2018 is here. But the direction of economic headwinds in India and world over continues to remain uncertain. Buying gold then remains a top thought in the mind of every Indian even in 2018, because of cultural and other reasons.
But before investing your hard-earned money in gold, remember that India's gold business has never been transparent. There are more jewellers - 385000 to 410000 - than bank branches - 125000, according to a survey of Jewellers listings on Just Dial done by the World Gold Council. Of this only 30% fall in the organised sector. Most of our jewellers are small and operate independently.
This, according to a World Gold Council (WGC) report in 2017 has meant that "despite 15 years of hallmarking, gold jewellery is still routinely under-carated. According to research by the consultancy, Oliver Wyman, under-carating of gold jewellery weight has fallen from between 20%-40% to somewhere around 10%-15%, although the true percentage may well be far higher given there are limited number of BIS certified jewellers. This is an important issue for the consumer."
The WGC's India's gold market: evolution and innovation goes on to note even with this being the case, "In urban India, 5% of consumers say they do not know the caratage of the jewellery they bought in the past 12 months; this increases to 18% in rural India."
More worryingly, not all hallmarked jewellers are credible, according to another report by the World Gold Council (WGC).
"Till date even hallmarked jewelleries are not that credible in India. It is not fool proof as the original BIS policy has intended it to be. To make hallmarking more credible there should be independent checks by BIS of the hallmarking centres. The enforcement should be much more rigorous," WGC managing director (India) PR Somasundaram said in the above report.
With these being the ground realities, we at Sify Finance decided to put together a checklist that every Indian must follow before making their purchases to avoid being duped:
1) Buy only BIS hallmarked jewellery
Step 1 is ensuring that the gold you are buying is from a BIS (Bureau of Indian Standards) hallmarked jeweller, preferably a reputed name in a top city.
With surprise checks and the cancellation of licenses of BIS-hallmarked showrooms in case of genuine complaints possible, the BIS hallmark, despite the concerns aired above, remains the benchmark you need to insist on.
2) Know the gold rate per gram
Know the day's gold rate per gram before making your purchase. How it is arrived at varies from city to city and from one association of gold jewellers to another. The rates are usually changed twice a day - once in the morning and once in the evening. The biggest jewellers almost always sell at the same price.
Ensure you check rates on a reliable website ahead of purchase. Sify.com has gold rates from India's major cities sourced from the major bullion organisers in the cities or from the reputed jewellers there.
Another way of ensuring that the gold rate per gram is reliable is by cross-checking in more than one famous showroom.
3) Find out how many grams of gold you are really getting?
Most gold sellers have a trick up their sleeve that they have employed down the ages. They complicate the rate cards.
Let us explain:
At most jewellery stores, beside the per gram price, there are added columns for wastage (which varies from ornament to ornament with the mechanism of arriving it a mystery only the jeweller can solve) and making charges.
After you decide the ornament you are buying, making charges or a percentage of the wastage is removed from the rate card as a special discount, but that hasn't simplified the picture, now has it?
A better way of simplifying the rate would be to find out the gold you actually get in hand for the price you pay.
For example, if the final price is Rs 30000 and you get a 10 gm chain in hand - you have essentially paid Rs 3000 per gram. From this, subtract the day's actual gold rate per gram and see how much more you will end up paying per gram. Only if your heart is in the deal even after this, go ahead.
4) Check on buy-back terms
Find out what your jeweller is willing to offer you if you return the jewels at a later date and exchange it for a more contemporary design. Now, most top jewellers promise to buy back gold at the then prevailing rate if you decide to exercise this option.
Yes, this does mean that you won't be compensated for the wastage that you paid for or for the making charges, but you at least have an assurance to fall back upon.
Ensure that there is also an exchange and buy-back period and policy and that you are aware about it. This will ensure that you can return your ornament in case you have any grounds for complaint.
5) The bill, please
To ensure all this, do insist on a bill. This could mean your having to pay GST and possibly share your PAN/Aadhaar details too if you are making a big purchase - but a bill ensures transparency and provides you assurance. Remember, it is proof in your hand if you are forced to approach a Consumer Court.
Happy gold shopping, folks.
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