Buying Gold Jewellery? - Know the facts first

12 Apr 2012

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Generally, I do not prefer Gold, in fact, my engagement ring is the first gold ornament in my body. It’s a custom in India for the bride & groom to wear Gold Jewels during the wedding. I had no options but to buy. I head out to “Joy Alukkas”. I was discussing the Gold Jewelry Business in India, with the floor manager and I am surprised to know that majority of the people does not even understand the basics. In fact, my parents were cheated by “L.K.S Jewellers” when they bought 916 KDM Gold Rings a few years back. So, this blog may be a beginner’s first-hand information, when you buy Gold Jewels in India.

I would like to explain few technical jargons related to Gold Jewels…

Carat (K): Its the unit of purity of gold. As per the calculation below, 24K Gold is nearly 99.9% pure gold. 24K Gold is suggested for Golden Ornaments of more than 10 Sovereigns and remember there is no guarantee for the Jewels, since they may lose the shape even with normal usage.

Gold Carat Calculation

916 KDM (or) 22K Gold: Most of the Gold Jewels made in India are of 22K Gold. Cadmium or Kadium (KDM) use to be one of the metals mixed with Gold to make it strong so that beautiful intricate designs can be made. Cadmium is safe in the finished gold products, but very dangerous in the manufacturing process. Some countries banned Cadmium to be used in gold ornaments. In that case, the alloy would be the combination of Silver, Copper, and Zinc. (The % of these metals varies, depends on the manufacturer). 916 KDM Gold is a gold alloy of Gold and (Silver + Copper + Zinc) with roughly 91.6% of pure gold which is 22K Gold. Though we do not use Cadmium in most cases, we still use the name KDM. Look at the below calculation.

Gold Carat Calculation 22K

18K Gold: 18K Gold is 75% of pure Gold and 25% of other metals. Using the above formula, you can decide the percentage of pure gold in your gold ornaments.

BIS Hallmark: The Government of India formed the Bureau of Indian Standards (BIS) in the year 1987, which is the only institution in India, authorized to hallmark golden Jewelry. The Jewellers has to obtain a license from BIS for a fee and hallmark the jewel they make with BIS logo. BIS maintains market surveillance on the certified jewelers, on a random basis. Market surveillance involves a collection of Hallmarked Gold Jewelry from licensee’s retail outlet/manufacturing premises and having it tested for conformity in BIS recognized hallmarking center. Deviations in the degree of purity of gold and operation not in conformance to the system may result in cancellation of BIS license.

BIS hallmark Logo

Most of the Gold Smiths print the word “916” or “916 KDM” on the Jewels without the logo. Many jewelers will show you these printed numbers and claim that they are 916 KDM Jewels. Do not listen to the jewelers. Just look for the above logo. If you do not find the logo in the Jewels, it means that the specific Jewel is NOT verified for the purity of gold and you are being cheated.

Please purchase the Gold Ornaments, ONLY if it is hallmarked with BIS logo.

Sovereign: It is actually a gold coin of United Kingdom issued way back in 1817, which is valued roughly at one Pound Sterling. The weight of the gold coin is roughly 7.988052 grams. Even after the British left India, we still use the term “Sovereign” as a unit to measure gold jewelry.

1 Sovereign = 8 grams of Gold.

Wastage Charges: When the Gold Smith makes the gold jewel, it is assumed that some portion of the gold is wasted. Technically he recovers everything from the chemicals, the “assumed wastage” of gold is charged to the customers.

Making Charges: The charges you pay to the Gold Smith to make the Jewel out of raw gold.

Hallmarking Charges: BIS certified Assaying and Hallmarking centers hallmarks the gold for Rs.25 per gold ornament. (As of August 1st, 2012). You don’t need to pay that amount. It should already be covered in any of the charges above. If you are being asked to pay more than Rs. 25, please tell the Jewellers that you would pay the amount but would need the bill to explicitly mention the BIS hallmarking charges and the Assaying center’s name and address and you would register a complaint with BIS for this.

What percentage you can give? nowadays, the Jewellers combine both the charges into one, (either wastage or making charges) so that you feel you are being charged less. Just a psychological effect. With the information collected from my friends in Bangalore, Chennai and other parts of Tamil Nadu, I can conclude that the combined charges of …

Less than 8% – You are brilliant in negotiation. Please teach me the tricks!
8% - 10% – Average.
10% - 13% – The maximum you should give, however, complicate the design is.
More than 13% – You are being cheated.

It was like this when we bought Thali Kodi for my wife and a Short Chain for me. I saved my hard earned money of Rs. 3,816 from the Jewellers.

Person Thali Kodi Short Chain Time Taken
Salesman 13% 16% 5 Minutes
Manager 10% 13% 5 Minutes
Manager 9.5% 13% 10 Minutes

Remember the below

While Exchanging Gold

We decided to exchange the unused rings and bangles for the new gold. Joy Alukkas charged 1% of melting/usage charges (?) on the gold while exchanging. I was surprised. I argued with them that these are KDM jewels and I won’t pay a single paise. The manager told that he would accept the jewels from Joy Alukkas without melting charges, but not from other jewelers. After negotiating for a few more minutes, he agreed to take the gold for exchange without any charges.

Things to remember while exchanging gold

Once this is settled, another surprise was waiting for me. One of the Golden Ring (1 Sovereign) that my dad purchased from L.K.S Jewellers many years ago, with the printed word “916 KDM” failed in the purity test. It had only 80% gold and the rest was mixed with Silver!. This jewel is from one of the established Jewellers in Chennai. Hard to believe right?. Joy Alukkas melted the ring and showed the proof in the purity meter. Here is the picture.

LKS Jewellers Cheat

My Dad used to buy most of the jewelry from one of the showrooms of L.K.S Jewelry since it was close to our house. My dad trusted the jewelry shop so much that every single jewel in our house is from that shop. But, L.K.S Jewellers cheated my dad and lost a loyal customer.

Many people that I know, would bargain with street vendors, fish markets etc for few rupees, but reluctant to bargain in a Jewelry shop. My mom is one of them. Why is that?. A couple of reasons, that I came to know.

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