Why gold jewellery isn’t investment: CA says breaking even may take up to 7 years

Gold has emerged as the surprise outperformer over the past year, forcing many investors to rethink their strategies. While Dalal Street has delivered muted equity returns, the yellow metal has soared to record highs, reaffirming its role as a safe-haven asset in uncertain times. On Monday, retail gold prices touched Rs 1,07,321 per 10 gm, with consumers paying Rs 1,10,540 after 3% GST. That’s a sharp jump from Rs 74,500 (including GST) last Onam. The rally has reignited debate: is gold a sound investment, or simply a glittering illusion?

Jewellery vs. investment

CA Nitish Kaushik cautions against confusing cultural affinity with financial discipline. “We all grew up hearing: Buy gold, beta. But most of us end up buying jewellery, not pure gold. That’s where confusion and disappointment start,” he says.

Purity is critical for returns. 24K (99.9%) is investment grade, while 22K is 91.6%, 18K 75%, 14K 58.5%, and 9K just 37.5%. A 22K ornament worth ₹50,000 may actually contain only about ₹45,800 of pure gold. To complicate matters, jewellery carries heavy add-ons—making charges of 10–25%, 3% GST, and resale typically at a discount. “It may take five to seven years just to break even on jewellery purchases,” Kaushik warns.

Gold purity plays a crucial role in returns.

24K (99.9%): investment grade

22K (91.6%)

18K (75%)

14K (58.5%)

9K (37.5%)

A 22K ornament worth ₹50,000 may actually have only about ₹45,800 worth of pure gold.

A strong rally

Despite such pitfalls, pure gold’s long-term performance is striking. Prices have surged from ₹6,307 per 10 gm in 2004 to ₹78,245 in 2024, peaking near ₹1,05,170 in 2025—a 16–17x rise in 21 years. This equates to a 13–14% CAGR, enough to double an investment roughly every five and a half years.

2004 (24K): ~₹6,307 / 10g

2024 (24K): ~₹78,245 / 10g (~12.4X in 20 years)

2025 peak: ~₹1,05,170 / 10g (~16–17X in 21 years)

This translates to a 13–14% CAGR, enough to double an investment roughly every five and a half years.

Global demand

India remains the second-largest consumer of gold, after China, with households holding an estimated 25,000+ tonnes, valued at nearly 40% of GDP. Globally, central banks bought more than 1,000 tonnes in 2023, the highest since 1950, underscoring gold’s role as a hedge against inflation, dollar weakness, and geopolitical uncertainty.

Scarcity adds another layer of support. All the gold ever mined—about 216,000 tonnes—could fit into just three to four Olympic swimming pools. With annual mining output rising only 1.5–2%, structural demand keeps prices buoyant.

Smart investment

Experts suggest bypassing jewellery in favor of financial instruments. Options include:

24K/999 bars or coins, with BIS hallmark and mandatory HUID since 2021

Gold ETFs, offering low cost and liquidity

Gold SIPs, which average out volatility over time

Sovereign Gold Bonds (SGBs), which combine price appreciation with 2.5% annual interest

“Jewellery is for emotions, ETFs and SGBs are for wealth,” Kaushik sums up. The distinction is clear: gold as adornment may preserve sentiment, but disciplined gold investing builds wealth.

Gold in 2025

The momentum extends globally. On Monday, spot gold surged past $3,600 an ounce for the first time, climbing 1.3% to $3,631.66 after touching $3,636.69, while U.S. futures rose to $3,670.80. The rally followed softer U.S. labor data, which boosted expectations of a Federal Reserve rate cut next week.

Analysts see further upside. Zaner Metals’ Peter Grant predicts momentum could lift prices toward $3,700–$3,730, with any pullback likely viewed as a buying opportunity.

So far in 2025, gold has gained 38%, building on a 27% rally in 2024. Drivers include a weaker dollar, dovish monetary policy, robust central bank purchases, and persistent geopolitical uncertainty. China’s central bank, for instance, extended its gold-buying streak to a tenth consecutive month in August, according to newly released data.