Gold for Indians is not just a commodity, but a part of our culture and heritage. India with over a billion people is the largest consumer of gold, even though most of its population live under poverty line. In this article, we have explained about Gold, purity, different color of gold-green gold, pink gold and about hallmarking of gold. why Indians buy gold?
Table of Contents
Karat, Hallmark, Making Charges Important terms
The Gold content is measured in terms of karats (“k” or “kt”).
Carat and Karat are not to be confused. There is more to them then their slightly different spelling. Carat is associated with diamonds, is related to weight and is spelled with a C. Karat is associated with gold, signifies percentage of Gold and is spelled with a K.
- Pure Gold or 100% Gold is referred to as 24k Gold. When we say 24kt or 24k Gold jewelry, we mean that all the 24 parts in the gold are just pure gold without traces of any other metal(s) or 99.9 percent pure.
- When this pure Gold is alloyed with other metals, such as silver, copper, or nickel, the Gold percentage decreases. When we say 22kt or 22k Gold Jewelry we mean that 22 parts of the jewelry, is gold and the balance 2 parts are some other metal(s) or equal to 91.3 percent gold plus 8.6 percent of some other metal alloy.
A Hallmark indicates that the gold content in the jewellery has been evaluated and that you can take the gold quality as claimed by the jeweller to be genuine. A Hallmark – or Standard Mark – for gold jewellery is awarded by the Bureau of Indian Standards (BIS). BIS embosses the logo of hallmark along with fineness number (corresponding to given karat), hallmarking centre mark, jeweller’s identification mark, and the year of marking denoted by a code letter decided by BIS.
Why does Price of Gold Fluctuates?
Gold is traded (on the exchanges) everyday and demand, supply and various other factors determine the price each day. The national pure gold rates are usually published in most newspapers or websites. Gold rate also differs for different jewellers varies as it depends on from whom they are buying gold and at what price. The image below shows the returns of Gold and Nifty over years.
How Gold Price and Nifty have performed over the years
Price of Gold Jewellery
Price of gold ornaments depends on many factors. The formula or calculation used to arrive at price of gold ornament is given below:
Price of the gold ornament is = ( Price of 22K gold * Weight in Grams) + (Wastage charges) + ( Making Charges) ) + GST at 3% on (Price of jewellery + making charges) (Before 1 Jul 2017 was 1% VAT).
Purity of Gold: Jewellery made in low caratage [which means it has more of other metals] is cheaper than the traditional 22-carat pieces because of low usage of the precious metal. In above example we have considered 22K gold.
Making Charges are the charges you pay to the Gold Smith to make the Jewel out of raw gold. Different Jewellers charge differently for making gold jewellery.
Wastage Charges: During the process of making the ornament some amount of gold will be wasted or will be lost while cutting, soldering, melting etc. Hence the gold gets ‘wasted’ in the manufacture of a jewellery item. These are called wastage charges and jewellery stores generally asks a buyer to pay these wastage charges. Generally, the wastage charges are dependent on type of ornament and they range anywhere between 3% to 25%. Wastage charges are expressed as % of the weight of gold ornament.
GST on Gold With the introduction of GST at 3% for gold and 18 % for making charges, and keeping customs at 10%, the effective rate comes to 15.67 %. Before 1 Jul 2017, gold jewellers paid 1% excise and 1.2% value-added tax (VAT) over and above the 10% customs duty on bullion. This effectively worked out to 12.43 %. So, the effective price escalation on gold jewellery comes to 3.24 percentage points
Suppose the price of gold listed by the jeweller is Rs. 27,350 for 10 grams of 22KT gold. Now, if you wish to purchase a gold chain of 9.6 grams, the price will be calculated as:
- Price of 1 gram of gold = Rs. 2,735(27,350 divided by 10)
- Price of 9.60 grams’ gold chain = 26,256( 2,735 times 9.60 grams )
- Add making charges, suppose 10%, which comes to Rs 2,625.60 (10% of Rs 26,256)
- Cost = 28881.60(26,256 + 2,625.60)
- Add GST at 3%: Rs 866.44 (3% of Rs 28881.60)
- The final billing amount will be Rs 29,748.04 (Rs 26,256 + Rs 2,625.60 + Rs 866.44
Different jewellers charge different rate
Why is Gold used in Jewellery?
