Gold Leasing

Introduction

India is considered as one of the largest consumer of gold in the world. As per World Gold Council, India sits at 11th position for having substantial gold reserves. Whether it’s a wedding or a function or any festival, Indians go for gold shopping as a way to commemorate any occasion. But what’s the purpose of buying gold and keeping it to ourselves when you can lease the shimmering metal to make additional returns?

As gold does not attain any interest, leasing can add value to the asset and let you earn some quick gains. For instance, there are gold manufacturing companies who require this asset class on a daily basis. Since the production and selling process of gold takes time, meeting other operating expenses can be difficult for the company.

To deal with the elephant in the room, the company can employ gold leasing, a cost-effective solution to cover all business outlays. They can take this lease from a gold leasing company, convert the asset into liquid cash, repay all the debts, produce fresh gold, and return the same to the leasing company. Now, before we dive any forward, let’s learn the gold leasing concept in detail.

Meaning of gold leasing

Gold leasing, as the name suggests, refers to as lending the asset for a contract period in return for interest apart from annual gains. The digital era pushed the gold metal to a higher level, garnering attention from every nook and corner of the world. This metal is not only used for investment purpose but also as a hedge against economic uncertainties.

How gold leasing works?

Gold has always been an evergreen asset and peoples’ favourite over the years, especially to Indians. This yellow metal can be used for portfolio diversification and to make more money apart from simply gold savings.

As far as the gold leasing process goes, you can lend the gold to the retailer or a jeweller for a certain period in return for monthly interest. The possession of the yellow metal will always remain with you; it does not change even after you lease it to a third-party.

Some gold borrowers pay you interest regularly, while others do it monthly, or as per pre-agreed terms. The interest on gold lease can be anywhere between 4 – 5 percent, which is quite a return apart from gold savings.

Gold borrowing takes place mostly when the value of the shimmering asset nosedives, and vice-versa. When it comes to lending, the process works other way around. One can invest in this shimmering asset starting from Rs 10 to a maximum of investor’s capacity. The lease interest is computed in grams and sent to the lender’s account monthly.

Benefits of leasing gold

Generally, gold as an investment comes with myriad benefits. One can invest in gold in multiple forms like buying gold items, investing in digital gold, go for sovereign gold bonds, invest in gold stocks or gold certificates, etc. If you ask, what benefits on can avail on leasing gold, here are a few listed below.

• Considerable Returns − Banks, jewellers, and other financial houses are providing sound returns on gold leasing. At times, when you need extra bucks, you can go for leasing this metal. Unlike other assets, gold offers you the liberty to earn good side income whenever you need it.

• Portfolio diversification − If you are looking for an investment product that comes with less risk and decent returns upon investment, then there’s nothing like gold. This asset offers you the desired diversification you need at the end of the day.

• Possession remains with you − Even if you loan or lease gold to another party, the possession of the asset remains with you till eternity, as long as you store it with yourself, or till you sell it.

Pros of gold leasing

• High Security − Gold can be traded and leased digitally as well. Thankfully, there’s high security systems integrated into these financial apps. The system verifies before it on boards any third party dealer or jeweller or anyone who deals with gold. So, you can lease gold to verified dealers on the app and make good returns.

• Ease and Flexibility − Initially, one can invest in gold in small quantities and later on they can increase the investment value as per their ease and convenience. There’s no hard and fast rule with respect to investment value in gold. This goes the same with gold leasing, where investors can lease as much as they want and exit anytime.

• Creates wealth − If you are looking for additional income, gold leasing can make it possible. You can simply loan your existing gold to someone who’s in need for a certain period at a predetermined interest in return. At the end of the maturity, you’ll receive your principal amount along with daily or monthly returns.

Gold leasing Vs SGBs

Returns on gold can be earned through leasing as well as investing in sovereign gold bond schemes. But how to decide which option is better?

S.No	Gold Leasing	Sovereign Gold Bond Schemes
1	This method provides a return of 4-5%	This scheme offers a return of 2.5%
2	Returns will be in form of gold grams	The returns will be in the form of cash
3	There’s no lock-in period of gold leasing	SGBs come with 8 years lock-in period
4	Investments can be made in SIPs	Investments can be done in lump sum
5	Interest keeps surging over the years	Interest turns out to be flat
6	Some highly secured apps offers safety	Backed by RBI, ensuring security

Conclusion

Gold leasing can be a healthy wealth augmentation financial method for people who want to add extra income to their savings. Whether you are rookie investor or rich businessman, everyone can lease gold. There’s no lock-in period like sovereign gold bonds, giving you the leeway to cash-in swift gains and exit anytime you want. The returns on gold leasing are somewhere between 4 – 5 percent. If you are looking for wealth creation and portfolio diversification but want a less risky route, gold leasing is something you should consider.

FAQs

Q1)Does gold leasing provide better returns than SGBs?

Ans)Yes, gold leasing offers 4-5 percent returns, whereas SGBs offer 2-3 percent on your investment.