The significance of gold in India has grown by leaps and bounds in the heart of Indians and homes alike. Gold, in Indian history, is more than an investment. It is an integral part of Indian culture and traditions as gold jewelry is passed on from generations to generations to keep the family legacy alive. Also, gifting gold is considered auspicious in India. In addition to this, many people in the country find gold as a safe investment and use it during financial crisis.
Although the price of gold is displayed at every jeweler’s shop in India but to be sure of the price of gold jewelry and coins simultaneously, it is wise to first calculate the rate of gold by following the five steps mentioned below in this article:
- Determine the current value of Gold: This is important because there is a formula that should be used to calculate the per gram value of gold. However, the only variable in the formula is the current value of gold that you can find using the internet. Note that gold rates that you see online are for 24 carat of gold – the purest form of gold. However, for gold jewelry, 22 karat gold is used.
- In the second step, divide the current gold rates in dollars per ounce by 31.1 to get today’s gold price per grams. Let’s suppose, if today’s gold price is $1600/ounce, then present gold rates will be $1600 divided by 31.1, which will be equal to USD $ 51.45 per gram.
- Categorize your gold in Karat to access its value: This means, keep all the gold coins on one side whereas the jewelry, and other items on other respective sides. You can use a magnifier to see the mark on the gold. In case it is not visible, you can even do the acid test or Skey test to check the gold karat, whether it is 18K, 22K or 24k. Once the assessment is done, keep the gold coin and jewelry in a separate group.
- For each group including the coin and the jewelry, divide the karat by 24 and then multiply it by the current gold rates per gram. For example, if you have 10k gold and the value of gold on that particular day is USD $1600/ounce or USD $ 51.45 per gram, then the price of your scrap gold will be 10k = 10/24 = .4167, that means USD$51.45 x .4167 = USD$21.44 per gram.
- To calculate the price of gold jewelry, the following formula can be used:-
Gold jewelry price = (Gold price/gram) * (weight in gm) + (making charges) * (Weight in gm) + GST
So if, the price of 22k gold is 2350/gram, the purchase weight is 2gm and making charges is, let’s suppose, Rs. 200/gm, then the price of gold ornament will be =2530* 2+200*2 =5660 +GST (3%) = Rs. 5828.
In India, the demand for gold is escalating and so is the price. Therefore, to invest in the finest gold or to sell gold for maximum returns, it is good to do a bit of ground work. Note that, not all jewelers in the country offer gold at similar rates because of the making charges (that varies from one shop to the other), and discounts (that many gold sellers offer from time to time to clear the stock). Also, some shopkeepers buy gold in bulk at a lesser price and thereafter sell it at a reduced rate too as compared to other shops. Therefore, it is wise to do some research on gold rate and the type of gold you want to invest in.
Recently there has been a tremendous fall in the gold rate all over India as well as the world over. This in turn has encouraged more and more people to buy gold whether for investment or simply as jewelry. However, whenever you want to buy gold jewelry or solid gold, the first thing that you should ensure is the purity of the metal. This means that you should check how pure the gold that you are buying is. This presents an important question, that what is the method of checking the purity of gold. In order to protect the consumers in the market, the government of India has made it mandatory to get gold jewelry hallmarked in the country. This in turn not only helps in keeping control of the quality and determine the gold rate, but will also protect consumers of the metal from corruption among jewelers.
The Bureau of Indian Standards of BIS act, says that a hallmarking agency will certify the gold rate purity based on the Indian standards. In other words, the gold jewelry being sold in the Indian market will be first evaluated and tested in official centers of hallmarking and then will be certified that the metal used for making the jewelry or the bricks and bars conforms to the Indian and international standards of purity and fineness.
Check for BIS hallmark
The first thing that you should check is whether the jewelry has a BIS hallmark or not. You can check online to see what the hallmark symbol looks like. If any jewelry or gold bar has this symbol it means that it has been checked by the BIS and is certified for purity. At the same time, the jewelry store where you purchase the gold ornaments should also be BIS hallmarked.
