Indian Gold Book:Indian Gold Book - Gold Bars Worldwide

Hallmarking charges
The few hundred retailers that currently sell hallmarked jewellery either absorb the cost or increase the labour charge. For
example, by Rs 5 - 15 per gramme.
Authorised hallmarking centres can set their own charges. For example:
Below 20 g Rs 50 per item (US$ 1.00)
Above 20 g Rs 75 per item (US$ 1.50)
For most retailers hallmarking is an expensive exercise, when obliged to operate competitively at low retail margins. The
hallmarking cost for a pair of small earrings (2 items) would be Rs 100.
A retailer is also obliged to recover the annual BIS certification fee of Rs 25,800.
Exchanging old for new jewellery
If the old jewellery had been bought from the same retailer.
The customer is normally credited with the quoted K22 carat gold price per gramme, if it had been sold as K22 and
cadmium solder had been used.
If it had been sold as 22/20 (i.e. a low caratage solder had been used so that after melting the residual gold content would
be 10% less than the original weight of the jewellery), the K22 carat gold price per gramme would normally be reduced by
3% or more. The credited value would then be set against the price of the new jewellery.
If the old jewellery had been bought from another retailer.
The old jewellery would be assayed using a touchstone. As the caratage often turns out to be less than the declared
caratage, an appropriately lower carat gold price would apply.
In addition, there would be a further reduction: around 10 - 20% if the solder is non-cadmium, and around 8 - 10% if the
solder is cadmium (or high caratage).
Supplying old jewellery for refashioning into new jewellery
Under this system, often used in suburban areas, small towns and villages, gold in any form (but usually accumulated old
jewellery) is given to a local retailer or fabricator so that it can be refashioned into new items.
The customer can hand over sufficient gold to cover all fabrication costs (i.e. labour and wastage charges). Or he can pay
for the fabrication costs in rupees.
The prevailing carat gold price is irrelevant to the transaction. The actual caratage of the old and new jewellery is not
necessarily an issue.
In rural areas in particular, this can be the cheapest way in rupee terms to obtain new gold jewellery provided the goldsmith
does not reduce the caratage or retain any recoverable wastage. Customers sometimes watch him as he fabricates the new
jewellery.
Selling back old jewellery for cash
If the old jewellery had been bought from the same retailer.
Using the carat gold price, the retailer first calculates its value at the caratage at which it had originally been sold, and then
reduces it according to his own declared formula. For example:
Around 5% if the solder is cadmium (or high caratage).
Around 10% if the solder is non-cadmium.
PRICING AND PROFITABILITY
If the old jewellery had been bought from another retailer.
Most retailers tend not to buy back old jewellery from customers with whom they have not dealt in the past. In the event
that they do, the price would tend to be low, often 10% or more below the standard bullion price.
Studded gold jewellery
All retailers observe that studded jewellery is more profitable than plain gold jewellery.
While gross profitability (after fabrication costs) on plain gold jewellery is reported at around 10%, diamond and other
studded jewellery can yield 15 - 20% and often much more.
Retailers normally advise customers of the breakdown in the cost of diamond (and other precious and semi-precious)
jewellery: weight of gold, cost of diamonds, labour charge and taxes.
Retailers will exchange old for new diamond jewellery. The customer would usually receive the prevailing break-up value,
less the labour charge. However, retailers will normally only buy back diamond jewellery if it had originally been bought
from them. The price would be based on the prevailing break-up value, less 15 - 20%.
Staff costs
In metropolitan cities, wages for counter staff (often 20 or more in large showrooms) are reported to range from less than
Rs 5,000 (US$ 100) per month up to Rs 15,000 (US$ 300).
AN INTRODUCTION TO THE INDIAN GOLD MARKET 159