and appreciation for gold. For example, 24K gold prices increased from Rs 1,08,140 per 10 grams to Rs 1,08,900 within a single day, reflecting market dynamics and investor interest. Prices vary slightly between cities, yet the overall trend indicates sustained demand and potential for returns in pure gold investment avenues.

While gold jewellery holds emotional and cultural significance, experts emphasise that it may not be the most financially efficient form of gold investment. Alternatives such as 24K bullion, ETFs, and sovereign gold bonds provide structured and cost-effective ways to accumulate wealth. Long-term planning, awareness of hidden costs, and separating emotions from investment decisions are key to leveraging gold as a powerful wealth-building asset.

Disclaimer: This article is for information only and should not be considered financial advice. According to experts, investment decisions should be based on individual financial goals and risk tolerance, and consulting a qualified financial advisor is strongly recommended.