How to buy gold in India

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#1 Dec 23rd, 2010, 05:01
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  • luckyfatima is offline
#1
Do you know how to buy gold in India. A friend is going to Delhi and she wants to buy gold. I gave her this advice, but I am not sure what normal making charges are like these days. Please advise.

Also, I didn't tell her about "wastage charges" cuz I don't know if these are used in upscale gold shops these days…any other fees she would need to know about?

Here is what I wrote to her:


Quote:
About the gold…it is very different buying gold in India than in the US. Before you ask "how much," ask "how many grams is it?" Gold is priced by weight. They will have calculators sitting on the counter and they will be using these. You should also use the available calculators.

Traditionally they will be using a weight called "tolah" which is about 11.5 grams, but it isn't necessary for you, just look at gram weight. Before you go shopping that day, google "gold price in India today" and look at the daily price. It should be a bit above 2000 rupees per gram right now. So if you buy something that weighs 23 grams, you will multiply 23 x 2000 to get the base price.

On top the of the base price will be "making charges" per gram. Let's say it is a piece with 40 rs. per gram charges, you multiple that times the 23 grams of your piece and add that to the base price.

Small items like tiny earrings have a fixed making charge per piece rather than per gram because they are very light. The making charge is where the bargaining comes in. The gold price is set internationally, not by the shop, and that can not be changed. But the shop keeper will initially tell you a high price based on a higher making charge. You have to bargain on the making charge. Different items have different making charges depending on what it is, bangles usually have a low making charge and items with stones or the newest designs have higher charges. On India mike I will post this and try to get a rough guesstimate of what normal making charges should be these days (last time I bought gold in India was 7 years ago and the gold price has sky rocketed and making charges inflated since then).

Imagine a chain is 10 grams. Imagine the gold price today is 2040 rupees/gram. That means your base price on the chain is 20400. The man might tell you it is 35000. You make sure you know the gram weight is 10, times it by the 2040 rupees to know the base price right in front of him. You know it is 20400 Rs. You divide 35000 by 10 and see he has charged you 3500/gram or 1460 extra or 146 rs per gram making charge. 146 is a VERY HIGH making charge, you say "This is too much. you charge 70 rs per gram making charge!" (since you are a foreigner they might really tell you more than double…that is why it is good to know the general making charge per gram on different types of jewelry so you will have a clue what you should be paying). He will recalculate, you do the process again until you settle on a making charge that you agree on, maybe 85/gram or something. I am just making up the 85, I really am not sure what it will be. So, say it was 85/gram, for a 10 gram item you pay 850 rs making charges plus the actual gold weight charges of 20400, meaning in the end you pay 21250 rs. This means your 10 gram 22karat gold chain was about 472 USD. The Gold price is extremely high these days, but you will never pay that low in the US, so it makes it worth your while to shop for gold in India.
Any feedback or idea of making charges?
bas timepass
#2 Dec 23rd, 2010, 08:30
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  • baba420 is offline
#2
gold in india is sold in 24 carats and 22 carats,
gold biscuits are 24 carats, zinc and copper are added i think to make ornaments,
gold sold in retailers are usually 22 carat, thatswhat they claim, but expect some irregularity for sure,
hope it helps,
regards,
baba.
#3 Dec 23rd, 2010, 08:47
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#3
Looks like a Reverse Gold drain. People coming from Dubai would BRING gold to India whether in bullion or ornamental form.

Baba's advice is good. To add to it, buy from reputed places and buy BIS Hallmark certified ornaments only. Be careful, the place may claim to be selling BIS Halmark certified jewellery, but they usually sell both certified and non-certified. Also the wastage and making charges can be bargained and lowered.

Lastly, unless it is for an impending wedding or some such, this may not be the best time to buy gold.
#4 Dec 23rd, 2010, 09:04
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  • livinhimalayas is offline
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Always look for the Karat mark on each ornament if it says 22/14 that means 14 karat gold purity with 22 karat gold polish - if it says 22k then it mmeans it is 22 karat. All jewellers are required to put the karat mark on each piece of jewellery if it is not there do not buy. Always insist on a bill.
He that would live in peace and at ease must not speak all he knows or all he sees. - Benjamin Franklin
#5 Dec 23rd, 2010, 13:02
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  • JOHNLORD is offline
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Making charges vary from 8- 18%.

If you get someone charging Rs40.gram its a bargain.
Lord, Grant me the Serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to hide the bodies of those people I had to kill because they pissed me off.
#6 Dec 23rd, 2010, 14:24
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"wastage" seems to me to be a bit of a con. What wastage? Jewellers, the world over, go to lengths to recover even the filing dust when they are working. Of course there is some loss, and also selling the scrap does not recover the same price as paid for the raw material (the refiner has to make his profit too), but if any jeweller tries to tell you, that, for example, when a circle is cut from a square, the corners are wasted, that is absolute rubbish.

Bottom line, though: when we shop, we accept the terms of the shop and pay the agreed price.

One thing I notice is that items that include enamel or semi-precious stones may still be sold by total weight. This means paying gold price for glass!

