Gold prices in India have risen almost 20% this year. It could even rise further now that Donald Trump is set to become the 45th President of USA. Despite the spike in prices, with festival demand set to peak, physical gold, which had a lacklustre year when it came to demand in 2016, is expected to bounce back this Diwali season.
But as the festival spirit takes over and we get ready to loosen our purse strings to buy gold, there is one thing every gold buyer must exercise - due care.
To make it easier, we at Sify Finance have put together a checklist for every gold buyer ahead of their purchases:
Buy only BIS hallmarked jewellery
India's gold business has never been transparent. Even hallmarked jewellers are not that credible, according to a recent 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 report published a little over a year ago.
An even bigger problem is the fact that most of the gold jewellery is not even hallmarked as there more than 400000 jewellers, most of them small and operating independently.
The best you can do in the circumstance then is to ensure 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.
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.
How many grams of gold are you getting in hand?
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.
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.
The bill, please
To ensure all this, do insist on a bill. This could mean your having to pay value-added tax and possibly share your PAN 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.
Finally, a Dhanteras thought shared by the maker of Piku:
"Dhanteras" is a festival of Dhan .. Acquiring Dhan of knowledge and wisdom.. Don't waste in buying Gold.. Buy some peace.— Shoojit Sircar (@ShoojitSircar) October 28, 2016
Agreed. Knowledge and wisdom helps during gold purchases too! Happy gold shopping, folks.