Avoid jewellery; stick to ETFs, bars and coins for investment this festive season: Navneet Damani

Investors looking to build exposure to precious metals ahead of the festive season should use the current price gap in domestic markets to accumulate gold and silver, according to Navneet Damani, Head of Commodity Research at Motilal Oswal Financial Services. But for those buying purely as an investment, his advice is unambiguous: avoid jewellery and stick to ETFs, bars and coins.

Discount window opens a tactical entry point

Damani said both gold and silver are currently available in India at a discount to parity COMEX prices, offering buyers a tactical entry before seasonal demand picks up. “Silver and gold both on the domestic front are selling at a discount vis-a-vis the parity COMEX prices,” he said, adding that the discount is roughly “fifty, sixty dollars” for gold and “ten cents or twenty cents or more” for silver.

That pricing gap matters because it may not last. As India moves closer to the festive buying season, stronger consumption demand could compress these discounts, effectively raising the entry cost for late buyers.

Investment route matters more than ever

While Damani remains constructive on both metals, he drew a sharp distinction between buying for use and buying for returns. “The best way to invest has been either through the ETF route or probably the physical consumption route, that is buying bars and coins,” he said.

The message is especially relevant in a market where many households still default to jewellery as their primary gold purchase. For investors, however, jewellery carries embedded costs that can materially dilute gains, particularly if the objective is portfolio allocation rather than adornment.

Why jewellery may be a poor investment bet

Damani warned that jewellery should be bought only for actual consumption. “Unless until that is not the case, stay away from jewelry and probably bars, coins and ETFs could be the mode of investment,” he said.

His reasoning is straightforward: making charges can range from 10% to 15%, creating an immediate drag on returns. In a market where investors are already weighing gold against silver for upside potential, such costs can significantly reduce the efficiency of the investment.

Changing consumer tastes add another layer

Damani also pointed to a generational shift in jewellery demand. Younger buyers, he said, are opting for lighter and different styles rather than traditional heavy purchases, suggesting that buying jewellery today as an intergenerational investment may no longer be a straightforward call.

That view fits into his broader bullish stance on precious metals outlined earlier in the discussion, where gold was positioned as the stronger rally candidate over the medium term. For investors seeking cleaner exposure to that thesis, the takeaway is clear: buy the metal, not the markup.