In a world where traditional investment options often dominate the financial landscape, Gold leasing emerges as a unique and innovative opportunity.In this blog, we will delve into the intricacies of Gold leasing, exploring how it works, the benefits it offers, and how it stacks up against other Gold investment products. Whether you're a seasoned investor, a beginner looking to start small, or someone saving for jewellery, Gold leasing might just be the golden opportunity youve been waiting for. Let's uncover the glittering world of Gold leasing and how it can shine in your investment portfolio.

Gold leasing is an innovative investment option where you can rent out/lease your digital Gold to jewellers who use this Gold as working capital. Since you have leased Gold to jewellers, the jewellers give you an interest every month.

For Ex: If you lease 100 grams of Gold, you receive extra 5 grams in year 1. So you now hold 105 grams of Gold - All of this 105 grams will benefit from Gold price appreciation.

If you invest 100 grams of Gold in Gold leasing & leave it for 8 years, you will get 48 grams of Gold extra & all the 148 grams of Gold will benefit from increase in Gold price. In terms of INR, if you invest 6L, you will get 20.4L at the end of 8 years.

*Assuming 11% CAGR on Gold

Gold leasing as a practice existed for multiple years but was limited only to the offline world and to those who had a good jeweller connections/network. This is now being democratised & digitised

You can use platforms such as Gullak to invest in digital Gold & lease it to large jewellers. The Gold leasing option on Gullak is called Gullak Gold+. Here, you get an extra 4-5% on top of Gold's CAGR of 11%. The extra 5% Gold makes Gullak the #1 Gold leasing app in India. Gold leasing on Gullak is secured by a 100% bank guarantee from the jewellers.

Details of Gold leasing on Gullak Gold+

The process of Gold leasing is straightforward & easy. You can select the amount you wish to invest, select SIP or one time & then add your PAN number. Post this, you can make the investment using UPI.

You can pause/cancel/withdraw anytime. The withdrawal process takes up to 2 days.

Before we understand how Gold leasing compares to other Gold investment options, let's deep dive into all Gold investment options that are available.

Physical Gold refers to physical gold bars, coins, jewellery, or bullion. Physical gold is the oldest form of gold investment. However, in the modern outlook, investors do not consider this as a mode of investment. This is due to hefty making & wastage charges accrued while buying them, faulty purity rate of the gold & storage difficulties associated with them. The returns are equivalent to annual gold returns(~11%pa)

As the name suggests, digital gold is the digital representation of physical gold that you buy. When you buy digital gold, a similar denomination of physical gold is stored in a secure locker. There are no making or wastage charges involved. Investors can buy digital gold for as low as ₹10. The gold is bought at live gold buy price & sold at live gold selling price. While selling, investors have the flexibility to withdraw it in the form of physical gold or INR equivalent of the gold. The returns are equivalent to annual gold returns.(~11% p.a)

Exchange Traded Funds of Gold, invest in gold without physically owning gold. They track the price of gold and allow investors to buy and sell shares in a fund that holds gold as its underlying asset. ETF prices are equivalent to actual gold prices in the market. One ETF is equal to 1 gm of Gold. Gold ETFs require a demat account for investments. There are no lock-in periods associated with Gold ETFs. Unlike digital gold, ETFs can not be withdrawn as physical gold. The returns are equivalent to annual gold returns.

A gold fund is an investment vehicle designed to hold assets connected to gold. Gold funds come in various forms, such as stocks, physical gold, or stocks of gold mining companies. These funds primarily depend on financial instruments directly influenced by gold prices and typically invest in physical gold bullion. Consequently, the returns generated by gold funds closely mirror changes in the price of gold. For individuals seeking a convenient, paperless approach to invest in gold, gold mutual funds offer an avenue to capitalise on the advantages of gold investment. Gold Mutual Funds can only be withdrawn in its INR equivalent.

These are Sovereign Gold Bonds (SGBs) issued by the Reserve Bank of India (RBI). They serve as a viable alternative to physical gold and offer an additional 2.5% interest on top of any appreciation in the price of gold. This interest is credited to investors on a semi-annual basis. However, it's important to note that SGBs come with a substantial lock-in period of 8 years.

Sovereign Gold Bonds are sold on a per-unit basis, and their value is determined by the underlying gold grams, each with 99.9% purity, for every unit sold. These bonds are typically made available in different tranches throughout the year, providing investors with multiple opportunities to invest. Essentially, 1 unit of SGB is equivalent to 1 gram of gold, making it a convenient way for investors to gain exposure to gold without physically owning the metal.

Gold leasing represents a cutting-edge development in the realm of gold investments, offering investors the opportunity to earn an additional 5% interest annually, in addition to the historical returns on gold. This investment allows users to earn up to 16% returns p.a on Gold. The 5% extra interest p.a is in the form of Gold, giving investors a benefit of Gold price appreciation on extra returns & also the benefit of compound interest.

In the above sections, we have noticed that only Gold leasing & SGBs provide additional returns on top of gold's annual returns. Let's compare both these assets in the table below.

An LTCG (long term capital gains) of 20% with indexation benefits is applicable here. And the extra 5% returns are post tax returns with TDS being deducted at source.

Gold leasing is suitable for all kinds of investors :

Gold leasing is a unique financial innovation in India that has been gaining momentum. While it's not an entirely new concept and has historically been utilised as a wealth creation tool primarily by affluent individuals, it has now become more accessible to retail investors. In essence, gold leasing has evolved from being a practice predominantly for the wealthy to a more inclusive investment avenue, allowing a broader range of investors to participate, diversify their holdings, and generate additional wealth through their gold assets. Gullak Gold+, plays an important role by giving its investors the opportunity to get extra 5% returns on top of their annual returns on Gold which is the highest returns one can make via Gold leasing currently.