Gold monetization scheme: Govt withdraws main scheme, short-term deposits to continue

A look at investing gold jewelry for monthly interest. Includes info on gold quantity, interest rates, and scheme benefits.

Gold Jewelry with Monthly Interest

The Gold Monetization Scheme offers interest to investors who deposit gold into a Metal Account. Once deposited, your gold starts earning interest. When you bring your gold to a bank or agent, its quality and weight are assessed, and the corresponding value is credited to your Metal Account. You'll be asked for your KYC details. The deposited gold is then loaned to jewelers at a slightly higher interest rate than what's paid to you.

How Interest is Paid

Your principal and interest are calculated 'in gold.' For example, if you deposit 100 grams and earn 1% interest, your account will hold 101 grams. Interest rates vary by bank. The minimum deposit period is one year, and small accounts are encouraged to deposit at least 30 grams. The gold can be in any form, like bars or jewelry. You can choose to receive your returns in cash or gold when you make the deposit.

Profit Potential

Investing 100 grams of gold for 5 years in the Gold Monetization Scheme can yield significant returns. With a 2.5% annual interest rate, you could gain 11.8 grams of gold or its equivalent cash value after 5 years.

Added Benefits

Besides earning interest on your gold, this scheme offers safekeeping, eliminating the worries of storing it yourself.

Scheme Discontinuation

As of November 2024, 31,164 kg of gold has been monetized under this scheme. This includes 7,509 kg in short-term, 13,926 kg in long-term, and 9,728 kg in medium-term deposits. Citing international market conditions, the government has discontinued the Gold Monetization Scheme (GMS).

Short-Term Options Continue

Banks can continue their short-term gold deposit schemes (1-3 years). While the GMS included medium-term (5-7 years) and long-term (12-15 years) options, these are no longer available. So, you can still deposit gold for the short term, but keep in mind that longer-term options are discontinued.