When we talk about investing in gold, most Indian households don’t think of ETFs, sovereign bonds, or digital gold. They think of bangles, necklaces, and earrings – passed down generations, stored in lockers, and bought during weddings.
But here’s the reality: not all gold is a good investment.
Gold jewellery, despite its sentimental and cultural value, often fails as a wealth builder compared to pure gold forms.
In this blog, we explore the difference between investing in gold and gold jewellery, and why that gold necklace bought 21 years ago may not have delivered the kind of returns you expect.
What Do We Mean by Gold Investment?
Gold can be held in many forms. Not all are created equal in terms of investment potential.
| Type | Description |
| Physical Gold (Coins/Bars) | 24K pure gold bought from banks, jewellers, or bullion dealers |
| Digital Gold | 99.9% pure gold stored by vaulting partners, bought online |
| Gold ETFs/Mutual Funds | Market-traded instruments that track gold price |
| Sovereign Gold Bonds (SGBs) | RBI-issued bonds backed by gold prices with 2.5% annual interest |
These forms are meant purely for investment. In contrast, jewellery is bought for emotional and aesthetic reasons – and that makes a big difference financially.
Gold Jewellery as Investment: The Traditional Choice
Jewellery is deeply woven into Indian culture. It’s bought during weddings, festivals like Dhanteras, and often seen as a symbol of security and prosperity.
For generations, families have considered jewellery as a backup asset – something that can be pledged or sold in times of need. But this cultural belief often hides the real costs and limitations of treating jewellery as an investment.
Key Differences: Gold vs Gold Jewellery Investment
| Feature | Gold Investment (Coins/Bars/ETFs) | Gold Jewellery |
| Purity | 99.9% (24K) | Often 22K or less |
| Making Charges | None | 5% to 25% extra |
| GST | May apply but minimal for ETFs/SGBs | 3% on total + making |
| Resale Value | Full market price | Less due to wastage/making |
| Liquidity | Easy to sell or trade | Often resold at a discount |
| Storage | Vaults / lockers / demat | Needs physical safety |
| Use | Purely financial | Primarily adornment |
| Emotional Attachment | Low | High |
| Returns | Matches market price growth | Reduced due to costs/losses |
Return Comparison: ₹1 Lakh in Gold vs Jewellery (2004–2025)
Let’s take a hypothetical example. Suppose someone bought:
- Pure Gold (24K): ₹1,00,000 worth in 2004
- Gold Jewellery (22K): ₹1,00,000 in jewellery (₹85,000 gold + ₹15,000 making charges)
Gold Price Growth:
In 2004, gold was around ₹6,000 per 10g. On 10th August 2025, it’s around ₹1,03,040 per 10g – a 17.2x increase.
- ₹1 lakh in 24K gold in 2004 ≈ 166.6g → worth ₹17.17 L in 2025
- CAGR (Compounded Annual Growth Rate) ≈ 14.3%
Jewellery Resale:
Now consider the jewellery:
- ₹85,000 worth of gold → ~154.5 g of 22K (2004 rate: ~₹550/g)
- On 10th August 2025, 22K gold is ₹94,450 per 10 g (₹9,445/g) → value before deductions ≈ ₹14.59 L
- Deduct 10–15% for resale losses, purity checks, and no return of making charges
- Final resale value in 2025 ≈ ₹12.4–₹13.1 L
- Jewellery CAGR: ≈ 11.5%–11.9%
That’s a difference of about ₹3.4–₹4.1 L compared to pure gold, just due to resale deductions and added costs.
Side-by-Side Comparison: Gold vs Gold Jewellery Returns
| Investment Type | Starting Value (2004) | Value in 2025 | Multiple | CAGR |
|---|---|---|---|---|
| Pure Gold (24K) | ₹1,00,000 | ₹17.17 L | 17.2× | 14.3% |
| Jewellery (22K) | ₹1,00,000* | ₹12.4–₹13.1 L | 12.4–13.1× | 11.5–11.9% |
*₹85,000 gold + ₹15,000 making charges
Visual Comparison: Growth of ₹1 Lakh (2004–2025)
Source: GoodReturns.in – Gold Price in India (as of 10 August 2025), showing 24K gold at ₹10,304/g and ₹1,03,040/10 g, and 22K gold at ₹9,445/g and ₹94,450/10 g.
