Whatever may be experts opinion on gold and at whatever price Gold may jump, we Indians never ever stay away from buying gold jewellery. It is considered as one of the major cost in Indian marriages. 50% of gold jewelleryare bought for weddings or wedding anniversary.
The size of the gold market in India is estimated at around $15 billion. But sadly it is one of the worst regulized sectors in India, where you can’t guarantee the quality and price. So let us explore what caution we need to take care.
Who decides the world gold price?
Five banks sitting in London fix the price of the gold for that particular day 🙂 This is the tradition since 1919. Banks involved in this price fixing are Barclays, Deutsche Bank, Bank of Nova Scotia, HSBC Holdings and Societe Generale. Price is published twice in a day (at 10:30 GMT and 15:00 GMT). London is the place where the largest volume of gold trade takes place in the world. This price will be followed by other countries. Price of gold changes daily, due to hundreds of factors, ranging from the opening of a new gold mine, to the changes in interest rates of one currency or another. The gold market is probably the largest and most free market in the world among commodity market.
So the major flaw starts from here itself.
How to convert gold price in India?
In India we follow the USA price. In USA gold is weighted in terms of troy-ounce which we need to convert into grams. Jewellers internationally use pennyweight which is equivalent to 1.555 grams.
The domestic price of gold = (London Bullion Market Association AM fixing in US$/ounce X conversion factor for
converting ounce into kg for 0.995 fineness X rate for US$ into INR) + custom duty for import of gold + sales
Tax/octroi and other levies applicable.
But the trustee of mutual fund company reserves the right to change the source for determining the exchange rate. The mutual fund company shall record it writing by mentioning the reasons for change.
Abhijeet
Sir what is 100% buy back policy?
Basavaraj Tonagatti
Abhijeet-100% buy back means whether they buy back the gold which they selling you TODAY.
supreja
Thanks for the information I’m a college student it’s very useful
Purushothaman
Very useful article! People like me who never carries any idea about gold can refer your article as the starting point to know more details on gold purchasing.
Basavaraj Tonagatti
Purushothaman-True and that is the reason Jewellery shops eyes on such customers.
Ravi
Can hallmarked jewellery with all 5 symbols marked be fake.I.e it can have lower quality of gold than declared.
As I have bought gold jewellery of 916 fineness and prices of two sellers were 23900/10 gm and 24800/10 gm with hallmarking.so why there is so much variation in gold rate.plz and this is so confusing.
Basavaraj Tonagatti
Ravi-The price variation is because they follow the different benchmark to arrive at their rate. Also, if the lower priced gold is really lower in your city, then he may be charging you something more in the name of making charges or wastage. Check the different and you will get an idea behind such lower gold price gimmick.
Ravi
Different brands set different rates for same purity of hallmarked jewellery. Why ? While there making charges are also very high ranging from 250 to 650 per gram in different showrooms.And there buy back policy also differ that forced us to sell hallmarked from the buying shop.So there is no profit of buying hallmarked jewellery if we can’t sell that at any place while not deducting any big amount.
Basavaraj Tonagatti
Ravi-Our concentration while buying a gold is on price, but we less bother about the other costs like making charges and wastage. The shop which claims to be selling at lowest price will increase their other charges to compensate their profit.
Karthick S
Really helpful. Thanks.
Mamatha
Thanks for the information. I faced similar problems when buying gold. This article is very useful for people who want to buy gold. keep publishing such articles.
jains
Shubh Jewellers is an example of confused pricing – they advertise no additional charges (no wastage, no making charges) but their bullion rates are higher than market gold rate. however, the inflation in price (8%) is still lesser than typical making charges (14%). This is my experience while checking couple of items in last 6 months, your mileage might vary – I am not endorsing or complaining – just supporting the article that pricings are confusing to understand!
Basavaraj Tonagatti
Jains-Yes you are right. It is better to pay inflated prices of 8% over the making charges of 14%. But when TV9 conducted the reality check they failed purity gold check also by some margin. Yes, prices are confusing to understand because it is not regulated well.