Home / Money / Personal Finance /  Here's how to check the purity of your gold jewellery

Imagine going to a jeweller to sell or exchange your gold jewellery, and finding out that its purity is not of the same level as was promised when you bought it. It’s a scenario that most Indians would have faced. The malpractice is rampant in India, the second biggest consumer of gold in the world after China. One of the reasons is lack of proper certification regarding the yellow metal’s purity.

This is likely to change soon as the government is planning to make hallmarking of gold jewellery and artefacts compulsory from early next year. “The government will issue a notification with regard to hallmarking of gold jewellery and artefacts on 15 January 2020," said Raosaheb Danve, minister of state for consumer affairs, food and public distribution, in a written reply to Rajya Sabha on 6 December.

Globally, hallmarking of gold jewellery is compulsory in a majority of countries. “Consumers park a lot of savings in gold. Also, people often use gold to take loans. So unless the guarantee is not there, it doesn’t serve consumers’ interest. It (guarantee) is there in every country which deals in gold. This will work in favour of consumers," said Somasundaram P.R., managing director, India, World Gold Council.

Hallmarking of gold jewellery was introduced in India by the Bureau of Indian Standards (BIS), India’s accreditation agency that certifies assaying and hallmarking centres, in April 2000. But, as of now, hallmarking is voluntary in India. Out of around 300,000 jewellers in India, only about 30,000 sell hallmarked jewellery, according to Prithviraj Kothari, national president, India Bullion and Jewellers Association.

Absence of hallmarking translates into lack of transparency in terms of purity of gold. “A fair amount of impurities are being sold to consumers right now. This move is in the right direction and was much needed," said Sandeep Kulhalli, senior vice-president, retail and marketing, jewellery division, Titan Co. Ltd. “Consumers will now be assured that the gold jewellery they are buying is certified for purity," said Kothari.

What is hallmarking?

Jewellers have to necessarily get a licence from BIS before they get their jewellery or artefacts hallmarked at any of the BIS-recognized assaying and hallmarking centres. There are 877 such centres recognized by BIS, as of 31 October 2019.

Hallmarking is done through a sampling method, where a few pieces of jewellery in the entire batch are randomly tested for purity.

The purity of gold is measured in caratage. While 24 carats (K) of gold is considered the purest form, it can’t be used for making jewellery as it’s too soft. Hallmarking of jewellery is done in three categories of caratage—14K, 18K and 22K—which are suitable for making jewellery. In percentage terms, 14K denotes 58.5% purity (hallmarked as 14K585), 18K denotes 75% purity (hallmarked as 18K750) and 22K denotes 91.6% purity (hallmarked as 22K916).

The hallmarked caratage and the day’s price of gold can help determine the estimated price of the jewellery you buy. So if the price of 10gm gold of 24K is 30,000 and you are buying 22K jewellery of 10gm gold, its price would be 91.6% of 30,000, or 27,480. The jeweller may add making charges plus taxes to the price of gold.

The changes

“Jewellers who are not selling hallmarked jewellery will be given one year’s time to clear the existing stock. We have made representations to the government to implement (the hallmarking rule) first in metro cities and then across India," said Kothari.

Once hallmarking becomes mandatory, “they (jewellers who have gold that does not fit into the hallmark categorization) may have to melt their gold jewellery, which may result in losses," said Ishu Datwani, founder, Anmol Jewellers, a Mumbai-based jeweller.

There will be no impact on jewellers that are already selling hallmarked jewellery; in fact, they will benefit from the level-playing field. “Many of the smaller players are not hallmarking jewellery. Some of them also work in an unprofessional manner—they don’t buy gold from genuine sources, pay cash to buy gold, don’t pay goods and services tax, and accept cash for selling jewellery. All these things will slowly get sorted, creating a level-playing field for everybody," said Datwani.

Nothing will change for consumers holding gold jewellery that is not hallmarked. They can go to any jeweller and get the purity checked.

Prices may rise

“The cost of hallmarking jewellery is nominal and is currently government-administered at 35 per piece," said Somasundaram. However, the logistics and the time involved may add up to the cost for the jeweller which may be ultimately passed on to the consumers. “The cost is likely to go up as the requirement of working capital for a jeweller may go up as getting the jewellery hallmarked involves time. Also, it will put pressure on the existing assaying and hallmarking centres to service all the jewellers across India," said Kulhalli.

But the price rise may only be a short-term phenomenon, said Datwani. “The costs may go up marginally in the short term but will even out in the long run. Also, more assaying centres will come up as they see the business opportunity," he said.

Even before the government makes it mandatory, it’s best to buy only hallmarked jewellery. After all, you would want to ensure the purity of a piece that may someday become a family heirloom.

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