Gold is an alluring commodity, and people have been drawn to it for centuries. The beauty and value of Gold have made it a great investment opportunity. There are several factors to consider when buying gold to get the best return on your investment. Due to its popularity, even counterfeit gold is being sold in the market. Here are a few tips for buying gold so that you buy pure and good quality gold each time.
Gold Rate in Your City
The rate of gold is different in each city due to the demand, import costs, and other factors. Transport cost, octroi charges, taxes, and other charges involved in procuring it determine the rate for the day. For example, gold rates at port cities are lower than interior cities. Gold prices update twice a day (morning and evening) in every city. The cost of labor involved in producing ornaments also varies across cities, thereby influencing gold rates for each product. It is important to know the gold rate in your city for the day before buying gold.
One of the most important tips for buying gold is to judge the purity of the gold you purchase. The ornaments or coins of gold you purchase are produced from an alloy of gold and other metals. The percentage of gold in the alloy determines its purity. Karat and Fineness are two systems to specify the purity of the precious metal. 24K or 999+/-50 Parts Per Thousand (PPT) is the highest form of gold purity. The purity of all other forms of gold is established upon comparison with this standard. Gold jewellery and coins are often available between 14K to 18K purity.
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Hallmarking is an industry best practice and among the crucial tips to buying gold. It ensures credibility and the validity of the purity claims of the manufacturer. It certifies the purity of gold used to manufacture the ornaments you intend to purchase. The gold alloy must comprise the precious metal above the prescribed threshold by the International Hallmarking Convention. In India, BIS (Bureau of Indian Standards) regulates the certification of gold as per norms of the Government of India. Hallmarking of all ornaments is mandatory and it is done by stamping or laser etching. It includes purity, the identity of the jeweller, and the date of hallmarking. You must check the hallmark on the ornament before buying gold.
Jewellers levy making charges on their ornaments and coins over and above the cost of gold. The manufacturing procedure for gold articles is labor-intensive and the intricacy of the design influences these charges. The gold making charges are relative to the creativity of the designer and the effort of craftsmen used in making each piece of jewellery. You may therefore be paying an amount 8-10% higher than the actual value of gold in your article. If you are buying gold for investment purposes it is advisable to purchase coins or bars. These are more affordable due to the minimal complexity of the design. It helps you avoid the unnecessary expense of making changes.
Ornaments are prepared by melting and cutting precious metals. Shaping it into custom designs leads to a wastage of gold. Jewellers include this amount as wastage charges in the total cost of your article. Although the wastage has been considerably minimised by the usage of technology for producing gold jewellery. You must check with the jeweller if your article is handmade or machine manufactured. Also, remember that plainer and compound designs involve less wastage in comparison to complex ones. Designs with gemstones involve maximum wastage and hence cost a bit more.
Final Amount Calculation for Buying Gold
Several factors affect the final amount calculation of your gold articles. You must consider factors like the gold rate in your city on the day of purchase, making charges, and taxes. If you pick a design with gems, then wastage charges and the value of embellishments must also be taken into account.
You can use the following formula to calculate the final price of your gold article.
Final Jewellery Price = (Price of (24 Karat/ 22 Karat/ 18 Karat) gold per gram on date of purchase * Weight of Gold (grams)) + Making charges + Wastage charges + GST at 3% on (Total charges)
The cost of gold is based on its weight, i.e. on a per gram basis. The gold cost keeps fluctuating on a daily basis across different locations. You must check the rate on the date of purchase through different sources including trustworthy websites. Jewellers also tell the daily gold rate according to the charge per gram. When buying an ornament, thoroughly check its weight and calculate the cost as per gold cost on the day of purchase. If you buy a piece with precious stones like diamond-studded on it, then you must take extra care. Make sure the gold is weighed and billed separately to avoid paying extra.
Buy Back Policy
Jewellers offer the option of buyback to allow you to exchange your old jewellery to keep up with the trends. Although the value of gold remains the same, the jeweller will deduct making charges while accepting the gold. They will calculate the value of gold on the date of buyback depending on prevailing rates. Irrespective of the date of purchase, you will get the return based on the current rate of gold only. One of the great tips for buying gold is considering the buyback policy of the seller. You must therefore discuss and understand the buy-back policy of your jeweller. If you buy gold coins from a bank, the buyback option is not available as per RBI.
Gold Scheme Provided by Jeweller When Buying Gold
Jewellers offer gold schemes to make buying gold ornaments easier and affordable for you. The best tips for buying gold are to check with your jeweller for schemes to plan your purchase better. Most schemes involve payment in easy instalments for a fixed period. At the end of the scheme tenure, you can purchase gold of equivalent value from the jeweller. Some schemes also offer discounts on making charges while others waive off the last few instalments. Others may book a custom design and make it available at the end of the scheme duration. Investing through a gold scheme makes the process systematic and easier for you.
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