n the earlier pieces, we discussed the pitfalls of buying jewellery as an investment.

I cannot emphasise enough that while jewellery is a great accessory and a lavish gift, that is all it is.

Don't assume that it automatically makes for a great investment because you place such a high value on it.

• Why jewellery is a bad investment

All you gold lovers, you need not pout. I never did say gold is a bad investment.

My reservations are only with jewellery. In fact, it is a great investment and must be part of your overall investment portfolio.

To invest in gold, go for the gold bars. To understand how gold bars score over jewellery, read Buy a gold bar, not a necklace!

The types of gold bars

There are plenty of bars available in the market that are imported from all over the world.

Some of the more well-known ones are from the refineries from Europe, South African and Australia. Credit Suisse, Johnson Matthey, PAMP Suisse, UBS and Rand Refinery are a few.

These gold bars come in various sizes: 50 grams, 100 grams, 1 kilogramme, 1 ounce, 10 ounces, 100 ounces and 400 ounces, to give a broad indication. Thinner gold bars are sometimes referred to as gold biscuits or gold wafers.

India is known for its TT bars (10-tola bars).

The traditional Indian measure for gold is tola, a name derived from the Sanskrit word tula for scale or balance. One tola was the equivalent of the silver rupee issued by the British East India Company.

However, they are becoming less popular and the 100 gm bars are increasing in popularity.

For exact weight in ounces and grammes, here is the conversion.

How much do the bars cost?

The cost of the bar will be the current market rate with a 1% sales tax. However, you may get a few rupees' difference between sellers.

But if you have two bars of identical weight going for different rates, it could be the fineness. The seller would either refer to it as 995 or 999, the latter being more expensive.

Fineness refers to the purity of gold. Gold purity is expressed in parts per thousand. So 995 is 995/1000 or 99.5% pure. Today, it is possible to produce gold up to 99.9999% purity and referred to as 999.

When you sell the gold bars, you get the prevailing market rate.

Where do you begin?

Certain bullion banks like Nova Scotia import the bars and sell them in the Indian market.

Unfortunately, these banks are not eager to service individuals. They prefer selling in bulk to certain customers who regularly take fixed amounts from them.

So it's not as simple as walking into a bank and picking up a gold bar at the counter.

You can get the bars either from the Minerals and Metals Trading Corporation. They have counters all over the country. There are gold dealers as well as jewellers who sell such bars.

The best place to start is by asking your local jeweller where you can get one. If he does not sell bars, he will definitely give you a contact or even get one for you.

When selling, MMTC will not buy back. But any jeweller should buy the gold bar and certainly any gold dealer who sells bars.

• Should you buy gold?

The final word

Please do not approach an investment in gold like you do an investment in shares.

Don't go looking for short term highs as in the equity market.

When you buy gold, be prepared to hold on to it for a number of years (maybe 10 is a fair estimate), to avail of a substantial appreciation.

Consider gold in addition to your other investments (fixed deposits, post office saving schemes, bonds, shares, real estate). It should be part of your overall portfolio. Which means don't put all your savings in gold.

A word of caution: try not storing it at home. You don't want a thief running away with your bars, do you? A bank locker seems a surer bet.

Tomorrow: Will you be taxed on gold?