Should you mortgage or sell your home gold when you're empty-handed? Learn about the best option for your needs..

In India, gold is considered more than just a piece of jewelry, but also a family safety net. From weddings to emergency cash needs, gold is considered crucial in every household. But what if a sudden cash crunch arises—such as a medical emergency, business losses, or the burden of inflation? There's a lot of confusion about whether to pledge gold or sell it outright. It really depends on your situation. So, let's understand when to sell gold and when it's best to pledge it.

Why does a cash crunch occur, and what is the role of gold?
Most families in India hold a significant portion of their gold investments. Gold prices are at record highs in 2025, driven by inflation and global uncertainty. However, when income becomes unstable—such as job loss, illness, or crop failure—immediate cash is needed. Gold is considered a "bait of safety" in such times. This is why pledging gold in times of crisis protects long-term goals, while selling it results in permanent losses.

In fact, the gold loan market in India is growing rapidly. It's projected to be the fastest-growing segment of retail credit by 2025, as people are increasingly choosing to pledge gold instead of selling it.

Pledging Gold (Gold Loan): When and Why Choose It?
Pledging means depositing gold with a bank or NBFC and obtaining a loan against it. Banks verify the purity and weight of the gold, then grant a loan up to 75% of the market value, and the gold is returned upon repayment.

Advantages:
Instant disbursement, minimal paperwork (just Aadhaar, PAN, and gold).

Low interest rates (11.9% to 16% annually), cheaper than personal loans (24%).
The gold remains with you, retaining its sentimental value (family heirlooms).

Flexible uses: Medical, education, business, or home renovation.

Disadvantages:
If the loan is not repaid, the gold may be auctioned.

If the price of gold falls, you may need to make an additional deposit.
Processing fees (0.5-1%) and late payment penalties

When to choose? If the problem is minor (2-3 months) and there's a plan to repay it.
Example: A sudden hospital bill or buying seeds for a crop.

Selling gold: When and why to choose?
Selling means selling gold at a jewelry shop or online (like Goldmonetary) and getting cash immediately. Selling old gold incurs a 20-25% processing fee, but pure gold (coins) fetches a better rate.

Advantages:
Full cash is received, with no repayment burden.
If the price is high (like now), a good profit.
No interest or fees.

Disadvantages:
Gold is lost forever, an emotional blow (especially for women who consider gold a security).
Making charges are a significant disadvantage, especially on jewelry.

Losses if the market falls.
When to choose? If the crisis is prolonged, you don't have the capacity to repay, or you have to sell gold to make a new investment (like mutual funds). If you can't bear the pressure of repaying the loan, it's better to sell it; otherwise avoid mortgaging it. (Note: The news is based on general information only)

Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.