Indian Gold Book:Indian Gold Book - Gold Bars Worldwide

JEWELLERY WHOLESALERS
Jewellery wholesalers, acting as middlemen between fabricators and retailers, normally expect to make a gross profit of
2 - 3%. It can be higher if credit is given.
They are normally paid in cash, or in the form of gold. As many major wholesalers also produce jewellery on a speculative
basis (not just in response to orders), their profitability can depend on movements in the standard bullion price.
JEWELLERY RETAILERS
Methods of payment
Retail customers obtain new gold jewellery using one or a combination of 4 methods. In summary:
• Cash payment. Some retailers now also accept credit cards.
• Exchange of old for new jewellery. Its value is credited.
• Supply of bars and coins. The gold content value is credited.
• Supply of old jewellery for refashioning into new jewellery.
Retailers normally communicate a breakdown of pricing elements, although some can be combined and the terminology can
vary. In summary:
Carat gold price
Quoted in rupees per gramme at the appropriate caratage.
Labour charge
Normally quoted in rupees per gramme, although a flat amount can also be quoted.
Wastage charge
Normally quoted as a percentage.
Hallmarking charge
If applicable, a supplementary charge is sometimes levied.
PRICING AND PROFITABILITY
State sales and other taxes
Variable by State and city.
Carat gold price
Carat gold prices per gramme or per 10 g are normally displayed in most outlets. For example, at K22 and K18, and
sometimes K24, K23 and K21 as well.
The price usually reflects that calculated by the local jewellery association. It is based on the prevailing local standard
bullion price per gramme or TT.
The carat gold price is not always directly proportional to the standard bullion price, as it sometimes includes a surcharge
that may also include part or all applicable State and municipal taxes on jewellery, and a contribution to wastage.
For example, if the standard bullion price is Rs 450 per gramme, the quoted K22 price may be Rs 430 (as opposed to a
proportional carat price of Rs 412).
The carat gold price is used as the basis for buying, selling and exchanging jewellery.
Labour charges
“Labour” or “making” charges are normally expressed in rupees per gramme, although for small low weight items (such as
rings, earrings and nose pins), the labour charge can be a fixed amount per item.
In small suburban and rural outlets (usually where the retailer fabricates the jewellery on-site), the labour charge is often a
fixed amount per item. Although the charge can vary according to the weight of the item, the cost is not necessarily
calculated on a consistent rupees per gramme basis.
The tables below can only provide a rough indication of the approximate level of labour charges quoted for different
jewellery categories. The charges, especially at the top end, are inevitably dependent on the intricacy of designs and the
quality of craftsmanship, and whether the wastage cost is included.
AN INTRODUCTION TO THE INDIAN GOLD MARKET 157