सोने पे सुहागा?

“As if all the fixed deposits and mutual funds and shares and gold funds weren’t enough, I also have to think about this gold deposits now” complained Swami, as we met this weekend over our customary cup of coffee. He looked at my broker friend Jigneshbhai, and asked “So should I invest in this new gold deposit scheme?”

My broker friend silently looked up from his coffee at Swami and said, “It is worth considering, but it depends.”

“Why can’t you just answer Yes or No?” asked Swami in a irritated tone. And then he looked at me and as if I was responsible for it, he asked me, “Why doesn’t your friend give straight answers and talk like this to me?”

I just waited for Jigneshbhai to speak, as I was equally eager to figure out what to do about this new gold scheme.

Swami and I waited, half expecting our broker friend to speak up. But Jigneshbhai kept sipping his coffee. After a couple of minutes, Swami lost his patience as usual and insisted, “So what? Should I go for it or not?”

Finally my broker friend spoke. “If you have black money in gold, you won’t even look at it.”

Of course, we don’t, otherwise we won’t be here, thought Swami and I. Perhaps our broker friend realized that, when we looked blankly at him, as if saying “Not applicable.”

He then continued. “If you or your wife like jewellery, you won’t look at it. Because you are going to lose it.”

On hearing that, Swami’s interest was piqued. “There is so much jewellery at home. It is not always used anyway. I hope I can convince my wife to part with some of it.”

Jigneshbhai gave a wry smile on hearing that. Can we really part with that jewellery? Swami and I were thinking.

Our broker friend continued smiling while we were thinking.

Swami finally confessed that maybe he could part with some of his jewellery. “But I am going to need the gold a few years later. Maybe for my daughter’s wedding, maybe for my retirement.”

Jigneshbhai stayed silent for a while when he heard that.

As we waited for further inputs, he finally said with some semblance of clarity. “Well, gold is honestly not the best way to plan for that, but if you insist on buying or holding gold, then the gold deposit scheme is worth considering.”

That made Swami slightly happy but still unclear. The ‘worth considering’ was still there.

Meanwhile our broker friend now started opening up a bit. He started explaining the details.

“Well, for the gold deposit scheme, they take your gold at today’s rate, and you get it back after a few years at the gold rate then, plus they give you interest for that period. Plus they have said no income tax on interest, and no capital gains tax on finishing the deposit.”

While we were absorbing what our broker friend had said, he continued speaking.

“And for the gold bond scheme, you put fresh money into a gold bond at today’s rate – like a gold mutual fund. But in addition to tracking gold rate, they also pay you interest. But in this case, interest and capital gains is taxable”

Jigneshbhai finished talking and went back to his last few sips of coffee, while Swami and I were trying to understand what he said. We looked at each other, and the deposit scheme did seem like a decent way to get interest on unused gold lying with us. And gold bonds did seem like a decent way to invest in gold.

But Swami had his doubts as always, and finally asked, “But the interest is only 2.75% or 2.5% or something? Why not 7-8% like FD in banks? Why should I go for it then?”

Our broker friend got visibly irritated at that question, and shot back. “Well – because it is a gold deposit, not a fixed deposit. You are getting your gold back at the end of it – that’s why. And I didn’t say go for it – all I said is if you want to invest in gold, then among jewellery and gold funds, the deposits and bonds are worth considering.”

The ‘worth considering’ came back, and so did Swami’s discomfort. He liked being clearly told yes or no, and my broker friend didn’t provide that, and insisted that he decide.

Just then, my old, rich neighbour, the wealthy man in the sprawling bungalow, who had been listening to our conversation for a while, walked up to our table. He always spoke cryptically and only Jigneshbhai seemed to understand him. When he spoke, he often left Jigneshbhai smiling, and Swami and I scratching our heads.

Today too, he had a twinkle in his eye and a smile on his face. As we paid the bill and were leaving after finishing our coffee, he left us wondering when he said,

“Cakes, especially in excess quantity, aren’t good for health. But sometimes you can have your cake and eat it too, and this cake of gold also has icing on it. The gold deposits and bond schemes are indeed सोने पे सुहागा.”