Gold is a fantastic metal for jewellery because :
- Gold is lustrous.
- It’s durable: it does not rust, corrode, or tarnish over time or with wear and tear.
- Malleability: describes the property of a metals ability to be deformed under compression. Highly malleable materials can be readily rolled or hammered into sheets.
- Ductility: Ductility describes the property of the ability to stretch a metal, without being damaged. Highly ductile materials are useful for stretching into wires.While the properties Ductility and Malleability are similar, different materials react differently in these circumstances. Gold or copper for example, are both highly ductile and malleable, whilst lead is only malleable.
Gold in its purest form is not suitable for jewelry as it would not be able to withstand the rigors of daily wear and tear. It is therefore alloyed with other metals to make it stronger and more suitable for making jewelry. Some interesting facts about Gold lists some facts about Gold :
- The word gold derives from the Old English Anglo-Saxon word ‘geolo’ meaning yellow.
- The chemical symbol for gold is Au, from the Latin aurum, which means ‘shining dawn’
- Gold bars were made as early as 4000 BC
- 75% of all gold ever produced has been extracted since 1910. It has been estimated that all the gold in the world that has ever been refined would form a single cube 20 m (66 ft) a side.
- The price of gold is fixed twice a day at 10.30 am and 3.00 pm at the premises of N M Rothschild by the five main Bullion Houses – Deutsche Bank, HSBC, NM Rothschild, Scotia Mocatta and Societe Generale. The first gold fix was on 12th September, 1919 and this tradition has continued in order to provide a publicly quoted price as a benchmark to be used by producers and consumers.
Purity of Gold or Karat
The Gold content in a metal is measured in terms of karats (“k” or “kt”). Pure Gold or 100% Gold is referred to as 24k Gold. When we say 24kt or 24k Gold jewelry, we mean that all the 24 parts in the gold are just pure gold without traces of any other metal(s) or 99.9 percent pure.
When this pure Gold is alloyed with other metals, such as silver, copper, or nickel, the Gold percentage decreases. When we say 22kt or 22k Gold Jewelry we mean that 22 parts of the jewelry, is gold and the balance 2 parts are some other metal(s) or equal to 91.3 percent gold plus 8.6 percent of some other metal alloy. Similarly 18k Gold is 18/24th or 75% pure Gold, and 14k Gold is 14/24 or 58.3% pure Gold.
As the percentage of pure Gold decreases, the strength of the metal increases: so 14k Gold is stronger than 18k Gold. Additionally, as the percentage of pure Gold decreases, the price of the metal also decreases: so 14k Gold will cost less than 18k Gold.
| 24 karat Gold equals 100% pure Gold | too soft for jewelry |
| 22 karat Gold equals 91.7% Gold | Popular in certain parts of the world such as India |
| 18k Gold equals 75% Gold | Good balance of strength and value |
| 14 karat Gold equals 58.3% Gold | Good balance of durability and value. |
| 12 karat Gold equals 50% Gold | Not used for jewelry |
| 10 karat Gold equals 41.7% Gold | Lowest Gold content that can be legally marked as Gold in the United States. |
Difference between Carat and Karat
Color of Gold
Gold of different colors
Various colors of gold:
- White gold is an alloy of gold and at least one white metal, usually nickel, manganese or palladium.
