Are you interested in delving into the glittering world of gold leasing but are confused about where to start? You are at the right place. Gold has traditionally been a precious metal that may be stored in a home or bank locker for emergencies or financial instabilities. Gold leasing, on the other hand, was only available to the ultra-rich, who had close ties to jewelers and a large amount of gold to lease. Holding gold in physical form has many feasibility and security issues.
With development and innovations, gold leasing has become a popular investment option for everyone. Now, you can lease as low as 0.5 gms of gold and have complete flexibility in deciding the lease period and amount. Whether you are an experienced investor, or someone interested in knowing about gold leasing, we have got you covered. In this blog, we will shed light on what gold leasing is, how you can lease gold, and many other important points to help you understand gold leasing in detail and make informed decisions.
What is Gold Leasing?
Gold leasing is a new-age innovative investment that allows you to lease out your digital gold to the lessor and earn returns on your existing gold savings without transferring ownership. Two parties are involved in the gold leasing agreement – The lessor and the lessee. The lessor is the person who holds the ownership of gold and leases it to the borrower (lessee) at a fixed rate of interest according to the market situation. The lessee uses the digital gold as working capital in day-to-day activities and, in return, pays an interest rate of 4% – 5% per annum. The lessor can be an individual or a company, whereas the lessee can be a jeweler, a financial institution, or even a businessman.
How does gold leasing differ from other options to invest in gold?
Besides gold leasing, there are three other ways to invest in gold – digital gold, sovereign gold bonds, and Gold ETFs. Gold leasing is different from the other three in a way that it allows investors to lease their saved gold to a jeweler who will pay monthly returns to the investor. On the other hand, digital gold is simply a digital version of physical gold. Sovereign gold bonds are fixed-income instruments where investors can invest in a gold bond while Gold ETFs are like stock exchanges where investors can buy and sell gold in the open market.
When we evaluate their returns, gold leasing outperforms them all since it provides the standard 11% price appreciation return as well as an additional 4%-5% lease interest, making a total of 16%. Digital gold, on the other hand, offers regular 11% price appreciation, SGB offers 11%+ extra 2.5% interest on the principal amount, and Gold ETFs give regular 11% plus the interest as per prevailing gold price. Besides all that, in gold leasing, the interest rate is calculated daily and gets credited to your account every month, which is not available in any of the other three options. You can use a gold investment calculator to calculate potential benefits and returns on your gold leasing investment.
How does Gold Leasing Work in India?
In India, gold is not just an asset but also holds cultural value and is considered as an epitome of wealth and status in the society. It offers financial stability by working as a hedge against inflation when your purchasing power reduces. The concept of gold leasing is not new; it has been in existence for many years but in the form of physical gold leasing. However, today, with innovations, the emergence of digital gold leasing has stormed the investment market by giving the opportunity to lease even 0.5 gms of gold.
To lease gold in India, all you have to do is find a reputable lessee using digital gold apps and get involved in this lucrative investment option. For instance, the lessee can be a jeweler who will require gold for their daily activities. You just have to lease out your gold to the jeweler and receive a monthly interest in the form of grams of gold as per your gold quantity. Throughout the lease period, you retain your gold ownership.
Today, there are apps like Gullak that allow you to lease your digital gold to a trusted and reliable jeweler and receive a massive 16% interest, of which 4% – 5 % is in the form of gold itself. When you unlease your gold, you receive the principal amount along with the extra returns or lease rental payment. The lock-in periods for gold leases vary according to the platform; some have no lock-in and allow quick withdrawal, while others have a set lock-in term.
Why is this approach beneficial for both parties involved?
Gold Leasing is a trending and one of the most beneficial approaches that provide immense benefits to both the investor and the borrower:
Investor
The person who leases gold to the other is called an Investor. An investor can get enhanced returns (i.e., 16%) on their gold leasing compared to traditional gold investments that offer between (11% – 13.5%). The returns are calculated on a daily basis and credited to their account every month, making it a lucrative income generation source. Besides that, gold has a low correlation with other investments; therefore, when the market goes down and an investor suffers losses on other investments, gold investment can work as a safety kit that provides stability and financial assistance.
This means the risk in the portfolio also gets reduced due to gold leasing. It’s a great long-term investment as you not only get value appreciation but also the compounded interest which can increase your overall financial income. Moreover, the investor can enter the dynamic world of the gold market easily and generate additional income without losing ownership.
Borrowers
The jeweler, bullion bank, or individual who gets the leased gold is called a Borrower. They can get an advantage from gold leasing by getting access to gold without ownership and using it for various purposes. This eliminates the need to purchase it outright for short-term demands like fulfilling delivery of urgent contracts, supplying gold for industrial purposes, managing temporary gold demand, etc.
Conclusion
We can say that gold leasing is a new-age investment that gives investors an opportunity to earn a monthly return on gold as well as benefit from compounded interest and value appreciation. We have discussed everything from its meaning to benefits that can help you understand the intricacies of this world and make informed decisions. So, what are you waiting for? Choose a secure platform to immerse yourself in the world of Gold Leasing and enjoy enhanced returns while diversifying your portfolio.
