If you were looking to add value to your gold investments through physical purchase, the advice would have been to stay away from ready jewellery and opt for coins or bars available in 24-carat gold. But innovative jewellers are now introducing 24-carat gold jewellery. Customers are wondering if these, some of which can be worn, make investment sense as well. Traditionally, Indian jewellery items are made of 22-carat rather than 24-carat gold. Such ornaments contain 91.6 per cent gold and the rest is a silver and copper alloy. This makes these hard to allow for intricate and contemporary designs.
There is a very limited range of machine-made jewellery — chiefly pendents and bangles — that can be made using 24-carat gold. Wearing these is not considered practical; 24-carat gold being soft, the piece may get dented easily. Even jewellers say 24-carat gold should be preferred as investment rather than personal use.
But if one is looking at 24-carat gold as investment only, then it has to be compared to gold coins and bars, too, say experts. While buying 24-carat jewellery, you will have to pay the price of the metal, plus 10-15 per cent more for the making charges. Typically, the making charges for a 24-carat jewellery piece will be at least 10 per cent of the value of gold. So, suppose you were to buy a 24-carat jewellery piece on Monday, you will end up paying Rs 28,765 per 10g as the price of gold, plus Rs 288 per gm as making charges.
If you had opted for gold coins and bars instead, you would have saved on the making charges. For a 10g purchase, the uniform charges would be Rs 50. Jewellers argue that melting of coin takes no extra effort, hence, higher the denomination of coins, lower the charges. “Making charges depend on intricacy of design. Since 22-carat gold design is more intricate than 24-carat’s, customers pay more,” says Sanjay Kothari, vice-chairman of the apex trade body, Gems & Jewellery Export Promotion Council.
While buying 22-carat jewellery, the value of gold will be considered as the current rate minus Rs 400. Besides this, one will have to pay the making charges, which for 10g of 22-carat gold could be anywhere between 12- 15 per cent of the total value of gold. So, one will be paying not less than Rs 325 per gramme as making charges alone.
Even while selling, customers do not get full resale value for their 22-carat gold jewellery. "Jewellers maintain a difference in their sale as well as repurchase price. This is true for every carat, gold coin and gold bar," says Bachhraj Bamalwa, chairman, All India Gems & Jewellery Trade Federation.
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Resale for any gold, even hallmarked 22-carat jewellery, will mean a deduction of the making charges as paid to the jeweller, besides the difference in the jeweller's sale and repurchase price. Jewellers normally have a difference of four-five per cent between the sale and the repurchase price. The difference is lower, by two-three per cent, when it comes to selling 24-carat gold coins and bars.
| PAYING FOR THE YELLOW METAL | |||
| 24-carat jewellery | Gold coins | 22-carat jewellery | |
| Purchase cost | Current gold price + making charges (10-15 % of total value) | Current gold price +making charges (2-5 % of the total value) | Current 22-carat price making charges (12-15 % of the total value) |
| Deductions from price during resale | 4-5 % | 2-3 % | 4-5 % |
| Source: Industry | |||
Detractors like Bamalwa say that both in terms of personal use and resale options, one should be looking at other traditional options that may end up being more practical. For pure investment purposes, coins and bars may still be your best bet.