- Rose, red, and pink gold : is made by adding copper. Higher the copper content, the stronger the red coloration. A common alloy for rose gold is 75% gold and 25% copper by mass (18k)
- Green gold are made by leaving the copper out of the alloy mixture and just using gold and silver. It actually appears as a greenish yellow rather than green
- Grey gold are made by adding silver, manganese and copper in specific ratios to the gold
Colored golds can be classified to three groups:
- Au-Ag-Cu system: Colour variations of yellow, red and green can be obtained by different ratios of Gold(Symbol: Au), Silver(symbol: Ag) and Copper (symbol Cu) Hence this system of making colored gold is known as Au:Ag:Cu system. A multitude of hues and colours can be obtained in the Au-Ag-Cu system alone by variation of composition as shown in the Figure below:
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Colored gold using Au-Ag-Cu System
- Intermetallic compounds, producing blue and purple golds, as well as other colors. These are typically brittle but can be used as gems and inlays
- Surface oxide layers, such as black gold; mechanical properties depend on the bulk alloy, and the colored surface is prone to wear
Hallmarking of Gold
A Hallmark indicates that the gold content in the jewellery has been evaluated and that the gold adheres to international standards of purity. So you can take the gold quality as claimed by the jeweller to be genuine. A Hallmark – or Standard Mark – for gold jewellery is awarded by the Bureau of Indian Standards (BIS). BIS Hallmark consists of five parts.
- The first is the logo of the BIS Standard Mark.
- The second is the fineness mark. This refers to the gold caratage and is represented as the amount of gold in parts out of 1000. So, if the mark says 916, then it means that gold forms 91.6 per cent of the total metal.
- The third part of the hallmark is the mark of the assaying centre which carries out the certification process, represented by a logo. The list of hallmarking centres with their symbols can be found on the Website of the BIS.
- The fourth part is the logo of the jeweller.
- The final part is the year of marking, represented by a code approved by the BIS. For instance, ‘A’ denotes the year 2000, ‘B’ 2001 and so on.
BIS Hallmark
The Jewellers has to obtain a licence from BIS for a fee and hallmark the jewel they make with BIS logo. The other features are:
- At every outlet an illustration of the Hallmark, explaining its components.
- A magnifying glass as the Hallmark is usually small to make a proper check.
- Further, let’s say you’ve checked up on the jeweller and seen the mark and so on, but are still doubtful of the gold’s authenticity. You can go to an authorised Assaying and Hallmarking centre and get the gold tested. While you do have to pay testing charges, if your suspicion turns out right and the gold’s purity is less than what is marked, the charges will be refunded. Your jeweller will also have to provide a replacement.
- BIS maintains market surveillance on the certified jewellers, on random basis. Market surveillance involves collection of Hallmarked Gold Jewellary from licencee’s retail outlet/manufacturing premises and having it tested for conformity in BIS recognized hallmarking centre. Deviations in degree of purity of gold and operation not in conformance to the system may result in cancellation of BIS licence.
On 11th April 2000, the BIS launched its hallmarking scheme. The basic objectives of the scheme were Consumer Protection, to enhance exports, to improve the quality and purity of gold jewellery produced and to monitor any loss to the economy due to the improper caratage. Presentation on BIS (2007) explains about the BIS Hallmark. For more information on BIS Hallmark visit their website BIS:Hallmark
KDM Mark of Gold
Jeweller advertising KDM mark
Why do Indians buy Gold?
Indians buy gold because :
- Gold is considered as Status Symbol
- Gold is considered an equivalent for liquid cash : It can be converted to cash anytime when an emergency arises
- Gold is a very good investment : Gold has consistently increased in value and thereby considered as a safe and secure investment.
- Gold has great religious significance: Gold is the symbol of the Hindu Goddess Lakshmi and considered highly auspicious. Gold is considered sacred in every hindu religious festival because of the belief that gold becomes pure during its evolution process as it passes through fire. The Hindu calendar even has auspicious days to buy gold like Dhanteras and Akshaya Tritiya. Gold is also bought on festivals like Onam, Pongal and Durga Puja.
Gold always had a special significance in all ages.
- Gold was one of the three gifts given by the three wise men on the birth of Jesus according to the Holy Bible.
- According to the Hebrew Bible, the golden calf was an idol made by Aaron to satisfy the Israelites during Moses’ absence, when he went up to Mount Sinai. The calf was intended to be a physical representation of the God of Israel. Details at Wikipedia:Golden Calf
- A story in the Hindu Mythology states that during the creation of the Universe, the Creator, God Brahma, deposited a seed in the waters made from his body which became a golden egg. The remaining materials of this golden egg expanded into the Brahmānḍa or Universe. Hence Brahma is referred to as Hiranyagarbha which means born of gold as he is born from the cosmic egg of gold. Wikipedia:Brahma
Did you know: Toe rings are never made of gold as it represents the goddess of wealth and should not be soiled by touching a human’s feet.
