For many, Akshaya Tritiya is the most auspicious day for gold purchases. However, Mint Money advises its readers to buy gold for investment purposes through the exchange-traded funds (ETFs) or gold bonds route. This is because if you buy gold jewellery, you have to contend with the making charges, and establishing purity may be difficult. Then there are buy-back issues as well. But if you are using the day to treat yourself to a piece of jewellery or buying as a gift, here are some things to keep in mind.
Check for purity
When you buy gold jewellery, you should always check for its purity, which can be done by looking for hallmarks. The Bureau of Indian Standards (BIS) is the accreditation agency that certifies and hallmarks gold jewellery.
Any jewellery that has a hallmark will come with a number attached to it, along with a BIS stamp. A hallmark includes karat, stamp of BIS, year of hallmarking and jeweller’s identification mark. Karat denotes percentage of purity. For instance, 24 carat, or 24K, has 100% gold content, and is the purest form. Similarly, 23K would mean 95.8% purity (denoted by 958), while 22K means 91.6% purity or 916. Gold jewellery is typically 18-22K. BIS also stamps the year of hallmarking the jewellery.
Jewellers, too, stamp their own hallmarks on jewellery pieces, which include year of make and purity of the metal.
“When buying gold jewellery, check the amount of gold and its purity. It is important to get a purity check done no matter where you buy from. Most jewellers have purity check machines in their stores. Always insist on hallmarked jewellery so that you have a guarantee on the gold,” said Mehul Choksi, chairman and managing director of the Gitanjali Group, a branded jewellery retailer.
Cross check the pricing
Before visiting the jeweller, check the day’s rate of the metal to avoid any kind of fraud, though most jewellery shops display the day’s bullion rate. Look at the day’s bullion price and then discount it based on the purity of gold. In general, the bigger jewellery shops display bullion rates prominently, but smaller shops don’t. Therefore, always check prices before visiting the shop.
Let us say, the cost of 10g gold is Rs.29,095 at bullion rate. Then the price of 22K gold (91.6% purity) will be around Rs.23,682.
Negotiate on making charges
When you buy jewellery, the price includes not just the cost of gold, but also labour cost. All jewellers pass on this cost to buyers in the form of making charges, which are usually a percentage of the current gold price and can vary.
Generally, machine-made jewellery or those with little work done will have lower making charges; about 6-14% of the cost of gold. “If a piece of jewellery has intricate design or has precious stones in it, the making charges are higher,” said Rajiv Popley, director of Popley Group, a jewellery and luxury chain in Mumbai and Dubai. This can go up to 20-25%.
Always bargain on making charges as this is a negotiable component of the overall price. If you feel the labour charges do not match the work done, bargain to bring down the price. But most branded jewellery stores have fixed prices as a policy.
Studded ornaments with intricate patterns come with higher making charges compared to a pure gold piece. It is also difficult to check the purity of the embedded stones. Check the exact net gold weight before buying stone-studded jewellery. While you have to forgo making charges when selling or exchanging the piece, in studded jewellery, the stones are taken out to determine the weight of gold used. So, if you had paid a high price at the time of buying, your loss may increase at the time of selling. Moreover, stones that are not precious fetch zero returns.
Find out the jewellery’s resale value at the time of purchase. “Gold is often purchased as a means of security. So, it would be wise to keep the resale value in mind when buying,” said Popley. Most retailers have buy-back offers, so ask for the details. Some give the entire amount for the weight of gold mentioned while some give only 90% of the value. Remember that all jewellers deduct making charges at the time of sale.