Mint Money advises investors to buy gold in paper form—exchange-traded funds or gold funds—for investment purposes. If you buy gold jewellery, you have to contend with the making charges and establishing its purity may be difficult; then there are buy-back issues too.
But if you must buy gold jewellery for a wedding or gifting purposes and high prices are a deterrent—gold is around Rs.30,000 per 10g currently—there are ways through which you can cut costs.
When gold is designed for your needs, the finished jewellery comes with making charges attached to it. Making charges are nothing but the amount that you pay for the labour involved for making a piece of jewellery.
Labour charges are a percentage of the current gold price. This means higher the price of gold, higher would be the making charges.
Fixed making charges: Some jewellers offer fixed making charges on purchase of ornaments in bulk. So, if it’s a family wedding, you may want to buy all the jewellery from a single store and avail the facility of fixed making charges. This is usually beneficial as making charges in percentage terms would keep increasing with every hike in the price of gold.
Machine-made ornaments: Every ornament has different making charges. Generally, bangles and chains attract the least making charges; between 6% and 14% of the cost of gold. This is because some of the designs in bangles and chains category are mass produced and machine-made. As they are machine-made, the making of certain pieces of jewellery requires comparatively less labour.
Says R.K. Nagarkar, chief executive officer, Tribhovandas Bhimji Zaveri, “If there is more intricacy involved in the designing of the jewellery, then the making charges will be higher.” For instance, earrings and lightweight gold items with delicate work attract labour charges in the range of 20-25% of the cost of gold.
So if you are planning to gift gold jewellery to a relative or friend, machine-made jewellery may be cheaper than a piece with intricate design.
Opportunity to bargain: Since making charges differ from jeweller to jeweller and is not organized as such, it gives you an opportunity to bargain.
Says Ashok Minawala, former chairman, All-India Gem and Jewellery Trade Federation, “A customer can request for a discount in the making charges if accepted by the company. Generally, a 5-10% discount may be offered.”
However, some branded jewellery stores have fixed prices for their jewellery items as a policy. Says Sirish Chandrashekhar, senior marketing manager, Tanishq, “We don’t have discounts on making charges, except for special occasion offer.”
Avoid buying jewellery studded with stones
Unknown costs: When you buy jewellery studded with precious or semi-precious stones, the jewellery is weighed along with the gold and you are charged accordingly. The jeweller may give you a break-up of the price of gold and that of the stones used but you will have to take the jeweller’s word for the exact weight of the stones. So if the gold part in a studded jewellery weighs 50%, you have no way to ascertain that and you may end up paying more for the gold part and less for the stones, if they are semi-precious. The opposite can happen if it’s a precious stone that costs more than gold.
No guarantee of purity: There are various ways to check the purity of gold, but it is not easy to check the purity of stones, especially semi-precious ones.
Loss at the time of sale: While you have to forgo the making charges of all jewellery pieces at the time of sale, in studded jewellery, the stones are actually taken out to determine the weight of gold used. If you were cheated at the time of buying, your loss may increase at the time of selling. Moreover, stones that are not precious fetch you zero returns.
High making charges: Most studded ornaments involved intricate patterns and designs. Hence, the making charges are usually higher compared with a pure gold piece.
Things to keep in mind
Check for purity: No matter from where you buy your gold jewellery, get a purity check done. Most jewellers have purity machines installed in their stores for purity check. You can get it tested before buying.
Always insist on hallmark jewellery so that you have a guarantee about the purity of gold. Says Mehul Choksi, chairman and managing director, Gitanjali Group: “Always buy jewellery that is hallmarked by the Bureau of Indian Standards. Unless it is a hallmark jewellery one can’t guarantee the purity of gold.”
Buy-back: You would never want your daughter to sell the jewellery you gifted her for her wedding. But it is possible that she may want to exchange the piece for a modern design in the future. You must keep the receipt of the piece mentioning the weight of the gold. If you go to the same jeweller, he may give you the entire amount for the weight mentioned. However, if you take the piece to another jeweller, he would first check the purity of gold and then decide its resale value. Also, all jewellers deduct making charges at the time of sale.