When And Why Indians Buy Gold Jewellery
In India most of gold is bought in form of jewellery. Given below are charts from Business Insider:Morgan Stanely Chart (May 2012)
Why Indians buy gold?
When Indians buy gold
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Nice blog and your all presenting information are very great and it’s really good well done.
I have come across a white chain with 990 hallmark it’s heavy but not as silver should be. It weighs 62g but very soft. Could it be gold or silver?
REALLY NICE BLOG..
Hello, That was a really well written and informative article..
I have a question for you… hypothetically, if the rate of 24K gold is 30,000.. then the price of 22 k or 916.. should be 27480… then why is the quoted price usually 2-3% more than this? And I am not talking about the rate quoted by the jewelers… but the price of 22K released in Times of India and even websites that offer spot prices for commodities..
For example,, rate of 24K on Oct 17th as given on these two sites (http://www.goldpriceindia.com/gold-price-mumbai.php and http://www.sify.com/finance/gold-rates-in-mumbai/) is as follows:
24K= 31,336 and 22K= 29,300
But, assuming that 24k is 999.9 and 22k is 916.7.. the rate of 22K should be 28,704… so, why the difference of Rs. 596?
Since wastage charges are clubbed with the making charges and quoted together per gram by the jewellers.. the difference of Rs. 596 cannot be the wastage charge..
If it is the bid ask spread, then why does it not apply to 24K..
Or is it that the difference is controlled by supply and demand.. if it is so, who determines the percentage at which the quote price should differ from the spot price?
In gujarati news paper price of 99.9 gold was 30900 (99.9%), hall mark price was 30280(98%), and readymade ornament price was 29665 (96%). What is the significant of these prices?
What will be the price of 916 hall mark gold and ornaments prepared from 916?
Very informative article..Job well done..
sir we wish to know whether BIS HALLMARK LAW PASSED BY PARLIAMENT OR IT IS MANDETORY. WHAT PROCEDURES WE HAVE TO FOLLOW TO GET IT INVOLVED WITH IT
Good article . I wanted to know name and address of gold collection and hall marking centres in Ghaziabad or delhi who will collect gold for gold monetisation scheme . I am unable to find the list . It will be a great help.
The details of the centers have not been announced as yet.
One jeweller AMBA JEWELLER IN central market Lajpat nagar , sold me kdm jewellery claiming it’s also sign of purity . Sad but I was in hurry do I paid price of hallmark .
Thanks for great info .
Hi
i have a bangle that says 23 KDM….so cadmium was used?
is cadmium not even safe to be worn?….is it harmful for the skin or for overall health of the person wearing the jewelery?
some people said…KDM jewelery is not HALLMARKED BY BIS….BUT MY BANGLE HAS ALL THE 5 THINGS OF BIS HALLMARKING?
THE JEWELER EVEN PROVIDED THE SHOP’S BILL….
IS THERE A WAY TO ENSURE WE BUY ONLY THOSE JEWELERY ITEMS THAT DIDN’T USE CADMIUM…ANY EVIDENCE WE CAN LOOK FOR?
IS CADMIUM CHEAPER THAN OTHER GOLD SOLDERS?
In precious metal jewelry, including karat gold jewelry and sterling silver jewelry, cadmium has been a component in solders used in joining jewelry parts.
Despite the media hype, the presence of cadmium at these traditional levels has not been associated with any adverse health effects to consumers.there have been no adverse health effects known from the presence of cadmium in jewelry at traditional levels. Scientific data show the principal danger of exposure to cadmium is from inhalation – not a likely scenario with jewelry.
For more info can read article Cadmium in Jewelry: Myths and Reality
There was an article about how big jewellery brands often have a share in BIS centers, meaning they actually pass off 18 karat gold for 22 karat and so and so forth. The fact that it’s a major scam means even hallmarked jewellery is not pure…..infact the same was confirmed by a jewelry manufacturer. How would you comment upon such startling revelation?
how else is a consumer supposed to look out for themselves if the BIS guidelines are rumored to be violated by BIS itself?
