Introduction Indians like gold very much. There is no second opinion on this matter. Indian ladies will get fascinated with purchase of gold, especially gold jewellery.
Gold is a soft material. To make it hard and ductile, some other metals like copper, silver or nickel will be mixed in gold. The purity of gold is measured by carats. 24 carat gold is 100% pure. Different countries use gold of different purity. In India we prefer 22 carat gold. The purity of this gold is about 91.6%. Some countries use 75% gold and some 50% gold.
Purchase of gold serves two purposes: It is an investment and it is a fashion accessory. Gold is a symbol of pride and prosperity. Gold can be liquidated anywhere in the world. Many of us will purchase gold ornaments for various purposes and occasions. Some of the tips to be followed for purchase of gold jewelry are mentioned below.
Purity of Gold Before you make a purchase, ensure the quality of gold. The ornament you are going to purchase should have hallmarking. The Bureau of Indian Standards is the organization responsible to maintain the quality of gold. They have licensed some laboratories to test and hallmark the ornament. You ensure this marking you are going to purchase. It is better to go to standard jewellers only to purchase the gold. In some of the shops you will find some testing equipment for testing, you can witness testing there. In addition to hallmarking some shops will have 916 k marking also. Ensure this before you purchase.
Don't hesitate to bargain The rate of gold is standard. It will be changing on day to day basis. But all shops will have the same rate on the particular day. So you can't bargain on the price of gold. But jewellers add wastage and making charges. Making charges will be generally about 25 to 30 rupees per gram. Wastage will be around 8 to 10%. Many say that there are no making charges but they will charge 13 to 18% on the cost of gold as wastage. Here you have scope to bargain. Basing on the value of the ornament they can reduce up to 2 -3 % wastage. But those people will not lose any gold; they know the method of recovery. But it is a profit for them. So don't hesitate to bargain
Don't purchase articles with precious stones Gold will be sold on weight basis. The ornament you have selected will be weighed and charged as per the weight. If you select an article with precious stones like diamonds and emeralds, their weight will also contribute for the cost. Indirectly it implies that you are paying rate of gold to these stones also. Try to keep them as minimum as possible, so that your loss will be minimum there. Some shops they remove the weight of these items and charge separately for that. But there is no way to know the correct weight of these stones. The sellers charge more wastage for ornaments with stones.
In addition to the above three tips, you ensure correct invoice with a guarantee card for the item. Don't exchange gold articles very frequently. You will lose on wastage and making charges. Don't go for unknown shops.
Conclusion: One has to follow the above steps when they go for gold purchase. Main thrust is to be given to purity of gold and making and wastage charges. Ensure hallmarking.
A very informative article from Dr.Rao regarding purchase of physical gold. I find the paras on purity of gold and bargaining at the time of purchase,very useful. Honestly speaking, before reading this article, I didn't have much idea about the ways to check the purity of gold. I always thought that there was no scope of bargaining while purchasing gold. I thought that a customer was required to pay the prevailing market price on that day. Now, thanks to Dr. Rao, this misconception has been cleared.
However, judging the purity and safety are the major problems in case of physical gold. For proper safety of gold, we are required to keep it in bank lockers which comes with a hefty locker charge. For these reasons, the concept of e-gold or paper gold is becoming popular. Gold ETF depends upon the gold price and can give a good return depending upon the gold market growth. However, in this case, there are hidden charges in the forms of brokerage and service charges at the time of selling gold ETF units. E-gold is also based on the market rate of gold. The gold bonds issued by Government of India are in the e-gold and carry a nominal interest of 2.5 to 2.75% p.a. These are locked for 7 to 10 years.
Concluding my response, I thank Dr. Rao, the author, for this informative and useful article.
Thank you Mr. Partha for your nice words.
I have limited my article only to purchase of physical gold . The tips mentioned in the post are only for physical gold. I have not given any information about the e-gold and others.
Gold jewellery is a thriving and most profitable business. The increase of number of jewelries in Kerala and Gulf countries and in most of the states in India is a proof how much profitable the gold business is.
It is just like a cat falling down on all fours, whatever way you throw it up. The gold jewellers know how to take their profit. They may say it in different words. The worst is when you exchange. They reduce by the same term of wastage and again on the new purchase they load it once more as making charges and wastage. So we stand to lose double. Unless and until there are sufficient gold quality checking centres under government check and they do real quality checking and keep standards to be followed by the jewellers, ordinary people will be losing on many counts. As of now things are just arbitrary.
Another important aspect to keep in mind while purchasing gold is to buy solid pieces, instead of jewellery with a lot of delicate work. The more work a piece of jewellery has the more is the soldering done on it. So, technically, you will also be paying for the material used for soldering, when the jewellery is weighed. The soldering material is not of the same purity as the gold in the jewellery.
It is better to buy a sold gold bangle, than one with fine work. The former will fetch a better price if it is resold.
Also, check with the store about their resale policies. Some jewellers buy back jewellery without deducting wastage etc. They pay you for the exact weight of the fold, without deductions, if the jewellery was bought from their store.
Always insist on a bill, when making the purchase. This protects you from frauds.