1.  MBA 5  Prashant S Sawant

2. Gold investment  Buy gold & sit on it. That is the key to success.

3. Gold  Gold holding by India as of dec 2013 ?  Ans : 558 tonnes  Why people invest in gold ?  Why people always make a loss when they invest in gold in India ?

4. Gold smuggling YearNo of casesValue of seized gold ( Rs Crs) 2010-1112117.22 2011-1250442.38 2012-13885107.51 2013-14700250

5. Smuggling  What was the reason for increase in smuggling ?  Between mar 12 & aug 13, the import duty on gold was raised from 4% to 10%.  Why ?  To contain fiscal deficit ?  Q : What is the per kilo profit if gold smuggled from Dubai to India.  One more rule : 20% of imported gold had to be ploughed back into exports.

6. Gold historic prices On March 31stPrice of 10 gms of gold (Rs) 196760 20004,395 20014,410 20025,020 20035,260 20046,005 20056,165 20068,210 20079,250 200812,125 200915,105 201016,150 201120,391 201228,400

7. Gold buying  Investment or religious requirements ?  Festivals, Birthdays, Naming ceremonies, weddings, contests etc  Cost of ornaments = Cost of Gold + ???  Making charges  More intricate design, making charges are ???  Gold can not be called investment, why ?  Investment = Buying – Selling

8. Gold buying … contd  Why gold is never sold in india ?  Gold purchase is always connected to some some occasion hence has emotional value.  Why gold investment is a bad investment in India ?  1. Never sold, emotional reasons  2. Making charges

9. Ways to invest in gold  Gold bar  Gold Coins  Gold ETF  Gold fund

10. Gold Bars & Gold Coins  Why invest in bars/coins ?  Minimal/zero making charges.  What is the advantage of above ?  What we should check while buying these ?  Markings indicating ???  Weight & quality ( Purity )  Who in India only sells gold but doesn’t buy gold ?  Banks

11. Gold Bars & Gold Coins..cont  Available in different weights. Min gms ?  1 gm  Bank issues certificate mentioning ???  Weight & purity  Some banks ask extra amount for certificate. Should we pay extra & get the certificate ?  No as banks don’t buyback & jeweller may not value the certificate & will use his own method to check weight & purity.

12. Gold ETF  GETF  These MF are like sectoral MF ?  Invest only in gold.  Units are sold  NAV depends on ?  Actual gold price in the market  Which problems of coins/bar are taken care of in this type of investment ?  Making charges & storage

13. Gold ETF…. contd  You invested Rs 50000/- when the price of gold was RS 2000/- per gm.  How many units you will get ?  25 units.  Price of gold goes to Rs 2500/-  What is the current value of your investment?  Rs 62500/-  Profit ?  Price of the gold goes to Rs 1500/-  Profit/loss ?

14. Advantages of GETF over physical gold  Making charges  No emotions  Safer ???

15. GETF charges  Type of charges ?  Operational cost ( around 1% to 2%)  Brokerage ( around 0.5%)  Hence the calculation shown earlier may not be exact.  But the difference will be small.  Compare GETFs in the market for best prices & lowest expenses.  Making charges are typically what % ???  5% to 20%  GETF are open ended MF hence need demat ac.

16. In nutshell : GETFs  No tension of physical gold  Can buy a very small amount of gold.  No making charges. Only charges ???  No need to worry on purity & quality of gold as SEBI has mandated the same.  Buy/Sell on computer. No actual visit to jeweller/bank.

17. Some dis-advantages  Operating cost to be careful of.  Operating costs are low because it is passively managed fund.  Annual charges of demat ac.  Brokerage fee to be paid every time we buy or sell.

18. Gold FoF  FoF : Fund of Funds  These funds invest in GETFs.

19. Gold FoF & GETFs  FoF each unit can be a fraction of GETFs.  GETFs require minimum quantity of gold ?  Demat ac is not reqd. Advantages ?  No charges ?  SIP possible only in Gold FoFs.  Gold FoFs have higher expenses ( around 0.5% over the cost of GETFs).  Some FoFs charge exit load if you sell the units within 6 months to a year of purchase ( around 1% to 2% of total value).  GETFs have no exit load.

20. Important differentiator  GETFs & GFoFs invest in ?  Gold  Gold MF invests in ?  Shares of gold related companies.  What is the difference ?  Difference of gold price movement & performance of companies.

21. Interest  Gold in bank locker, interest earned ?  Gold in bank ac, interest earned ?  3% per yr on actual value of gold  Deposit period : 3 to 7 yrs  To declare the source of gold.

22. Gold loans  Who gives gold loans ?  Banks & NBFCs  Loan upto what % value og gold ?  90% (earlier).  March 2012, RBI mandated max 60%.  NBFCs can lend only against gold jewellery  Not against gold coins/bar  Banks don’t have these restrictions  Most convenient, hassle free & quick  Challenges of Gold loans  High interest rates  Gold prices crash ?  Deposit more gold or repay the difference  Gold is auctioned if loan is defaulted.

23. Gold loans in market  Muthoot  Manappuram  IDBI Bank : 10% per year interest payable monthly.  Other banks

24. How to invest ?  If buying gold ornaments, things to remember ?  Lower making charges & purity  Buy from reputed outlets & get bill mentioning weight & quality of gold.  Gold bars/coins can be bought from banks/ jewellery stores. Get the receipt.  Banks charge the premium on the gold they sell & ???  Don’t buyback the gold.

25. How to invest ? … contd  For investment in GETFs, what is required ?  Demat ac  Demat ac reqd for gold funds investment ?  No

26. Points to consider before investing  What is the price of the gold on that day ?  What are the making charges ? Range ?  7-22% ( Waman Hari Pethe, Vashi)  Is the gold branded ? Can it be sold to any jeweller other than the seller ?  For bars/Coins, check for quality, weight & making charges, if any.

27. Advantages  Very liquid  Can be bought in various forms ???  Can take loan against gold  Safer than equity investment in terms of volatility

28. Dis-advantages  Careful while buying  Careful while storing  Making charges  Slow growth except during periods of economic & political uncertainty.

29. Investment meter  Safety  *****  Liquidity  *****  Returns  ***

30. Tax impact  Tax @1% is applicable when you buy gold jewellery worth more than Rs 5 Lakhs.  Tax@1% is applicable when you buy non-jewelley gold items (???) worth more than Rs 2 Lakhs.  Investment in physical gold ( ornaments, coins,bars) also attracts capital gains & wealth tax.  If it is sold within 3 yrs, profit is added to income.  It it is sold after 3 yrs, 20% LT capital gain tax on profit after taking indexation into account.  Can avoid LT capital gains tax by investing the profit in capital gains bonds or residential property.

31. Tax impact… contd  Wealth tax@1% is applied when your wealth exceeds Rs 15 Lakhs.  CA calculates wealth.  No wealth tax for GETFs.  Profit from GETFs or FoFs is taxable.  Taxation is similar to debt MF.  STCG if sold within 3 yr. Profit added to income.  LTCG if sold after 3 year. @20%.  As of 31 st mar 2014, Debf MF has 1,90,770 crs.

32.  Thank you.  Prashant Sawant  9820408795  Global training group