This article is a must read for the people who would love to buy gold for ornaments or for investment or to calculate the value of exchanging gold ornaments.
Do you understand the terms KDM, BIS Hallmark, 22 carat, 24 carat, 91.6, making charges, wastage charges, VAT whic are involved when you are buying gold. These are words commonly used in Gold/ Jewelery stores and you need to know them to feel secure about your purchase.
Let us empower you with some basics
Purity of Gold
24 Karat Gold : 99.99% pure gold is 24 Karat Gold. This means there are no impurities what so ever. Gold is generally mixed with Copper,Silver for strength. The amount of gold vs copper (or silver) is the purity of gold and is measured with karat. Pure is gold is defined as 24 Karat.
22 Karat Gold : This means 22 parts of gold and 2 parts of other metal are mixed to make the alloy. This is equal to (22/24 = 91.6 Mathematically) also called 91.6 Gold. This means Gold is 91.6% Pure.
KDM : KDM is a tag embossed on a gold ornament that this certified to have more than 22Karat gold (= 91.6 Gold). Generally, jewelery establishments frequently uses word 91.6 KDM Purity. Once the ornament is made, it is tested for purity on a spectrometer and a KDM tag is attached to ornament. KDM and 22K gold are used synonymously.
BIS Hallmark: BIS is bureau of indian standards for certifying gold. readmore on this
18Karat Gold : If you go to stores like Central, you see ornaments made of 18K gold. This means golds used in making that ornament is 75% (18/24 = .75) pure. If you try to exchange that ornament you will get only 75% of the gold value. 18K / 14K gold are very popular in US.
Carat Vs Karat : Carat should not be confused with Karat. Carat is used to measure the weight of gem stone and is derived from carat vegetable seed which weighs about 200mg or 1/5th of a gram. This means a 5Carat diamond will weigh 1 gram and should not be confused with Karat. Karat is % and Carat is weight.
Making Charges : The beauty of an ornament lies in the hands of gold smith and machines are now overtaking the manual effort. A good design is a culmination of artistic view and exceptional effort to create a wonderful design that attracts the eyes of buyer. So for making such designs, Jewelery stores generally charges the customer with making charges. This varies from design to design based on the complexity. It varies from 3% to 11%. 10% is most common. so when you buy an ornament you end up paying approximately 10 % extra for making charges. You can negotiate with the store you are buying to reduce the making charges and sometime Jewelers run offers like zero making charges etc.
Wastage Charges : A fine finished laser cut gold ornament shines brilliantly. But during the process of making the ornament some amount of gold will be wasted or go as loss while cutting, soldering,melting etc. These are called wastage charges and jewelery stores generally asks buyer to pay these wastage charges. Generally, the wastage charges also are dependent on type of ornament and they range anywhere between 3% to 14%. 10% is very common. Again you can always negotiate with jewelery store for reducing these charges and stores also run offers like no wastage charges or 4% wastage charges.
VAT : VAT of 1% on purchase of Gold in ornament form (Ornaments or bars or coins).
Now with the above knowledge let us understand more about when you purchase an ornament.
Buying Gold Ornaments : When you buy ornaments, say a 100 Gram necklace, the prices will be arrived as follows.
Generally, ornaments are made of 22K gold, which they also called KDM certified (>91.6% Purity). The price of the market is generally constant through out the day and Stores will display 24K and 22K price. So you will be told 22K price / gram. Dealer will also tell the Wastage charges on that particular ornament, Making charges and VAT.
Price of ornament = ( Price of 22K gold * Weight in Grams + (approx 10% wastage charges) + ( Approx 10% Making Charges) ) + 1% VAT.
This means an ornament is approximately 120% the price of Gold in grams.
Buying Coins/ Bars : Some people wants to invest only in Gold bars, coins but not ornaments. In that case there will be only VAT and no wastage or making charges. You also buy 24K Gold in such case. The price will be Price of 24K gold * Weight in Grams + 1% VAT.
Exchanging the Ornament : Fashion never dies and you will be forced to change the ornament based on latest trends. So, when you exchange an ornament, normally stores will charge a wastage charge ranging from 3% to 10% and then gives the price of 22k gold. And if you are buying gold with that money, it means you are paying approximately 30% extra to get a new ornament.
Generally on exchanging pure bars or Coins, Stores will not charge any wastage charges if you carry a purity certificate.
Gold Investments (Buying gold in Paper Form) : Buying physical gold will always involves time, trust and storage costs, locker costs and zero interest. Gold has been give a consistent return of over 20% from last 6 years and is attracting more and more buying. To avoid the storage costs, locker costs and safety issues one can buy gold in market through Exchange traded Funds “ETFs”. Reliance, Kotak, SBI, UTI runs their ETFs which are generally traded in market. You can buy like Mutual fund units since most of them are using 1 gram as their base unit. So contact a Mutual fund agent or your Demat/ Equity dealer and he can help you.
Where to buy Gold in Hyderabad?
Coins/Bars : If you want to buy gold coins/ Bars or silver please go to MMTC. MMTC is a government of India organisation and the purity and safety is assured. It is just opposite Mahavir Hospital at Masabtank ( Infront of JNTU Masab tank). You can call them for a quick price check.
HYDERABAD REGIONAL OFFICE
10-2-1, 1st floor, APFDC Complex, A.C. Guards, Hyderabad – 550028
EPABX – 040-3394924, 3376900, 3394960, FAX – 3394923
E-mail : [email protected]
Coins/Bars can also be bought at Banks,Other Jewelery stores but we suggest you to buy from MMTC. Banks are expensive compared to MMTC or Jewelery stores.
Ornaments : There are several popular stores in Panjagutta, Basheerbagh,Secunderabad. Please check the offers before you shop. Some shops sell on chennai prices and generally chennai price is lower than Hyderabad price. We are not making any recommendation as most of them are reasonably good but the in best store experience was at Kalyan Jewellers. Other good stores are MBS, TBZ,Kazahana, totarams, malabar gold,mangatrai,chennai shopping mall, CMR, Chandana brothers etc.
Gold ETS/MF : Contact your Mutual Fund/ Equity advisor.
Akshya tritiya and Dhanteras are two big events for gold purchases in India and please use this as reference guide for your purchases. We would be glad to assist you if you have any queries. Please post your questions in the comments sections and our team will help you in getting the answers.