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  • Writer's pictureVitthal Verma

What Are The Benefits of Cash Against Gold in Delhi?

Updated: Mar 29

Cash and gold are both considered safe investment options in India. However, there are some key differences between keeping your savings in cash and investing in gold. In this blog post, we will explore the various benefits of holding cash against gold in Delhi. We will look at factors like liquidity, returns, risks and taxes to understand which option makes more sense under different circumstances.


Cash is the most liquid asset as it can be used anytime without any hassles. One can withdraw cash from their bank or wallet and use it immediately for any purpose like buying groceries, paying bills or booking a cab. On the other hand, gold is not a liquid asset. If one needs cash urgently, they will have to sell their gold jewellery or bars, which may take time. The gold has to be taken to a jeweller, valued and then sold for cash with a trusted gold buyer in Delhi. This process can take up to a few days. Gold is held in digital form through platforms that offer better liquidity than physical gold. One can liquidate their investment and get the proceeds within a day or two through such platforms. However, the liquidity is still not at par with cash, which can be used instantly.


Over the long term, gold has tended to offer higher returns than cash. In the last 10 years, the price of gold has increased by over 200% in India. In comparison, keeping cash under the mattress would have yielded little to no returns after accounting for inflation. The annual inflation rate in India has averaged close to 6-7% in the last decade, which means cash has effectively lost purchasing power every year. On the other hand, gold acts as a good hedge against inflation. However, it is important to note that gold returns can be quite volatile in the short term. The price often fluctuates substantially based on global trends, demand and supply forces as well as other macroeconomic factors. Cash returns, on the other hand, remain very stable with minimal volatility.


Cash carries very little risks compared to gold. The value of cash does not depend on external market forces. However, inflation slowly erodes its purchasing power over time. On the other hand, gold price movements make it a risky investment in the short term. Factors like changes in interest rates, strength of the dollar and geopolitical tensions can cause gold prices to fluctuate significantly from day to day and week to week. There is also the risk of theft or loss of physical gold. Overall, gold sale for cash are far less risky asset class than gold.


There is no tax payable on holding cash balances. Interest income earned from fixed deposits is taxable as per one's income tax slab rate. In comparison, there is a long-term capital gains tax applicable on profits from gold investments held for over 3 years. The rate is 20% with indexation benefits. Any gains realized within 3 years are taxed at normal income tax rates as short-term capital gains. Additionally, there is a 3% GST, making charges applicable when purchasing jewellery from retailers. These additional taxes reduce the post-tax returns from gold investments over time.


Cash can be easily carried while travelling within the country or abroad. It has universal acceptance and can be used to pay for things during trips. However, carrying large sums of cash also carries safety and legal risks. On the other hand, gold is not as portable. It is cumbersome and risky to carry physical gold bars or jewellery while travelling. The gold will have to be left in a safe or bank locker back home, reducing its utility. However, investments in digital gold are somewhat portable, as the holdings can be viewed on apps even while travelling.

Hedging ability

Gold is considered an excellent hedge against inflation and currency fluctuations. When prices are rising or the currency is weakening, gold tends to hold or increase its value, providing downside protection. This makes it an important diversifier and risk mitigation tool in an investment portfolio. Cash, on the other hand, does not have any hedging abilities and loses value with rising inflation. It also loses value when the domestic currency weakens against other global currencies.

Store of value

Gold has been a reliable store of value for centuries. It maintains purchasing power over decades and generations. Various studies have shown that an ounce of gold could buy a good men's suit both in the 1900s as well as today, showing its long-term store of value qualities. In comparison, cash slowly loses value every year due to inflation. Over longer periods of time, like 10-20 years, its purchasing power is significantly eroded. Hence, gold is considered a better long-term wealth preservation tool than cash.

Sentimental value

Gold jewellery has strong emotional and sentimental value in Indian households. Precious gold items are often gifted during weddings and other family functions, increasing their emotional worth. These jewellery pieces are then passed down for generations as family heirlooms. Cash does not have any such emotional significance. Hence, many Indian families prefer investing in gold for its sentimental appeal over just holding cash savings.

Supply factors

Unlike cash, gold has a limited supply as its mining output grows at a steady but controlled pace every year. This makes gold scarcity a supporting factor behind its value appreciation over the long run. In comparison, cash can be printed in unlimited quantities by central banks, diluting its worth. The fixed and limited global gold reserves act as a natural check against any sharp fall in its price over the long term.

Status symbol

Owning gold jewellery and bars is considered a symbol of affluence and status in Indian culture and traditions. Conspicuous displays of gold through jewellery, coins and bars signify wealth and social standing. Cash does not hold the same status value in social functions. The yellow metal is deeply ingrained in Indian customs as a prized possession handed down through generations. This status attribute of gold makes it an emotionally important asset for many Indian households over simple cash savings.


Cash offers better liquidity, lower risk and tax advantages compared to gold. However, old gold for cash gold tends to deliver higher long-term returns through price appreciation and acts as a better hedge against inflation. It also has strong portfolio diversification benefits. Overall, a balanced approach with some allocation to both cash and gold is ideal based on one's specific needs, risk profile, investment goals and time horizon. Cash is suitable for short-term needs, while gold makes for a sound long-term wealth creation and preservation tool, especially from a Delhi perspective. 



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