Gold has been a mainstay of Indian culture for thousands of years. The population has been accused of hoarding gold throughout the ages, and more so now that the economy is improving and more and more people are financially capable of buying gold as a form of secure investment. An interesting fact about gold demand in India is that almost 2/3rd of the overall demand is steered by the rural populace who tend to hedge against inflation through investments in gold and to some extent silver.
India has been importing gold to cover the demand for the yellow metal inside the country. In fact, gold imports are the second largest source of current account deficit (CAD) of the country, coming close at the heels of oil imports. Seeing that we are already buying huge quantities of gold, here are a few tips to buy gold smartly:
Check the Prevailing Gold Rate in Your City
This may sound elementary but you would be surprised by how many people tend to skip over this step. Gold rates are different for different cities as each city will have its own charges on gold apart from the transportation cost of importing gold into a city. You can use BankBazaar’s daily updated gold rates for most cities in India to get an idea of where prices stand at the moment. A point to note here is that gold rates in cities are updated twice daily – once in the morning and once in the evening.
Hallmarked Gold is the Way to Go
Gold is certified for its purity by the Bureau of Indian Standards or BIS, and checked gold is called as Hallmarked gold. The BIS, through one of its assaying centres, certifies the claimed purity of gold and engraves the purity level (916, 958 etc.) along with the name of the retailer on the gold product to ensure that customers are not duped. Always look for hallmarked gold when going gold shopping.
The BIS is limited in its reach with around 331 assaying centres spread through the country. As such, you should be extra careful when purchasing gold jewelleries from your neighbourhood jeweller. The BIS has been enabled to conduct surprise checks on gold sellers, but seeing the limited resources at its hands, it is advisable to opt for one of the BIS certified jewellers only.
Read through the Fine Print
Jewellers tend to incorporate wastage or making charges on the final product. This can be expected from them as gold jewelleries come with the added charges of craftsmanship done on raw gold. But you should ensure that the additional charges are not out of line. A simple way to go about doing this is to calculate the per gram amount that you are actually paying for the piece.
For instance, you purchased a gold necklace made with 20 grams of 22 karat gold that has cost you Rs.60,000. So you are effectively paying Rs.3,000 per gram of 22 karat gold. Check this figure with the prevailing gold rate in your city and decide if the charges are too high or not.
Check the Resale/Exchange Value
Gold is more of an investment than a casual purchase. It is imperative that you clear out things such as how much will your jewellery fetch at a later day if you were to sell it. Jewellers nowadays accept gold jewelleries at prevailing rates of gold in the city, shaving off the wastage or workmanship costs that you paid while purchasing. This is still a good deal and you are advised to check beforehand with your jeweller if he is going to buy-back or exchange the jewellery at a later date.
Indulge in Transparent Buying
With the government en route to implementing the compulsory requirement of Pan details for all purchases made above Rs.1 lakhs, you may soon be forced to buy gold products that can be tracked by the authorities. This measure has been taken to ensure digitization of the economy as well as transparency in financial dealings so that black money can be brought into the fold of legal economy. This has another benefit – with a certified bill of purchase you are covered for any contingencies that requires return of the article in question.
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