Is investing in gold jewelery right or not?

Gold in India has always been a mixture of emotions, traditions and investment. Most of the gold kept in homes is in the form of jewellery. But Kotak Institutional Equities has questioned this traditional thinking and said that buying jewelery is the worst way to invest in gold. According to Kotak, real earning is possible only when you invest money in ETFs, gold bonds, coins or bullion, which offer greater transparency, security and higher returns.

Gold gets 'locked' in jewellery, no benefit is available

According to the analysis of Kotak in a report of Moneycontrol, it was said that the value of gold present in the houses has definitely increased, but people almost do not get the real benefit from it. The reason for this is the huge premium paid while buying jewellery, which includes making charges, cost of designing and the cost of precious stones.

Kotak says that many times the value of precious stones in jewelery comes down with time. Due to this, the benefit of increase in the price of gold gets lost to a great extent. Therefore, jewelery becomes more of an expense than an investment.

Returns on jewelery less than the rise in gold!

The brokerage analyzed data from 2011 to the first half of 2026. According to the report, the internal rate of return (IRR) on jewelery during this period was only 10.3%, while gold prices increased by about 12.5% ​​during the same period. That is, if you had bought financial gold instead of jewelery during this period, your returns would have been higher and you would have retained the real value of the gold without any making charges.

Why did the demand for financial gold increase?

The rise of gold in global markets, geopolitical tensions and search for safe investment options have again brought gold into the center of discussions. In India too, with the rise in prices, the feeling of FOMO i.e. 'don't miss out' has increased among the people. For this reason, retail investors investing in gold ETFs have increased rapidly in the last few months. Kotak says that the inflow trends of ETF clearly show that investors are closely tracking the rise of gold and are giving more preference to financial gold than stocks.

To break even with jewellery, gold would have to become costlier by another 2530%. The biggest claim of the report is that even just to break even with jewellery, gold prices may need to increase by 2530%. This is possible only when the price of stones in jewelery remains stable, which is actually quite difficult. These expenses can be avoided by buying ETFs or gold bars and coins, due to which the returns are directly linked to the actual growth of gold.

India's external economic pressure is increasing due to gold

Kotak has warned that such increasing craze for gold can become a challenge for India's economy. Buying more gold means more imports, which increases both the country's trade deficit and current account deficit. Foreign capital inflow into the country has become slower than before, hence the huge demand for gold can further weaken the economic balance.