How To Use Gold Bought During Diwali To Strengthen Your Finances

Diwali festivities are now over, and many Indian families have added new gold jewellery and coins to their collections. For many people, the focus now shifts from celebration to utilising the valuables bought this festive season. The gold bought during Dhanteras and Diwali can be a valuable financial asset. From investments and gold loans to monetisation and resale, there are many ways to utilise the yellow metal for financial prosperity.

First, consider the investment options. Physical gold has traditionally been a store of value in India. Beyond jewellery, one should look at how the precious metal could fit into their savings or asset-allocation strategy, such as investing in Gold Exchange Traded Funds (ETFs) or digital gold.

You can unlock value through a gold loan. Many lenders provide secured loans against gold jewellery or coins, thus enabling quick liquidity without selling the asset. Banks and NBFCs usually lend up to 85% of the market value of pledged gold jewellery, with the cap reduced to 75% for loans exceeding Rs 5 lakh, as per RBI norms. The pledged gold remains in the lender’s custody until the loan is fully repaid.

The Gold Monetisation Scheme (GMS), introduced in 2015, was designed to bring idle household gold into the banking system while offering depositors a modest return. Investors can hand over jewellery, coins, or bars, excluding pieces with gemstones, to authorised collection and purity testing centres, where the gold is verified, melted and credited to their account. Interest on these short-term deposits ranges between 2.25% and 2.5% per year, and depositors receive a certificate that can be encashed or redeemed in gold once the tenure ends. Under the scheme, only short-term deposits of one to three years are available. The government discontinued the Medium and Long Term Government Deposit (MLTGD) options in March 2025.

For those not looking to sell their gold, leasing could also be a suitable option to earn passive income. Digital platforms such as SafeGold allow investors to lease their gold to jewellers, who use it as working capital. In exchange, investors receive annual returns of about 2% to 5%, credited in grams of gold instead of cash, according to an Economic Times report. Unused or damaged jewellery is refined into 24-carat gold and digitally recorded in the investor’s name.

If you decide to sell or liquidate the gold by converting it to a more liquid form, such as a gold fund or ETF, keep your eye on market trends and cycles of the gold price. A high purchase price plus making charges often reduces the effective value on resale. So, timing is important.

After Diwali, the gold bought or received during the festival often ends up locked away for years. Allowing it to sit idle, however, means missing out on its financial potential. Gold continues to hold significant value beyond its festive or ornamental appeal, and managing it wisely can strengthen your finances.