Indians tend to buy a lot of gold jewelry. Banks and lenders today also understand and appreciate the value of gold in any form, as long as it is of a certain purity and weight. Gold is valuable because of its rarity, and the fact that extraction and processing takes a lot of time and effort.
How to Leverage Gold Against a Bank Loan
If a person has some gold and is in urgent need of cash, all he or she needs to do is take that gold to a bank and get a gold loan. A gold loan is easily disbursed against the security of gold kept as collateral. The interest rates are low, tenure options are varied and even acquiring the loan is generally easier with gold kept as security. Banks feel safe in the knowledge that the loan given is secured, and the borrower can leverage his stash of the precious metal for the benefit of near-instant loan approval and preferential rates of interest.
When and How to Buy and Sell Gold
How does one make the most of owning and leveraging gold? Firstly, you must keep a close eye on gold price movements. The oldest, most basic, and most reliable way of making money off commodities is by buying low and selling high. Watch the global indicators and factors affecting gold rates and make smart, well-timed purchases. There’s a very small chance that the gold rate will fall lower than your purchase price by a huge margin, and it’s almost a certainty that your gold will appreciate over a few years and be a lot more valuable. So buy when the price is low, and don’t sell it for 2 years no matter what the price fluctuations are. After 2 to 3 years, find the highest price and sell it then. It’s never a good idea to sell off all your gold (unless you’re trapped in dire straits) and you must always have a decent amount of gold to fall back on. So after selling, wait for a time when the gold rate is low and then buy some more.
Benefits of a Loan Against Gold
Remember, the higher the gold rate at the time you want to take a loan, the higher your loan amount will be, because your gold will be worth more than what you bought it for. It’s worth what it’s worth on any given day, and all transactions relating to your gold will be done on that rate, regardless of the rate it was on the date you purchased it.
