For many Indians gold and silver symbolizes good fortune and prosperity. We buy gold for wealth accumulation, religious beliefs or simply for pretentiousness. An approach followed by many to easily buy gold is to join a jeweller’s gold purchase scheme, where cash is deposited monthly and later redeemed in form of jewellery. The scheme comes with its own nuances. This article explains how purchasing sovereign gold bonds (SGBs) can be a flexible and better alternative than jeweller gold purchase schemes to make smart choices when planning to buy gold in near future. The article explains SGBs as strategic alternative to traditional gold schemes of jewellers, especially when purchase of gold is being planned in the next 1 to 7 years.
| Strategy to accumulate gold value for marriage using SGBs Set target amount: Plan Jewellery items and their expected weight that you want to buy for wedding Decide target date for funds: Set date about 3 months in advance of wedding date. Select SGBs: Choose SGBs maturing around the targeted date. Accumulate: Invest regularly on monthly basis. Top-up with surplus funds as and when available. On maturity: Use the cash to purchase jewellery from any jeweller you choose. |
Indians love to buy gold jewellery, coins, and silver idols of deities and silverwares. Gold and silver have immense emotional and cultural significance in Indian weddings, epitomising family values, tradition, and prosperity. As part of trousseau, welcome of new bride to family or gifts to immediate family members, gold is one of the biggest wedding-related expenditure. We also love to buy gold on auspicious festivities like Akshaya Tritiya, Dhanteras, Deepawali, and Navratri. As part of household wealth, it is passed from one generation to another as family heirloom. We want to buy and keep gold. However, with the gold prices hovering around their record highs in 2025, it’s also difficult to purchase it by many families.
Some families, as a matter of convenience or to overcome financial challenges, like to buy gold through gold purchase schemes of jewellers. Under these schemes a fixed amount is contributed by the buyer on a monthly basis typically ranging from Rs 5,000 to Rs 25,000. The schemes are similar to systematic investment plans or recurring deposits. Making purchase of gold affordable, jewellers generally offer two approaches to assign value to collected money:
1. A common approach is to add fixed monthly amounts and consider gold price on the day of purchase when scheme matures.
2. Allocate corresponding quantity of gold at the rates on the day of contribution. The approach is not very popular.
Jewellers in order to make these scheme attractive offer reduced or zero making charges, top-up with free last instalment, discounts on diamond jewellery, in-store credits, or other similar benefits. While these schemes clearly make gold purchase affordable, we must also understand that there is other side as well that must be understood to make intelligent choices.
Issues in gold purchase schemes of jewellers
• While the buyer comfortably pays instalments to buy gold, he gets attached to a single jeweller. The buyer will not be able to consider the designs of other jewellers to choose designs of their liking.
• Buyers stand to lose money from business failures or dishonesty. Possibility lies that people may lose money to small dishonest jewellers. Even big businesses may fail or cheat. Past failures (like Gitanjali) show that even big brands can collapse.
• These schemes are generally designed in a manner that they do not fall under strict regulations of an investment scheme.
• The bonusses like no or low making charges are typically restricted to a few designs. The realisation comes when actual purchase is being made.
• There are no negotiations in the wastage or making charges.
• No interest is paid on monthly contributions.
• In case of diamonds discounts are common, that may not be fully available.
• Jewellers may play with the rates of artificial stones, pearls included in the Jewellery.
In a nutshell, once commitment is made the buyer loses the negotiation power in the gold purchase deal.
What are alternative options available?
To accumulate cash a buyer can open a RD or invest in a SIP, based on the risk appetite. If hedging gold price fluctuation is important, customer can buy, Gold ETFs or gold bonds. In this direction SGBs are smart and safe alternative to accumulate gold value for weddings that are scheduled in future. A comparison with gold purchase scheme is as follows:
| Sovereign Gold Bonds | Jeweller Scheme |
| Safe as backed by Government | High Risk |
| 2.5% annual interest + capital gains | Capital gain if you choose equivalent weight of gold on the day of contribution; extra scheme benefits |
| Tradable in secondary market | Locked with a single jeweller. No option to withdraw cash |
| More choices from different jewellers | Restricted design options of single jeweller |
| Flexibility in purchases with option to buy minimum one gram anytime | Periodical payments are to be made on fixed dates |
Presently the government has stopped issuing fresh SGBs and the only option available is to buy from secondary market, similar to share purchases. SGBs issued at different point of time are traded at different rates representing value of 1 gram of gold of 999 fineness. Another benefit is that most of SGBs are trading below the market price, whereas they are redeemed at the market price which is quoted by India Bullion and Jewellers Association Limited (IBJA). Thus, buyers of SGBs can potentially get discounts in the gold prices while purchasing and full value at time of redemption. The cheapest SGB available is at closing price of ₹9,191 which is maturing in February, 29 whereas the closing market rate of IBJA is ₹9,434*.
There are 59 SGBs available as on date out of which 51 are trading below the IBJA prices (13-05-25). The latest SGB available is maturing in February, 2032. Thus, people planning major gold purchases in next 7 years can easily accumulate using this route to collect cash to make big gold purchases.
Conclusion
If you’re planning to buy gold for wedding, you may avoid locking yourself into a jeweller scheme unless you love their designs and trust them completely. SGBs are smarter choice to accumulate gold value safely, earn interest, and retain flexibility.
- Gold rate of Rs 9434 for 1 gram gold of 999 fineness is as available on https://ibjarates.com/ on 13-05-25 (updated at 5.04 PM)
Even I prefer investing in SGB’s rather than opening a monthly scheme with a jeweller. Here one is deprived of monthly interest. At the end you get a little discount on making charges.