Bottom bottom line: pay a price you are happy with for something that you really like. This formula never fails!
#7 Dec 23rd, 2010, 15:18
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Originally Posted by Nick-H View Post "wastage" seems to me to be a bit of a con. [
Wastage in jewellers term is the stuff they use to solder all the little bits together that make the piece of jewellery. Traditionally it is a lower karat gold that is used rather than 22 or 21 normally used to make the jewellery.
#8 Dec 23rd, 2010, 19:56
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  • DaisyL is offline
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Originally Posted by Nick-H View Post Bottom bottom line: pay a price you are happy with for something that you really like. This formula never fails!
This is good advice from Nick. I'm wondering if your friend has much experience buying gold anywhere. If not, buying gold on vacation might not be the best idea. She'll be buying in situations of high sales pressure while possibly being jet-lagged - and if she's not had a lot of experience with gold, this is not a good combination. Just a thought.

However, re-read Nick's quote at the top of this post - good advice.
#9 Dec 23rd, 2010, 20:40
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#9
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Originally Posted by luckyfatima View Post
Quote:
Imagine a chain is 10 grams. Imagine the gold price today is 2040 rupees/gram. That means your base price on the chain is 20400. The man might tell you it is 35000. You make sure you know the gram weight is 10, times it by the 2040 rupees to know the base price right in front of him. You know it is 20400 Rs. You divide 35000 by 10 and see he has charged you 3500/gram or 1460 extra or 146 rs per gram making charge. 146 is a VERY HIGH making charge,

In your example that would be Rs. 1460 extra per gram (not 146 rs per gram), right? If Rs. 146 per gram is a "VERY HIGH making charge", what would Rs. 1460 per gram be?
#10 Dec 23rd, 2010, 23:13
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  • Nick-H is offline
#10
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Originally Posted by livinhimalayas View Post Wastage in jewellers term is the stuff they use to solder all the little bits together that make the piece of jewellery. Traditionally it is a lower karat gold that is used rather than 22 or 21 normally used to make the jewellery.
I don't think so (but I'm open to correction).

Unless a piece has a vast number of individual pieces, there is a very small percentage of solder. I know that, in UK regulations, there has to be*, because, as you say, it is a lower percentage of gold: That is to do with melting points, rather than tradition, although it is traditional to be very pissed off if the piece melts before the solder does! There is very little wastage of the solder itself, because, after the first few attempts, one learns to use the right amount. Too little means the join shows (it shouldn't, not without a magnifying glass) and too much means time wasted filing off the excess.

The solder that is in the join, of course, adds to the weight of the piece and so gets included in the price.

I have been there, done that, and got the t-shirt --- full of tiny acid holes! But not professionally.


*use too much solder and the piece will no longer pass the assay, which means that not only will they not stamp it, but also that they destroy it before returning the mangled bits to you. It happened to a silversmith friend of mine with an entire case (canteen is the right word) of cutlery. He got compensation from the bullion suppliers, not only for the substandard metal, but also for his time.
#11 Dec 24th, 2010, 08:48
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Nick I don;t know about your experience and will not comment on it but almost all indian pieces of jewelery are made with hundreds of small individual pieces that are soldered together to make one single piece. Every link in a chain is a separate piece that is strung together and then the joins are soldered. Most traditional pieces of jewelery are made this way. So the jewelers claim that as much as 3 - 5 % of a piece of jewellery is soldering. I am no jeweler but have bought enough to know the spiel given by the jewellers to the buyers. And since it has been going on for so long I mean hundreds of years we don;t even question it just accept it as part of the system. Now with the branded jewellery coming in, the system is becoming more organised.

The best part is when you buy the piece, they charge you for the entire weight irrespective of the solder. But when you go to sell it, then the solder part comes into play - I bet it is another way for the jewelers to make money from people blinded by the glitter of gold and its feel against the skin
#12 Dec 24th, 2010, 10:39
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  • nayan is offline
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I agree with Livin.
Thats how it works here. "wastage" is subtracted when you try to sell or redesign a jwellery.

Most highly reputed shops in Kolkata will not charge this "wastage" if the jwellery had been originally purchased from them.
#13 Dec 24th, 2010, 11:00
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  • machadinha is offline
#13
Quote:
Originally Posted by DaisyL View Post This is good advice from Nick. I'm wondering if your friend has much experience buying gold anywhere. If not, buying gold on vacation might not be the best idea. She'll be buying in situations of high sales pressure while possibly being jet-lagged - and if she's not had a lot of experience with gold, this is not a good combination. Just a thought.

However, re-read Nick's quote at the top of this post - good advice.
Yep. Buy yourself a/some nice item(s) if you like, and then don't obsess too much about a few dozen/hundreds Rupees more or less (there is conversely no need to have yourself being robbed blind as you stand there just because you can afford it; and no matter what you do, always shop around some first and including some friendly haggling to get at least some idea of going rates, you can always return to that place you liked and with the seemingly fair prices later. There's also nothing wrong with spreading this process out over days rather than a few hours, certainly if you're about to spend some substantial money; or certainly having just landed, to save the actual buying till later down your trip, when you will have a better idea of things); but if you want to buy in bulk, you're just gonna have to know what you're doing.

