Gold Buyers Guide

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.

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.

39 thoughts on “Gold Buyers Guide

  1. Always, Always negotiate on the making and wastage (now a days commonly called as VA) charges for good deals. Keep a limit of 12.8% and beyond which do negotiate. I had very terrible experience at a popular jeweler.

  2. I Want to exchange 916 KDM Gold Chain with New Chain i.e 916 KDM only.

    Pl let me know the Standard Making + Wastage Charges applicable for Old Chain as well New Chain

    • @Sujatha- Suppose if the weight of your chain is 10gms, Good Jeweller will consider 10gms as base weight and then depending on the ornament you buy will apply the making and wastage charges for the new ornament only.
      i.e., if you take 10 gms, you cost is 10gms + wastage + Making charges + VAT. (Some jewellers charge wastage twice better be careful).

      When you are exchanging an article it is better to go to the store where you had bought before and exchange for a new ornament. There are cases where when you shift jeweller, the new jeweller will say that your gold is <22k and will charge more for that(some time must have got cheated by old jeweller).

  3. Very useful information and thanks a lot. I will share a bad experience with a local jeweller in Calcutta – which may benefit many customers.
    I made a gold ring of 22K, KDM quality, weighing 6 gm. For that i deposited 6 gm of 24K gold coin of a reputed and world standard manufacturer. The jeweller cheated me in 2 accounts :
    1. He gave me the finished goods with 20K purity and his KDM mark was fake. I came to know about it by testing from an NABL accredited lab.
    2. The jeweller was supposed to pay me the exchange balance (24K to 22K or 20K in this case) as i gave him pure gold coin; and he is not supposed to charge me for wastage. But he kept me in dark and did not pay anything. Unfortunately i did not have a test certificate for the 24K gold coins.

    That was the mistake. A purity test can be done in 5 minutes by an XRF machine (Karat meter) and costs only Rs. 40 – 60 per piece. I came to know about this later. Hope readers will take one or two lessons from my bad experience.

  4. hi..
    a very useful post..but my doubt is if the ornament has any stones like ruby, emrald, they reduce that weight from ornament weight..and do they charge stone cost separately..orelse they include stone weight in the ornament weight and do they charge stone cost separately..i want to buy a vaddanam for my baby this week..but this doubt is in my mind..can u plz explain..

    • Yes. The weight of the gold and weight of stones will be given separately. However, there is no easy way to verify this. Do negotiate for wastage and making charges only on the weight of the gold and not on the stones. Also, please make sure you are not paying the price of gold for the stones. Obviously, stone give rich look to an ornament but it will increase the wastage costs.

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  6. nice information.. thanks for that.. anyhow i wanted to know where could i buy pamp sussie fortuna bars in india.. ??

  7. Hi,
    Thanks for all the information, For my referance please clarify,  If i am going to buy 100 gms gold necklace for the gold rate of the day 2900, What will be the total amount (approximate amount) i should pay.

  8. Hi,
    i want to buy 250 gms of gold pls telll me the wastage charges and making charges. am thinking to buy in chennai so tell me which jewellery shop is best in chennai.

  9. Go to Tanishq / Kalyan Jewellers for gold purity. If anybody know about govt certified bodies, please reply to this post and we will be very thankful to you.

  10. No, The value of 24K is little more than 22K (91.6KDM).  Generally, the are published in news paper on daily basis. So you can ask shop to pay 24k rate and then give price based on ornament gold price. 

    Check for Pure gold price and Ornament gold price in your local daily news paper and use that price as reference for 24K gold and 91.6KDM respectively.

  11. Hi, 
    I want to exchange gold coin 24 carat with gold ornaments of 91.6 kdm.will the price of 24 and 91.6 kdm be same?  pls list out how many  % approximately thy vl mention for chain, necklace, bangles, n earrings.

  12. Hi Guest1,

    1) 1.2 gms of wastage on 7.5 gms ornament works out to 16% wastage charges. This is huge unless the ornament has fine quality of machine work.  
    2) Assuming 2450 is the price of 22K gold, then your price/gm should not exceed 2969.4 ( 10% wastage + 10% making + 1% VAT) / gm. Since you have not given info on making charges i cannot comment. 
    3) If you have pain anything more than Rs.25,834 . then you were charged more by the merchant.  You can negotiate with making charges and wastage charges and reduce the price of this ornament.

    1) Be careful and ask merchant to use 22K gold rate instead of 24K gold rate for all calculations. 22/24 = 91.6% = 916KDM.
    2) Add 21% on the reference rate and this should be the maximum you can pay for the ornament. 
    3) Do negotiate on the wastage and making charges and ask them to reduce.

  13. My i can tell the what he calculate but on thing i can tell you should check the calculation before purchase gold and should go to atleast two or three store and my final suggestion if you want in the future please check in the bank and also in MMTC

  14. Hi, I got an gold (916 kDM) ornament of weight around 7.5gms and 1.2gms wastage in January 2nd week.,

    The shopkeeper calculatd the price as (8.7gms * 2860/-  ) + making charages.

    But when i see on internet , 22 carat gold rate in Jan 2nd 2012 is around 2450-2550.

    Then why does he charge me more? Anybody Please explain?

  15. its of great information for new buyers of gold. especially for the young
                                                                             Machi raju , tirupati 

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