When Jewellery Might Still Make Sense
While jewellery isn’t the best investment, it still serves a purpose:
- Emotional and cultural gifting
- Wedding purchases that double as long-term security
- Assets that can be pledged for short-term loans
But if you’re planning for wealth creation, children’s education, or retirement, then jewellery isn’t the ideal form of investment.
Can You Use Jewellery for Short-Term Needs?
Yes – while gold jewellery may not be ideal for long-term investing, it can serve as an emergency asset through gold loans.
Here’s how it works:
| Feature | Gold Loan Against Jewellery |
| Loan-to-Value (LTV) | 75–90% of net gold weight (not full jewellery value) |
| Interest Rate | 7% to 12% (varies by lender) |
| Processing Time | Same-day disbursal |
| Repayment | Flexible: bullet repayment or EMI |
| Documentation | Minimal – mostly Aadhaar & PAN |
Remember:
- Loans are given on net gold weight, not total jewellery cost.
- Making charges and design value aren’t counted.
- If you default, your emotional asset may be auctioned.
Best Use: Short-term liquidity for emergencies. Not a long-term wealth strategy
Why Jewellery is Usually 22K, Not 24K
- Durability: 24K gold (99.9% purity) is very soft and bends easily, making it unsuitable for intricate designs or daily wear.
- Alloying for Strength: 22K gold (91.67% purity) is mixed with small amounts of copper, silver, or zinc to increase hardness and durability.
- Cultural Standard: In India, 22K has been the preferred purity for ornaments for centuries, balancing beauty with strength.
Common gold purities and their typical uses:
| Purity | Gold % | Fineness (Parts per 1000) | Typical Use |
|---|---|---|---|
| 24K | 99.9% | 999 | Coins, bars, digital gold |
| 22K | 91.6% | 916 | Most Indian jewellery |
| 18K | 75.0% | 750 | Diamond/stone-studded jewellery |
| 14K | 58.5% | 585 | Budget/light jewellery |
| 10K | 41.7% | 417 | Low-cost ornaments, fashion jewellery |
How Hallmarking Protects Buyers
- Purity Guarantee: BIS (Bureau of Indian Standards) hallmark certifies the gold’s purity (e.g., 22K = 916 hallmark).
- Traceability: Hallmark includes the BIS logo, purity in karat and fineness, jeweller’s ID, and year of marking.
- Mandatory Compliance: Since June 2021, hallmarking is compulsory in most districts, reducing chances of fraud.
- Resale Confidence: Hallmarked jewellery is easier to resell or pledge, as purity is already verified.
Best Practices If You Still Want to Buy Jewellery
If you still prefer jewellery, here are some tips to make it slightly better financially:
- Buy BIS Hallmarked 22K jewellery
- Choose simple designs (lower making charges)
- Avoid stones and unnecessary embellishments
- Prefer jewellers with lifetime buyback or exchange offers
- Keep bills and certificates for future resale
Conclusion: What Builds Real Wealth?
Gold is a powerful long-term asset. It has outpaced inflation, preserved purchasing power, and proven its worth in uncertain times.
But not all that glitters builds wealth.
Jewellery is gold with an emotional markup. It serves tradition, beauty, and sentiment – but rarely delivers pure investment value.
If your goal is emotional satisfaction, jewellery is fine.
If your goal is financial growth, choose gold coins, digital gold, ETFs, or SGBs.
Final Thought:
Gold jewellery tells a story.
But pure gold writes your future.
Data Sources : RBI Handbook of Statistics (1983–2024 averages), Spot price: GoodReturns.in(as of 10th August 2025)
Gold Related Reads from Indiagraphs
- Gold vs Sensex: 25-Year Wealth Builder
What ₹1 Lakh Taught Us About Long-Term. - Why India Was Called the Golden Bird
The cultural and historical roots of India’s gold legacy. - Gold Price History: 42 Years of RBI Data
Visual charts and annual trends since 1983. - India’s Gold Import Data(2011 – 2025) India’s Gold Obsession by the Numbers
- How Much Gold Does India Really Produce? State-Wise Data & Growth Trends