Pretty self-explanatory I guess, but it will hold up even more in a place like India than it might in some other places. (If only because prices are just "flexible" by nature, and always arrived at by a mutual process of negotiation. It's not intrinsically evil or because people are "always" trying to "rip you off," necessarily, it's just a different approach. Jewellery in fact might be a lot better here than many other wares, since my understanding is weight is indeed the main determining factor, so now you'll -- basically, there will no doubt be more to it -- just have to know its worth in gold and silver. Whereas manual labor so artisanship is generally just cheap. Which would be those making charges in fact asked for above, I guess -- sorry, I can't tell you A finely crafted piece will no doubt command some premium -- I also think you'll soon be looking at an antique here however so commanding their own premiums again, those intricate styles have just gone out of fashion. I may be off the mark here.)

I've seen people there (foreigners) engaged in the business; they'd typically be carrying their own scales and have some tools on them to gauge carats and stuff. (At least the latter is what I assume they were doing, I'm no jeweller.) They obviously did know what they were doing.

Another thing is I've walked away from jewellers there with them running after me "Best price, best price!," and stuff. (Sellers always do, some might say, but there's a difference in how eager they are about it.) This, or if it takes place in a certain way -- more tea to be had still, etc. --, is always a clear indication your bids have in fact been getting close to being realistic, and a deal is close to being struck -- but in the end they'd never accept mine, and neither of us about to budge. I guess they just know there'll always be a next person to come along and accept theirs.

Certainly in touristy areas, you can observe people readily pulling out their cheque books. There's just no earnest bargaining against that

But so anyway, buy yourself some nice stuff to wear, some presents or souvenirs, sure, and keep your haggling over it friendly. Anything beyond that, and you'll have to take a course in jewellery first or so, I guess. I wouldn't particularly step into a trader's office here in Amsterdam or Antwerp or somesuch and expect to get away with the best of deals being the layman that I am.
#14 Dec 24th, 2010, 14:41
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#14
Quote:
Originally Posted by livinhimalayas View Post Nick I don;t know about your experience and will not comment on it but almost all indian pieces of jewelery are made with hundreds of small individual pieces that are soldered together to make one single piece. Every link in a chain is a separate piece that is strung together and then the joins are soldered. Most traditional pieces of jewelery are made this way. So the jewelers claim that as much as 3 - 5 % of a piece of jewellery is soldering. I am no jeweler but have bought enough to know the spiel given by the jewellers to the buyers.
Ignore the spiel. it is the same stuff, made using the same techniques and the same tools (give or take varying levels of mechanisation, electricity, gas, etc) the world over. Mind you, some techniques have been lost! I'm told that some ancient Egyptian soldering was unbelievably fine, and needs a microscope to detect. They had a granulated surface finish, too, which has only been re-discovered recently!

Only filigree (that jewellery which is made of many, many tiny pieces of shaped wire) qualifies as using a high amount of solder (and a huge amount of labour) --- unless, of course, it is a stamped imitation.

The amount, of course, will vary. In a plain band ring made from wire of the right shape (like a wedding ring) it is negligable, whereas in a piece with many cut-out (pierced is the technical word) designs it will be very, very much more --- so the percentage should vary according to the work!

What would they mean, "3 - 5 % of a piece of jewellery is soldering." anyway? And so what? You are paying a making charge already!

So, the next time you get this particular spiel, look the guy (who is a salesman, and may not have been nearer to a workshop than a car salesman has to the production line) straight in the eye and say... "bollocks."

Wastage is the unavoidable loss of raw material (as in any fabrication process) that occurs when cutting out parts or filing. There will always be some, even though scrap and even filings are preserved carefully. Even polishing removes some metal, which is pretty-much unrecoverable.

Trust me: I'm an [ex-] jeweller

During a major precious-metals price rise around thirty years ago (which, to the extent that my hobby was a business, put me out of business) an old-established UK workshop had their ancient carpet burnt in a specially built kiln. Despite all recovery methods used over the decades (you wouldn't chuck the contents of your vacuum cleaner's bag in the bin if you had a goldsmith's workshop!) a very substantial amount of money was made from this. From my own small workshop, I sold over 1.5 kilos of scrap silver. The cash was nice, but it would have been nicer to go on with the work!
#15 Dec 24th, 2010, 19:06
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  • nayan is offline
#15
Quote:
Originally Posted by Nick-H View Post Wastage is the unavoidable loss of raw material (as in any fabrication process) that occurs when cutting out parts or filing. There will always be some, even though scrap and even filings are preserved carefully. Even polishing removes some metal, which is pretty-much unrecoverable.
Nick,
that is not the meaning "wastage" is used in India. Like I said - it only comes into picture when you are trying to sell the piece to a jeweller - and not while buying.

And bengali style jewellery has a very high amount of filigree work.
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