Industry Odisha Bureau, Oct 18: Buying gold on Dhanteras is a cherished ritual worth celebrating. But making charges and storage costs make jewellery an inefficient investment. Gold remains vital collateral, yet festive buying needs separating from investment planning.
Each Diwali season, Dhanteras draws crowds of households to jewellers across India. Buying gold that day signals prosperity and a fresh start for many families. Dhirendra Kumar, founder and CEO of Value Research, says families should celebrate the ritual freely. His concern, set out in a Mint column, lies elsewhere. He argues buyers often mistake a cultural purchase for an investment.
Jewellery carries making charges, the fee for craftsmanship above the metal’s value. Buyers rarely recover these charges when they sell or exchange ornaments. Coins often sit for years in bank lockers that carry rental costs. The metal itself retains market value, but such costs erode returns. Kumar classes such purchases as consumption, however enjoyable.
Timing is another oddity, in his view. Few investors buy shares or mutual funds because a date is auspicious. Investment choices usually rest on goals, risk appetite, costs and existing holdings. Festive warmth, Kumar suggests, can make an unusual habit feel normal.
Gold has nonetheless long served Indian households as a financial safety net. Women’s ornaments were often the final reserve when cash ran short. Today that role works mainly through borrowing against jewellery. RBI data show banks held about ₹5 trillion of gold jewellery loans in May 2026. That was roughly double the level a year earlier. Including non-banking financial companies, or NBFCs, the total exceeds ₹8 trillion.
Lenders typically advance only 75–85% of the gold’s value, often less, Kumar notes. This loan-to-value margin cushions them if prices fall. On that basis, he estimates pledged jewellery is worth well over ₹11 trillion. That nears a third of the ₹37.5 trillion AMFI reports in equity mutual funds. The two figures measure different things: collateral on one side, securities on the other. Pledged ornaments are a fallback, not a growth investment, Kumar argues.
Kumar does see a place for gold in portfolios. He favours a small allocation as insurance against a less stable monetary order. Gold can respond to currency weakness and financial stress, though not reliably every time. Such insurance, he says, must be cheap to hold and easy to sell. Impulse-bought jewellery, in the costliest and least liquid form, fails that test, he argues.
Gold exchange-traded funds, or ETFs, offer one alternative. They trade on stock exchanges and track gold prices without physical storage. Investors need a demat account, and ETFs carry expenses and market risk. Another route has narrowed. Most large fund houses paused fresh inflows into gold funds of funds from October 16. The move reportedly followed a SEBI nudge, amid a weak rupee and festive import demand. ETFs remain available on exchanges.
Kumar’s advice is to keep the two decisions apart. Families can buy, gift and wear Dhanteras jewellery with pleasure. They should simply record it as spending, not as investment. Households wanting genuine gold exposure may rethink the form they choose. The ritual and the portfolio can coexist, provided each is judged on its own terms.
