Dhanteras gold rush: Emotion, investment, or legacy? CA explains India’s changing gold mindset

In India, gold is far more than a metal — it’s emotion, investment, and habit intertwined. It glitters in festive rituals, secures families through generations, and anchors portfolios when markets wobble. Every Diwali and Dhanteras, millions of Indians rush to buy gold jewellery, coins, or bars — not just as financial assets, but as symbols of luck and prosperity. Yet, most purchases remain sentiment-driven rather than strategic.

Financial planners repeatedly remind that while gold is a safe-haven and inflation hedge, it doesn’t generate income like stocks or bonds. Its value lies in stability and diversification, offering protection during market turbulence. Experts generally recommend keeping 5–10% of one’s portfolio in gold — enough to cushion volatility without compromising growth.

Three cases of gold investment

Chartered Accountant Nitin Kaushik shared cases that capture India’s evolving gold psychology through three fictional yet familiar investors — Aarav, Meera, and Rohan. Their journeys show that buying gold isn’t just about returns; it’s about mindset and purpose.

The digital believer

Aarav represents India’s tech-savvy investor. For him, gold is convenience. He opens his investment app and buys Digital Gold in seconds — no jeweller visits, no locker worries. His holdings are stored in insured vaults, tracked in real time, and easily sold when needed.

Digital gold allows him to start small, even with ₹100. Liquidity and flexibility are unmatched — but there’s a catch. Unlike mutual funds or sovereign gold bonds, digital gold isn’t regulated by SEBI or RBI. It’s backed by third-party vaults, not banks.

As Kaushik notes, “Liquidity? Convenience? Regulation? (for now).” For small investors, digital gold is fine; for larger holdings, counterparty risk becomes a concern. Aarav’s choice works because he values accessibility and quick exposure to the metal — not physical possession.

The traditionalist

Meera buys her gold the old-fashioned way — from her trusted jeweller. For her, gold is emotion, not an asset class. She invests Rs 2 lakh in a necklace, finding joy in craftsmanship and heritage.

But behind the glitter lies a quiet cost. Between 8–20% making charges and 3% GST, a significant portion of her spend isn’t actual gold. When she sells it later, those costs vanish — silently eroding returns. “It’s an expense no one talks about,” says Kaushik.

Still, Meera’s purchase glows every Diwali. Her returns may not beat inflation, but her investment sparkles with sentiment and pride.

Rohan: The planner

Rohan, the disciplined saver, opts for a gold savings plan. Every month, he contributes ₹5,000 for 11 months; the twelfth month is often a bonus top-up from the jeweller. After a year, he redeems in gold at prevailing prices — a smart move if gold has appreciated.

This structured approach is ideal for goal-based savers — those planning weddings, festivals, or major life events. It’s systematic, predictable, and emotionally rewarding.

Taxation angle

Selling physical gold such as jewellery, coins, or bars attracts capital gains tax. Profits from gold sold within two years are taxed as short-term gains at your regular income slab rate, while sales after two years are taxed at a flat 12.5% without indexation benefits (removed from July 2024). Purchases also attract 3% GST on gold value and about 5% on making charges. For investors seeking convenience, Gold ETFs and mutual funds offer exposure without storage concerns, taxed similarly at 12.5% for long-term gains. Sovereign Gold Bonds (SGBs) remain the most tax-efficient, offering 2.5% annual interest and tax-free maturity gains.

The common thread

Kaushik summed it up beautifully: “All three invested in gold — but for completely different reasons. Aarav for returns and liquidity. Meera for emotion and legacy. Rohan for discipline and goals. Each is right in their own way, because wealth isn’t just numbers — it’s also intent.”

Before buying gold, he advises, pause and ask: Are you buying for quick profits, for security, or to celebrate something precious? Once you know your “why,” the “how” becomes effortless.

In the end, Kaushik reminds, “Gold will always shine — but your reason for holding it decides whether it’s an ornament, an asset, or a story worth telling.”