What to keep in mind while buying physical gold or gold jewellery
Buying gold is not just like buying fruits, vegetables, apparels or grocery. Buying pure gold or gold jewellery is an investment in a liquid asset which can be encashed at any time in case of need. While buying pure gold or gold jewellery, people get confused about the purity, carats, prices, making and polishing charges if purchasing jewellery due to ignorance of basic facts about gold. This article tries to provide you with some quick tips to be vigilant.
Introduction to Gold
Hallmarking of gold jewellery by BIS – Purity of Gold
Basically there is no gold of 100% purity and purity of gold is measured in carats. 24 carat gold is considered to be pure gold. It is said that to extract or produce gold equivalent to one finger ring of gold about thirty tonnes of used ore is dumped as waste consisting of many heavy elements such as cadmium, lead, zinc, copper, arsenic, selenium and mercury which is major source of pollution of water unsuitable for human consumption. Silver and/or copper are mixed with gold to make an alloy and its purity in gold measured in carats gives the percentage purity. For example 18 carat gold, is of 75% purity calculated as [18/24] x 100 = 75%, consists of 75% gold, 12.5% copper and 12.5% silver as per standard norms. Hallmarking certifies the purity of the gold as per BIS standards.
Understand about weights and measures of Gold
Basic unit of weight used for dealing in gold is troy ounce. 1 troy ounce is equal to 20 troy pennyweights. Jewellers internationally use pennyweight (dwt.) which is equivalent to 1.555 grams as common unit of measurement.Gold Prices – history and trend of prices
Gold price history charts give a fair idea about the trends of gold prices. Recession hit and bearish stock markets tend to increase the gold prices. Indian gold market is also affected by the fluctuation of prices of US dollars. Strong INR decreases the prices of gold in INR and vice versa. Government import policies, local economic conditions and seasonal sale also affect the supply and demand. But it has been observed during the last one century (100 years) that gold used to be the safest haven for investment over a long term plan. Gold prices started increasing continuously since 2006-07 to 2010-11 and stabilized at the end of year 2011.Buying gold from local jewellers or goldsmiths – Tips
Future of Gold
Due to SDR's, special drawing units introduced by IMF and the world wide discussions being initiated to evolve uniform Global Currencies or Regional Currencies like Euro, it is quite possible that Asian countries may come up with their own regional currencies for bilateral or multilateral trade transaction in the Asia Pacific Region. In such a scenario the monetary value of Gold may vanish with the passage of time as the major gold consuming countries' taste for gold jewelry is shifting from Gold jewelry to Diamond jewelry. The author can foresee that in the near future there might be tendencies among Indian households to pledge their gold to obtain Gold Loans and the Gold Loans may also force the Banks to pass through Gold Redemption Crisis on the same lines as Mortgage Redemption Crisis faced by the American Banks in 2007 and 2008 during the great American Depression when more than 30 Banks including Lehman Brothers failed in America.
Follow 
Good information. So many doubts about purity of gold and its pricing mechanism on the basis of purity in terms of carats resolved. I think this carat system does not work for pricing of diamond jewellery. If possible write something about diamonds also.