One of India’s leading fintech apps - Gullak, has recently announced its latest offering - Gullak Gold+ - an investment option through which you can earn extra 5% Gold every year on top of annual Gold returns of ~11%. They provide the extra 5% by leasing/renting your Gold to jewellers who in return give you an interest every month.
Before we evaluate if you should invest in Gold leasing, let’s quickly see how Gold has been performing.
Quick recap of the Gold investment landscape
- Gold's CAGR for 1, 3, 5, 10, 15, 20 & 30 year duration has been greater than 11%
- Gold beats returns from Nifty 4 out of 5 times in the last 5 years
- In 2022, Central banks globally have accumulated gold reserves at a pace never seen since 1967, when the US dollar was still backed by the precious metal. Demand for gold has jumped by 28% in September quarter(2022), according to the World Gold Council report, primarily driven by a flight towards safer assets amid soaring inflation, according to a new World Gold Council report.
- Experts in India predict Gold prices to touch 62K this year & with a predicted Global financial crisis, a lot of international experts predict Gold to be soaring in the next 5 & 10 year period as well.
More on Gold leasing - What is Gold leasing
We often talk about making your money work for you & gold leasing is built on a similar concept - of making Gold work for you.
Your digital Gold is leased out to verified jewellers who require Gold for their day to day operations. These jewellers then give you a monthly interest in Gold grams. This is not very different from renting your house & getting rental incomes.
Should you lease your Gold?
Extra returns : You get an extra 5% returns in Gold grams every year. Suppose, you lease out 100 grams of Gold, you get 5 grams extra returns every year. The extra 5 grams also appreciates when the Gold price appreciates. Also the interest is compounded & not simple as in SGB (Sovereign Gold Bonds). Extra returns being in Gold & with the power of compounding, make it a lucrative investment option
Safety : A 100% bank guarantee is collected from the jewellers against the leased quantity. As the Gold price appreciates, an additional bank guarantee is then collected. Large players such as Augmont & auspicious by RSBL are their lease partners. Augmont is the 3rd largest Gold refinery in India which is NABL & BIS certified. Your Gold is leased to Auspicious by RSBL which is the largest bullion player in India with a Rs. 25000+ Cr turnover.
Additional charges : Since this involves digital Gold, there are GST charges but these are one time. And despite the additional charges & taxation, the additional 5% returns in Gold grams beat the returns from all other Gold investment options significantly.
Liquidity : Gullak Gold+ allows you to withdraw instantly. You can withdraw as cash or get the Gold delivered and there is no penalty for the same.
Flexibility : You can start with as low as 0.5 grams & also set up monthly SIP’s
Conclusion
If you are an investor looking to maximise returns from Gold, then Gold leasing via Gullak Gold+ could be a great investment option for you. However, research on all the pointers & do evaluate if it aligns with your investment principles before investing.
Frequently asked questions on Gold Leasing via Gullak Gold+
1. Is gold leasing safe?
Applications like Gullak offer a 100% bank guarantee on the investments. This means your leased gold is secure. The jewellers onboarded on the app are verified by Augmont, one of India’s biggest refineries and have huge turnovers.
2. SGB vs Gold leasing, which is better?
Investors are well-acquainted with SGBs, another form of gold investment that gives extra returns. In the following table, we will compare SGB vs Gold leasing and check which asset performs better:
SGB vs Gold leasing
| Parameter | SGB | Gold leasing |
| How does it function | These are gold bonds launched by the Indian government | Gold leasing allows you to lease your saved gold to jewellers and earn additional interest(in gold grams) |
| Returns | Additional 2.5% returns on top of Gold price appreciation | Additional 5% interest on top of gold price appreciation |
| Extra returns type | In INR | In Gold grams |
| Interest type(on extra returns) | Simple interest | Compound Interest |
| Lock-in period |
SGBs come in with a lock-in period of 8 years.However, investors can sell them before maturity in secondary markets at a discounted rate of 7-8% | Investors can un-lease gold anytime with apps with Gullak. |
| Returns in 8 years(after tax) | Approximately 244% in 8 years | Approximately 257% in 8 years |
Over here, we have compared SGB vs gold leasing on a variety of parameters and can notice gold leasing out-performing SGBs.
Are there lock-ins with gold leasing?
With applications like Gullak, there are no lock-in periods. Hence, investors can un-lease their gold anytime they want. The withdrawal is pretty seamless and quick.
Can withdrawal be done in the middle of the month? Is there any loss of interest in this case?
Yes, you can withdraw whenever you want. You will be able to withdraw full principal and accrued interest as of that date. If the product has a lock-in involved, it will be explicitly mentioned on your screen when you invest.
Moneycontrol journalists were not involved in the creation of the article
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