What is the game of percentage in the business of gold?

The jewellers sell ornaments to his customers saying that the gold from his shop is the purest in. While the truth is that on general basis, gold is not available in the market in more purer form than 85%. The entire market of gold is based upon ‘percent’. No matter what the rate of gold in the market is, the jewellers must get the benefits in percent while the customers either sell or purchase ornaments. This article discusses this arithmetic of ‘percent’ in the gold business at play.

It is said ornament is the only business in which the jewellers reap dividends both at the times of purchasing and selling. That is profits from all corners! Attached with it is one more interest factor. People neither stop purchasing nor stop selling gold knowing this fully well that the businessmen of gold and silver squeeze benefits from all the corners of their customers.

In fact behind the play of benefit is the logic of the jewellers that probably there would be not a single man on this planet who wouldn't like to purchase gold that also in its most pure form in cent percent. But this is quite beyond their capacity to comprehend that there is no existence on this planet earth of a thing like cent percent gold. To make ornaments, some alloys have to be mixed with gold.

The game of percentages in gold business

This whole business of gold is rested upon the arithmetic of percent. No matter what the rate of gold, the jewellers must have profit as per cent. Now well, what exactly is this percent? In fact, at the time of making ornaments of gold and silver itself, the division of profit is fixed which encompass in itself the manufacturing companies, the artisans, , the wholesalers, the retailers etc. This could be understood thus through an example. The type of ornaments being sold in the market these days have up to 77-83% of pure gold if you are purchasing 100 gm of gold, you have to pay 100 % whereas the pure gold present in the ornament is a mere 80 % . The rest are alloys. Now in this balance 20 % is hidden and fixed as the profits of everybody involved in the business. The share of manufacturing company in this 20% is 10-12%. The share portion of artisans and wholesalers are fixed and closed up. Remaining 10-12 % of shares go to the retailers.

This profit percentage is multiplied with the rate of the gold on a given day. Its profits are evaluated in the rupees thus. The less the sale of the gold of the lesser percentages the more the profit of the retailers would be. Because, no matter how much the purity the ornament is made up with, the persons involved above the level of retailers in the business will have a prefixed share percentage. Similar exactly is the mathematics with the silver ornaments. In this way, the more the purity of gold in ornaments, the lesser would be the profit, and the more the impurity, the more the profit. This is the basic theory, based upon which is this business of gold running from the ages past.

The more the price the more benefited the businessman is

The benefits accruing to the gold businessmen is directly proportional to the price i.e. the higher the price the more the profits. For example, if the price of gold is 30000 per 10 gm then upon the sale of 100 gm gold, the profit accrued to the businessman would come round to 30000, whereas if the price of gold goes further up @ 40000, the profit accrued would be 40000.

The truth hidden behind the purity of gold

The businessmen of ornaments always give ornaments to the customers saying his gold is the purest while the reality is generally no ornaments more pure above 85 % in form exist in the market. There is a different arithmetic of the businessmen taking guarantees of purity to the extents of 90-95 %The guarantee is this that when the ornaments get older the ornament would be returned into the very shop from where it was purchased with the so called given purity percentages. This guarantee would not work when cash is exchanged after selling the ornaments. The above guarantees apply only when ornament is purchased in lieu of old ornament.

The mathematics of percent of the carat of gold?

Here the question arises how come it is that when the purity percentages of gold hovers between 70-80 % the businessmen extend guarantees of 90-95 %? It is obvious there is loss of the seller in it which he adjusts in the bargain over the purchase of the newer ornaments in the name of making charges. There are generally the stamps of 22 C i.e. 91.6 % or 23 C i.e. 95.8 %. But in way are the gold pure more than 77% in case of the 22 C stamped ornament and more than 88 % in case of 23C stamped ornaments.

The tricks of percent at play on older gold ornaments

There is a custom in the Indian tradition to present old ornaments to the newly wed brides. This tradition goes on from generation to generation. Whenever the need in the family arises to sell the ornaments, the businessmen stand to benefit from such transactions. As for example, if the ornament of this type has the purity of 75 %, then the jeweller makes the pay back in cash saying the presence of pure gold into this is 65-70 %. Here also the game of mathematics of percent is at play.

Here the interesting fact is that in olden times, the businessmen used to sell something else to their customers in the name of gold and silver that means whatever ornaments they gave to their customers were impure. The elders treated these ornaments more than their lives and kept it preserved. Older ornaments did not break nor did it get rubbed off. And when the need of exchanging it into newer ornaments arose, the businessmen again stood to profit by this transaction by furnishing fake ornaments once again. This times round too. There are so many gold business men who used to stand benefited to the extents of whole 100 % of the value of gold sold and today are honest, prosperous and big gold business houses. In fact the old business is resting totally on trust and faith.

Boli i.e. sattebaji i.e. speculation in gold business

The business of gold and silver since decades has been coming on 'Boli'. Boli is a mysterious type of matter. This is a plaything between businessmen to businessmen. As for example when a businessman commits on Boli to purchase 1 kg of gold, then he is bound to purchase this gold committed on mere verbal 'Boli. /Boli here means in fact gold has neither to be purchased nor to be sold. Without any investment this business is transacted to earn the profits accrued between hours and increased rate of gold. Neither the gold is delivered nor the currencies counted. There were times much speculation in it was resorted to by the speculators and due to increase and decrease in the international market of gold, many speculators became wealthy with no investment.

This actually goes like this. A business man purchased 1 kg of gold from a business house on phone. If after 10 minutes of this transaction, the rate of gold jumped higher, the businessman who had purchased gold 10 minute earlier sells it on phone itself thus earning a huge profit margin without actually investing or without any delivery of gold. Loss has to be absorbed also when the price slides down in this strange world of gold business.

Many code words in circulation in the gold business

There are many code words in circulation in the gold and silver market.
In business parlance, 'Ganhan' is used for gold and 'Lathi' is the code term for silver. The pure silver pieces are called 'Thakia'. The locally purified gold is called 'Rava'. Oftentimes when the retailers run short of ornaments of the customers' liking, he seeks outright helps from the wholesalers. This prompt service is called 'Jakad'. In this situation, the wholesalers increase the cost of profit as his share by 2-3 %. The benefit accruing to the wholesaler is due to the compulsion of the retailer who runs short of stock which is explained as the capital investment made by the wholesalers.

Caution at the time of purchasing gold

  • Make it sure take the bill from the seller. And don't forget getting it mentioned on the bill how much pure the gold is in terms of return percentages.
  • There generally stamps of 22 C and 23 C (carat) affixed on gold ornaments. Please note it the ornaments having the stamps of 23 C are comparatively more pure.
  • Try your best to sell ornaments from where you have purchased and don't forget bringing bill at the time of sale.
  • The sellers reduces the weight on the pleas of dirt. In this state you just ask him to weigh the gold of the ornament by getting it melted because there is no scope of any dirt after melting.
  • Always get your ornaments weighed from electric balance and get the whole weight mentioned on the bill. If it is possible rest assured by getting it weighed on some elsewhere balance of an other shop.

Gold is gold is gold. The lives of the traditional Indian women reside into it. Therefore it is imperative to take utmost caution in purchasing gold. Never buy ornaments in a huff or tizzy. Take care of its every aspect. And don't get unnerved by the story of the making of the ornaments till it reaches to the retailers. You can feel the thrill of the choicest ornaments by keeping your ears and eyes alert.

Note: The biggest of all gold coin was made in 2007 having a radius of 53 cm which the price of which was pegged at 10 lack Canadian dollars.

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