How can a consumer get his money’s worth and be sure he’s paying for the exact quality that the hallmark suggests?
There was an article about how big jewellery brands often have a share in BIS centers, meaning they actually pass off 18 karat gold for 22 karat and so and so forth. The fact that it’s a major scam means even hallmarked jewellery is not pure…..infact the same was confirmed by a jewelry manufacturer. How would you comment upon such startling revelation?
how else is a consumer supposed to look out for themselves if the BIS guidelines are rumored to be violated by BIS itself?
How can a consumer get his money’s worth and be sure he’s paying for the exact quality that the hallmark suggests?
Hello sir. can i purchase gold coins or gold biscuits online. Which website is correct for me. please advice me.
How safe is the website Caratlane.com? They say the product is 100% certified – Every piece of jewellery that they make is certified for authenticity by third party international laboratories like SGL,IGI,BIS and GIA. I have ordered a bangle already. Please comment whether to buy or no? Certified by SGL means can we trust this Caratlane? Delivery is not a problem, because a person from his office is coming to deliver it. Its cash on delivery product. Please reply as early as possible. Thank You.
Hello Maam,
It is safe to buy from CaratLane. They would deliver what they promise. Else you can write a blog article about it or inform us.
Solitaire Gemmological Laboratories (SGL) is an independent international laboratory that provides professional gemstone identification and grading services to the gems & jewellery industry worldwide. For further information on SGL please visit http://solitaire-labs.com/verify-your-report/
Hi
i have a bangle that says 23 KDM….so cadmium was used?
is cadmium not even safe to be worn?….is it harmful for the skin or for overall health of the person wearing the jewelery?
some people said…KDM jewelery is not HALLMARKED BY BIS….BUT MY BANGLE HAS ALL THE 5 THINGS OF BIS HALLMARKING?
THE JEWELER EVEN PROVIDED THE SHOP’S BILL….
IS THERE A WAY TO ENSURE WE BUY ONLY THOSE JEWELERY ITEMS THAT DIDN’T USE CADMIUM…ANY EVIDENCE WE CAN LOOK FOR?
IS CADMIUM CHEAPER THAN OTHER GOLD SOLDERS?
Hi Kirti
what a well researched piece on gold. this info really helped.
cheers
rachna
Thanks Rachna for such a nice comment. Appreciate it
Last day I purchased a bangle and it s not having Hall mark symbol or anything.. Instead its mentioned “ORA 22k”. When I asks the sales guy he told its same as Hall marking.Since I like the model I disldnt ask him further and I purchased the Gold which weighs 20.120 gm. So my question is if I suppose to exchange it afterwards will I get the same value when I purchased.Or will they say No U won’t get it becoz it’s Hall mark is missing..
Pls comment
Sir,
Hallmark is a standard which guarantees the gold purity. It’s like buying lock for the house. Lock is to put off most of the robbers. But if a robber decides to break in lock would not stop him.
So Hallmark is for buyer’s peace of mind that he bought genuine gold.
So if you sell/exchange it to another shop then they would still test it and may offer you less or market price
But if you sell/exchange from same shop then you might get the market price.
Is your bangle from ORA creations of USA?
Do you have the bill?
hello. can i purchase gold coins or gold biscuits in online. which website is correct for me. please advice me.
This is a topic which is close to my heart..
. Many thanks! Exactly where are your contact details though?
nice bolg! and thanks for giving such precious information about gold.
very good informative article.keep it up…
Thanks a lot Kalyan. Keep on reading and becoming aware!
Good research and really very informative.
Thanks.
What kind of earrings are allowed with cartilage piercing?
As it happens, today I went gold shopping for a gift item and found everything so pricey 🙁
Very helpful info 🙂
Thanks for commenting. Gold price is going up for quite some time!
Good informative article.
Thanks
Mann
Good encouraging comment. Thanks Mann.