Gold- it's shiny, ornamental, and its warm, rich glow is pleasant to the eye. It is also considered one of the most popular precious metals world over. But have you ever stopped to consider why gold is as expensive as it is?
There are several factors that contribute to its rather high valuation. It is an excellent hedge against inflation and is capable of retaining its value even during times of financial uncertainty. It can also be liquidated quite easily and there is close to no risk when buying it, making it an ideal investment option.
However, buying gold is not always easy, and there are a few things that you need to be mindful about to ensure you get the best possible deal, just like your mother and grandmother would have!
1. Cost per gram
Before you buy any amount of gold, ensure you first check the per gram cost. This will give you a fair idea of the current price of gold in the market. Remember that gold prices can vary at different showrooms. This is because they come from different associations of gold jewellers. However, the biggest jewellers usually have similar rates.
To know the current per gram cost of gold, check trustworthy websites or ask multiple showrooms for their rates and compare.
2. Level of purity
Gold is available in different levels of purity, and this can affect its cost. For instance, 100% gold, or 24K gold as it is also considered, is the purest form of gold. This type is extremely malleable, which is why for ornamental purposes, gold is generally combined with another alloy. However, the kind of alloy that gold is combined with also determines the price.
For instance, 22k gold is 91.6% gold as it contains 22 parts gold and 2 parts of other metal. Likewise, 18k gold is made up of 18 parts of gold while other metals make up the other 6 parts, making it 75% gold. Research the type of gold you want and the different rates based on purity levels.
3. Genuine certification
Gold that does not carry certification by BIS (Bureau of Indian Standard) may not be the real deal. India has over thirteen thousand BIS hallmarked jewellery showrooms, which are responsible for ensuring gold is of genuine quality and meets certain standards. However, according to The Quint, less than one in every three pieces of jewellery sold in India currently is guaranteed for quality and purity i.e., hallmarked.
Source: LiveMint. Note: An Assay Centre is where the gold is hallmarked.
Thus, whether it is gold jewellery to wear or a gold coin as a means of investment, make your purchase only after you see evidence of the BIS hallmark.
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4. Other charges
Prices for gold jewellery are not always straightforward. Gold sellers may not always tell you the charges, unless you ask, so make sure you ask. In addition to the per gram price, you might also have to pay for making charges and wastage. These additional costs may differ based on the ornament and from one seller to the next. Only once you decide on a particular piece will you know how much you are paying in other charges.
For instance, if you buy a 10gm gold bracelet for Rs 30,000, you are essentially paying Rs 3000 per gram. Consider the current per gram cost, and the difference is what you are actually paying as other charges.
An interesting point to note that is with more intricate pieces, the level of impurity may be higher, as jewellers may have to add more copper to make the gold more malleable. Thus, while the per gram cost of gold may not increase much, the making charges will.
5. Check Buy Back Terms
Apart from these, it is also advisable to check buy-back terms from the seller. Find out how much the jeweller from whom you are buying the gold is willing to offer you if you want to exchange it later. While it is unlikely that you will get the full rate that you paid during your purchase, you may be assured of exchange or sell-back opportunity on the piece.
Last but not least
Make sure you ask for a bill with your purchase. A bill that includes important details of your transaction can offer transparency. It also makes it easier for you to approach the right authorities in case of any discrepancy or claim.
Keep this checklist handy the next time you buy gold, and be assured you are getting yourself the best deal.
While credit cards come with a host of benefits, they must be used carefully, and never in these situations!