Selling gold? Here are 5 things you must know

Before you set out to sell your gold jewellery, make sure the price you get is worth parting with what could be heirlooms with cherished memories.

Selling gold Here are 5 things you must know

Apart from being a valuable asset, gold is considered auspicious in our country and often has sentimental value. Since it is a popular investment option, it’s a common practice for people to sell it for cash in less-than-optimal economic times when they have a dire requirement for money. However, lack of knowledge and insufficient due diligence can come in the way of making the right decision and people might not get a fair price for their gold. Therefore, before you venture out to sell and monetise your gold, you should keep a few things in mind.

1. Price of gold

It is very important to have some knowledge and understanding of the worth of gold you intend to sell. Keep up with the latest price of gold. Gold is worth so much that even small fluctuations in the rate can translate to a considerable sum. Although you will not get the exact price for your jewellery, it will be beneficial as a reference point when you compare multiple offers. Shops generally have predetermined buy and sell prices for every 10g of gold. Their buying price tends to be lower than the price at which they sell. Shop around and get some quotes so you can fully appraise the value of your gold and get the highest possible price for your asset. Also note that in the process of selling your jewellery, you will lose out on the making charges and taxes that you paid while buying it.

Related: Factors that affect gold prices in India

2. Purity of gold

Before you sell your gold, it is crucial to evaluate its purity and authenticity. Check if your jewellery is hallmarked or not. Hallmarked jewellery also attracts lesser deductions in terms of purity checks. Gold that bears a 916 hallmark denotes 91.6% purity of gold for 22k gold. If your jewellery is not hallmarked, you can visit a purity testing centre to get a certificate detailing the proportion of impurities mixed.

3. Actual value after removing impurities

The actual price you receive will be affected by melting charges. The gold shop will first melt the jewellery in an induction furnace. They will then determine the actual value of this gold that is free from impurities. The final price will be based on the value of pure gold minus any gemstones and other metals like alloy used to make your jewellery.

Related: Why gold needs to comprise 5-10% of your investment portfolio?

4. Where to sell for the best price

You can sell physical gold to any jewellery store or an accredited gold reseller/recycler, or retail websites. Always remember to do thorough research related to gold trends and value before selling. It is advisable to sell your gold jewellery to the same store you purchased it from because they will give you a rate for the same purity at which they sold to you.

Related: Should you resort to gold during inflation?

5. Tax on sale of gold

You must remember that the profit gained from the sale of gold is taxable under ‘Capital Gains'. If you buy gold or gold jewellery and sell within 36 months, it is treated as a short-term capital asset. But if you buy gold or gold jewellery and sell after 36 months it becomes a long-term capital asset. The short-term capital gains are added to your regular income and are taxed at the slab rate applicable to you whereas long-term capital gains are taxed at 20%. Gains from gold ETFs and gold mutual funds are taxed in a similar way.

Last words

Start by inquiring with local and big jewellers and get quotes from multiple stores before you settle on a buyer for your gold. You don’t want to get cheated, so before finalising on a buyer, check their credentials to determine their legitimacy. It is important to educate yourself before parting with your precious asset so that you are assured of receiving the best deal. Look at these simple ways to check gold price before you buy.

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