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Gold leasing: Is it a worthy investment?

Before we evaluate if you should invest in Gold leasing, let’s quickly see how Gold has been performing.

January 26, 2023 / 12:06 PM IST

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.

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

ParameterSGB Gold leasing
How does it functionThese are gold bonds launched by the Indian governmentGold leasing allows you to lease your saved gold to jewellers and earn additional interest(in gold grams)
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 interestCompound Interest
Lock-in period

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 yearsApproximately 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.