Check for Grade of Purity
Different people prefer different levels of purity in gold. Then again in some cases it is not possible to use pure gold because it is very soft. This is the reason that when making diamond and gold jewelry, or gold jewelry with any other precious stones, 18 carat gold is used. The purity of the gold can be ascertained by the number inscribed on the piece of jewelry. This can be studies as below:
999 – 24 carat – pure gold and features the highest gold rate purity
958 – 23 carat
916 – 22 carat
875 – 21 carat
750 – 18 carat
708 – 17 carat
585 – 14 carat
417 – 10 carat
375 – 9 carat
333 – 8 carat
If you are buying gold for investment purposes then it is advisable to buy the gold inscribed with the number 999 which means pure 24 carat gold. Better gold rate purity will fetch you a better price in the market when you try to resell it.
The piece of jewelry or gold bar should carry the logo of the BIS authorizing hallmarking center where the jewelry or gold bar has been hallmarked. You can check on the internet to see the list of hallmarking centers across the country and their individual logos. It may be difficult to remember all the logos, but nowadays with internet access on mobile devices it should not be a major problem.
Year of Making
Along with the numbers there are also alphabets inscribed on the gold ornaments and this alphabetical system has been decided by the BIS. These alphabets represent the year in which the ornament has been hallmarked. For instance, the letter A denotes the year 2000, the letter J stands for 2008, N is for the year 2011 P for the year 2012 and so on. You can check this alphabetical system on the official website of the BIS.
Jewelers’ Identification Mark
All reputable and big jewelers always mark the jewelry made by them with their own identification mark. This will especially be helpful if you wish to return the jewelry to them. Usually you get a better price for gold jewelry if you resell it to the jewelry store from which it has been bought.
In spite of the changing trends and modernization, gold continues to be the most popular precious metal in India. It is not only popular for making ornaments, but also as a means of investment. Many people who still believe in the traditional methods of investment, opt for this precious metal. However, there seem to be heavy fluctuations in the price of gold in India nowadays and there are several factors which are responsible for these fluctuations. Let us study these factors in detail.
- International price of gold: One of the main factors behind the movement in gold prices in India is the international price of gold. Most of the domestic demand for gold in India is met by gold imports. Hence when the international prices rise, there is also a rise in the price of gold in India.
- Dollar value: When the dollar loses value, the price of gold rises and vice versa. This is because dollar is the most stable currency and when there is any turbulence global or domestic turbulence that can affect dollar’s strength, people’s investment in gold increases.
- Gold ETFs: There are other factors as well which affect the international price of gold. One such factor is the Gold Exchange-Traded Funds or ETFs. People invest in gold EFTs electronically and if there is a large redemption in these funds then it tends to affect the international price of gold, pushing the price lower.
- Demand for gold: Apart from these, the price of gold also depends on demand for the yellow metal from large consumption countries such as China and India. With most countries having high demand and lean seasons, gold prices also vary.
- Duties and other policy decisions: Any adverse policy decisions of government like imposing import duty on gold can affect the price of gold. Such duties make gold costlier in India which in turn affects consumption.
All these factors affect the price of gold in the international market and subsequently in India.
Rupee and the price of gold
The other important factor that affects the price of gold in the country is the movement of the rupee. When the rupee drops against the dollar in interbank trading, it causes an increase in the price of gold. This is the reason that it is necessary to keep an eye on the international price of gold along with the movement of the rupee against the dollar. If the price is steady for both then the price of gold will also be steady in the country.
The other factor affecting the price of gold is inflation rate. In the last few years there has been a high inflation rate in the country due to which the rate of gold has risen. This is not just true for gold but also for other commodities including food products. A rise in inflation causes a natural rise in the price of gold in the country.
Higher domestic gold inventories
India was the highest consumer of gold in the year 2014 and was second biggest after China in the first quarter of the current year. Due to the high domestic gold inventories, there was a drop in the demand for gold in the current times leading to a drop in the price of gold.
Concerns over monsoon
Farmers are the main factor leading to the demand of gold in the country. Due to a weak monsoon the farmers face financial difficulties leading to the sluggish demand for gold in the country. It is true that almost two thirds of the country’s demand for gold comes from rural areas. This is because jewelry is the traditional means of storing wealth for many rural Indians who do not have access to or faith in the formal banking system. This is the reason that when the monsoon is weak the demand for gold in the rural areas decreases and hence the price of gold falls.