What to look for when buying gold jewellery

A lot of care needs to be taken when buying gold jewellery, especially considering the cost involved. After you have finalized the item that you want to buy, there are several things that need to be considered before you go ahead and actually buy it. Below are list of things we have prepared for jewellery buyers. This will act as a good checklist. If you are a first time buyer or a relatively new buyer, this will be really useful to you.

Make Quality

The first and most important to check when buying jewellery is the make quality. There are several things that determine the make quality.

Gold Purity

Most Gold jewellery items in India are of 91.6% purity. If you have heard of the word “916 KDM”, that is where the 916 comes from. This is also called 22 carat jewellery (22/24 = 0.916, again the same 916 number). However, there are few items which are made with even lower purity, especially diamond jewellery - 18 carat, 14 carat etc. The purity is lowered because it is not easy for 22 carat gold to hold the diamond as 18 carat is more harder than 22 carat.

So check for the carats/purity and see if you are OK with it. But dont expect 100% purity in case of wearable jewellery items as its not possible to mould Gold in its purest form. Its mixed with Copper or partly Zinc to mould it and purity comes down. If you want to buy highest purity gold, go for Gold Coins. You will get the 999 etc coins (these are also called 24 Carat Gold Coins).

Stone/Pearl Quality

Stones used in jewellery come with varying quality, be it CZ, American Diamonds, Ruby, Emerald, Uncut Diamond, Diamond or Gem stones. Diamond and Gem stones are certified but you need to be careful when buying other types of stones which dont come with a certificate. A good jewellery store will always use good quality stones and charge at prevailing market rates (for eg, about Rs 400-600 for Emeralds, Rs 800-1200 for Rubies, Rs 350 for CZ, etc). Make sure you are buying good quality stones as you pay for it and you will not get a good return on low quality stones when exchanged in future.

While jewellery looks beautiful with stones, you dont get the full value during exchange. Even with good quality stones, it is about 75-80% that you get during exchange in the future.

There are few alternatives if you want a similar look and feel at a lower stone cost. For example, use of Green Onyx stones in place Emerald. This will reduce the stone cost by about 60%. Most reputed jewellers dont use Onyx though, they use the actual Emerald stones.

In case of pearls, again they are of varying quality. A good store uses natural freshwater pearls.

Proper stone/pearl/bead fitting

Once you checked for stone/pearl/bead quality, look out for how they are fitted. Sometimes, they are not fixed properly and they come out and fall off. You again have to go back to the store to get it fixed. To avoid these unwanted headaches, check that they are fixed properly. Especially, in cases where the stones are fixed in a way that there is no gold behind it. The stones will be fixed in holes/gaps with gold surrounding it but not supporting it from behind. These type of designs are made to reduce the usage of Gold in the item leading to reduced weight but these type of designs are not the best in holding the stones.

Uniform Shape

A good quality jewellery item will have all stones of uniform shape. Sometimes you have to carefully observe to identify the odd ones out. Again a good quality store will have these properly.

Uniformly applied enamel

If enamel is used in the Jewellery, be it black or any other color, they don’t add extra weight but need to be properly applied. Otherwise they will go off as the item is used and the item will end up with uneven design.

Pricing

After you have shortlisted the item and happy with the make quality, the next is to check for the price of the jewellery item. A good store will provide you with a detailed estimate, either in a printed estimate slip or they write it out for you on a paper and then the salesman will explain the different parts in it to you.

Regular jewellery buyers do not even need an explanation and they get it themselves. If you see buyers using calculators to verify estimate slips, that means they are regular buyers of jewellery and can reverse engineer the overall value added charges and other prices applied.

The estimate will include the following in most of the stores. Some stores do have a varying non-standard calculation (in these cases need to be even more carefully looked at).

Gold price based on Weight

There will be 2 weights that will be provided to you on the estimate - one is the gross weight (which includes the stone/pearl weight also) and other is the net weight (which is the weight of Gold used in its 916 or lower purity form).

The base Gold cost in the item will be Net Weight (in grams) multiplied by the Prevailing rate (eg: if its 22 carat Gold, then the prevailing 22 carat Gold).

Stone Carats

If Gold is measured by its weight in grams, Stones are measured by Carats. A detailed estimate will include the number of carats for each type of stone or pearl. In some stores, especially the reputed ones, the tag of the jewellery item itself contains this breakdown.

Gold Rate

Gold rate varies based on the purity of Gold used in the jewellery. As stated above, most items are made with 22 Carat Gold. Check that the rate is correct against the purity used.

Also the Gold rate varies based on location. The rate in Hyderabad will be different from the rate in Chennai. These days most of the stores in Hyderabad use Chennai rate and Chennai rate is usually lower than Hyderabad rate.

Stone Rate

The stone rate will be based on the stone quality and varies per the type of stone used. The overall price of stones will be the sum of Stone Carats * Stone rate for each type of jewellery used in the jewellery item.

GST

GST for Gold jewellery is now 3% (1.5 CGST and 1.5 SGST). Earlier it was VAT and it was 1%. So the cost of buying jewellery has now increased by 2%.

Value Add (Wastage and/or Making Charges)

Gold jewellery attracts an extra cost that is mentioned as “Value Add” in the estimate in some stores. This includes the wastage charges or making charges or in some cases it is both wastage and making. Whether it is one of wastage or making or its both mentioned to you in the estimate, it finally comes down to the same percentage of Gold cost based on the type of jewellery item.

Machine made jewellery attracts low wastage/making when compared to the hand made ones. Within hand made, a normal design made of mostly plain gold without much stones attracts lower wastage/making when compared to those with stones. Nakshi/Deep Nakshi/Temple jewellery attracts high making/wastage due to the detailed design and manual work involved in making of Nakshi designs.

Here is an example of pricing/estimate of a jewellery item with Emerald and Rubies. Jewellery Weight and Carat details:

Gross weight: 60 gms

Net weight: 50 gms

Emerald: 20 carats

Ruby: 20 carats

Estimate/Pricing:

Gold Rate: 2850

Gold Cost = 50 * 2850 = 142500

Value Add: 12%

Value Added Charges = 142500 * .12 = 17100

Other formula to get above figure is:

Gold cost (including Value Add) = (50 + (50 * .12) ) * 2850 = 159600

Stone Cost:

Emerald = 20 * 400 = 8000

Ruby = 20 * 800 = 16000

Item Cost = Gold Cost + Value Add + Stone Cost = 183600

GST: 3% of Item Cost = 550.8

Total Cost = 184150.8

Standards

Gold Jewellery comes hallmark on the item and certificates for Diamond or some Gem stones. You must you ask for these when buying jewellery.

BIS Hallmark

Jewellery stores are certified by BIS and they get their jewellery hallmarked. There will be 5 parts for BIS Hallmark - BIS logo, Jeweller mark, Assaying Centre mark, Year of marking and the purity info, eg 916 for 22 carat. BIS logo and 916 is what people generally look for.

Stone Certification

Gem stones and Diamonds are certified by GIA, IGI, etc

Exchange guarantee

Good stores tell you what you will get in return during exchange. This information is usually on the reverse side of your bill. You need to carefully read those (something which is generally ignored).