Gold leasing | How leasing works, benefits, interest rates & comparison

By Gullak Team
Sept 27, 2023
10 min read
Gold leasing - All about Gold leasing

Gold leasing | What is Gold leasing | Benefits of Gold leasing

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.

What is Gold leasing?

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.
How much are you leasing?Extra Gold that you'll getIn INR
100 gms5 gmsRs. 6,00,000
105 gms5.3 gmsRs. 6,99,300
110 gms5.5 gmsRs. 8,15,034
116 gms5.8 gmsRs. 9,49,922
122 gms6.1 gmsRs. 11,07,134
128 gms6.4 gmsRs. 12,90,365
134 gms6.7 gmsRs. 15,03,921
141 gms7 gmsRs. 17,52,891
148 gms7.4 gmsRs. 20,42,911
*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

How can you avail the benefits of Gold leasing in India?

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+
  • Returns - Up to 16%
  • Returns from leasing - Extra 4-5% grams of Gold every year
  • Tenure - No lock in - Can withdraw anytime as cash or get the Gold delivered home
  • SIP options - Daily/weekly/monthly SIP options are available
  • Min amount to invest - 0.5 grams
  • Gold partner - Augmont
  • Leasing partner - RSBL
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.

What are the benefits of Gold leasing?

  • High returns through Gold leasing:

    You can get up to 16% returns through Gold leasing. That's an extra 4-5% more than Gold's CAGR of 11%. The massive 16% returns on Gold leasing end up beating returns from mutual funds

  • Liquidity with Gold leasing:

    You can withdraw your money anytime and without any penalty. You can withdraw as cash or get the Gold delivered at home

  • Hedge with the best Gold investment:

    Gold's track record as a hedge against inflation has been better than other investment assets.

  • Monthly income via Gold leasing:

    The extra 4-5% p.a Gold that you get on Gold leasing is credited to your account on a monthly basis. This gives you a great option to not let you digital Gold sit idle but earn monthly rental income for you. You can benefit from the rental/monthly interest while remaining the owner of the Gold throughout.

  • Diversification with the best Gold investment:

    Gold has a negative correlation with other investment options. Adding Gold in your portfolio can reduce the overall risk of your portfolio.
How does Gold leasing compare to other Gold investment products?
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

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)

Digital Gold

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)

Gold ETF(Exchange Traded Funds)

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.

Gold mutual funds

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.

SGB or sovereign Gold bonds

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

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.
ParameterSGBGold Leasing
ReturnsAdditional 2.5% returns on top of Gold price appreciationAdditional 5% interest on top of gold price appreciation
Extra returns typeIn INRIn Gold grams
Interest type(on extra returns)Simple interest | fixed returns every yearCompound Interest | Compounding leading to higher returns YoY
Lock-in periodLock-in period of 8 years.However, investors can sell them before maturity in secondary markets but at a discounted rate of 7-8%No lock in. Can withdraw anytime as cash or get Gold delivered
TaxationNone if held till maturity & if purchased in primary market20% LTCG with indexation benefits

How does the taxation on Gold leasing work?

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.

Is Gold leasing for you?

Gold leasing is suitable for all kinds of investors :
  • Investors looking for alternative investment: The high returns & the nature of the investment make it a great alternative investment option

  • Investors looking to diversify in Gold & with Gold leasing providing the highest returns on Gold, Gold leasing could be a great option for investors looking to diversify

  • Investors who are just starting out & want to start small: You can benefit from the simplicity of the investment vehicle that Gold leasing is & also set up small SIP's

  • Users saving for jewellery: Gold leasing gives you additional Gold grams every month. Invest 100 grams & you get extra 5 grams Gold at the end of the year. You can get all this Gold delivered to your house & use it for jewellery purposes.

Conclusion on Gold leasing

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.
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Frequently Asked Questions
Does Gold give good returns ?
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Is Gold leasing safe?
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