Gold is something that many Indians buy during festivals such as Akshaya Tritiya, Dhanteras . Other than jewellery, we can also buy physical gold in the form of bars and coins.

Many prefer to buy gold coinsover jewellery as the former can be bought in denominations low as 0.5 grams. If you too are planning on buying gold coins this festive season, here are 7 things that you must keep in mind.

1. Purity of gold coins
There are two ways to measure the purity of gold coins - Karat and fineness. Karat is the more commonly used measure of gold purity. 24 Karat (KT) is considered to be purest form of gold which contains 24/24 parts of gold. Similarly, 22KT gold contains 22 parts of gold and 2 parts of other metals such as zinc or silver to make it more durable while making jewellery.

Also Read:How to check purity of gold

Fineness is another parameter used to measure the purity of gold and is mainly to find the purity of 24KT gold. As per the World Gold Council's website, even 'pure' gold can contain minute amounts of mixed impurities which the manufacturer has not been able to remove. Fineness is defined as weight of precious metal (such as gold) in proportion to the total weight (which includes alloy and impurities). It is expressed in units of parts per 1,000. The purest form of gold, i.e., 24KT, when measured in fineness shows 999.9 parts per thousand of purity.

Atul Sinha, Senior Vice President - Marketing, Caratlane.com, an online portal to buy gold says, "Even if one cannot buy 24 KT gold jewellery, it is always possible to buy a gold coin of 24KT."

2. Hallmarking
While buying a gold coin apart from purity, one should also check if it is hallmarked. Government of India has set up the Bureau of Indian Standards (BIS) to ensure that consumers are not cheated while buying gold. BIS certifies gold and silver coins and jewellery by stamping it (embossing its mark on the gold item) to certify the level of purity of the item.

Effective from January 1, 2017 there are four components that are hallmarked on gold. These are:
a) BIS logo;
b) Purity in carat and Fineness;
c) Logo of Assaying and hallmarking centre, and
d) Jewellers' identification mark and number.

In addition to that, hallmarking will be done only for gold jewellery and artefact of 22KT, 18KT and 14 KT. Prior to January 1 2017, there was additionally fifth component i.e. the year of marking.

Source: BIS Website

"As per the latest BIS norms, hallmarking is done for the specified karat of gold. However one can always approach the BIS approved Gold testing and hallmarking centre to check the purity of any other karat of gold," adds Sinha.

From January 2021, it will be mandatory for hallamrking of gold jewellery. However, government is yet to issue notification in this regard.

3. Packaging
It is advisable that one must buy gold coins in a tamper proof packaging. The packaging is a guard against counterfeiting, fraud, and damage, explains Sinha. Jewellers recommend that one should not tear or open the tamper proof packaging of the gold coin in case one intends to resell it, as the packing ensures the credibility of the purity of the gold coin.

4. Denominations
Usually, gold coins are available in the market ranging from 0.5 grams to 50 grams in weight. However, availability of the denomination you wish to buy depends on the jeweller.

5. Making charges
Buying gold coins is relatively easier as compared to jewellery. It offers you the option to buy the purest form of gold in the minimum weight of 0.5 grams with lower making charges in comparison to ornaments like earrings, rings etc. Making (or manufacturing) charges for gold coins usually ranges between 8 percent and 16 percent, says Sinha.

On the other hand, making charges for jewellery generally starts from 8 percent and can go higher depending on the craftsmanship.

6. Options to buy from
Apart from the local jeweller, one can also buy gold coins from online e-tailers, banks, the Stock Holding Corporation of India, MMTC (a government-authorised public sector unit for the sale of gold and silver), and certain non-banking financial companies like the Muthoot Group.

However, the minimum denomination of gold coins will vary from one entity to another. Only a few like the Muthoot Group offer smaller denomination coins in 0.5 grams. According to Muthoot's website, it offers gold coins starting from as low as 0.5 grams of 24 KT/ 999 fineness. Muthoot also offers coins with different designs like that of Lakshmi, Ganesha etc., and the lowest denomination varies according to design.

Banks like Canara Bank offer 24KT gold in denomination of 5 grams, 8 grams and 10 grams as mentioned on their website. Stock Holding Corporation offers gold coins of 24 KT/999 fineness in partnership with MMTC with a starting denomination of 1 gram.

7. Ease of selling
If you have bought gold coins or are planning to buy from a bank, do keep in mind that they will not buy back those coins as per a Reserve Bank of India (RBI) directive.

Usually it is seen that gold coins or jewellery brought from one jeweller (let us say A) is sold to another jeweller (let's say B) will fetch you a lower resale amount. "This is because jeweller B pays you only for the gold and not for making charges, administrative fees, and profit margins that you have paid while buying from jeweller A," says Sinha.