When you think of India, gold isn't what necessarily first comes to mind. However, it's one of the most sought after items there and Indians adore it. Gold is part of every Indian household and is an integral part of religious ceremonies. It's commonly bought as a form of investment due to its ever increasing price. There's no bigger status symbol than gold! And, the gold is not the usual 18 karats either. Most of it is a fine 22 karats, with a deep yellow gleam. If you're wondering how to buy gold in India, take a read of this guide.
Know the Purity
The value of gold comes from its purity, measured in karats (Ks). It's most often found in the following forms:
- 24K gold -- is the most pure form of gold. Practically, it's 99.95% pure (99.99% pure gold is difficult to find these days). For investment purposes, this is the best gold to buy. It's not used to make jewelry though, as it's too soft to be molded into intricate designs and maintain its shape.
- 22K gold -- is used to make most jewelry in India, and the designs are so intricate and elaborate! It's 91.67% pure gold (22 parts gold and two parts other metals), with the remainder comprised of silver, zinc, nickel, and other alloys. This gives it additional firmness. Yet, it's still not firm enough to hold gemstones.
- 18K gold -- is 75% pure gold (18 parts gold and six parts other metals). It's noticeably duller in color than 22 karat gold and much less expensive. Its durability makes it useful for studded, special occasion jewelry.
- 14 K gold -- is 58% pure gold (14 parts gold and 10 parts other metals). It's more popular in the United States than 18K and 22 K gold, due to its blend of color and strong durability, and is used for everyday jewelry.
It's important to be aware that local jewelers in India frequently cheat customers by selling 22 karat gold jewelry at 24 karat gold rates.
Purity is the biggest concern when buying gold in India. All that glitters is not always gold! Fortunately, the Bureau of Indian Standards (BIS) has set limits as to how much of each metal can be mixed with the gold in order for it to retain its purity. The BIS operates a hallmarking scheme, whereby representatives visit jewelers and assess gold quality. If it meets the standards, the jeweler is granted a license. This enables them to get their gold jewelry hallmarked for purity, after extensive testing, by BIS-recognized Assaying and Hallmarking Centers in India. The gold hallmarking was revised effective from January 1, 2017, and has four parts.
- BIS triangular stamp.
- BIS hallmarking center logo.
- Jeweler's identification mark of BIS certification.
- Purity in karat and fineness. Hallmarked gold jewellery is now available in three grades, with the following numbers: 22K916 = 22K, 18K750 = 18K, and 14K585 = 14K. Prior to January 1, 2017, the numbers were as follows 958 = 23K, 916 = 22K, 875 = 21K, 750 = 18K, 585 = 14K, and 375 = 9K.
Currently, it's estimated that around 30-40% of gold jewelry is hallmarked in India. However, the Indian government is planning to implement mandatory hallmarking of 14, 18 and 22 karat gold jewellery weighing more than 2 grams.
Jewelers in India try and mislead customers by telling them hallmarking is a huge expense that increases the cost of jewelry. Actually, it only costs 35 rupees to get a piece of gold jewelry hallmarked. If the gold isn't hallmarked, it's most likely not as pure as claimed. Don't be tricked by big name jewelers!
Check the Price of Gold
India does not mine gold. All gold supplies are imported from overseas by certain authorized banks. This means the price of gold in India is greatly influenced by international prices and currency fluctuations.
Before buying gold, always check the per gram price -- it changes daily (except Sundays when there's no trading).
The banks supply the gold to distributors, who provide it to retailers and jewelers. The price of gold varies in different cities, as it's decided by various associations of gold jewelers. You'll find that the largest and most reputed jewelers almost always sell at the same rate. Their making charges may be higher though. Hence, it's a good idea to carryout comparisons between showrooms.
You can also check gold prices on reliable websites, such as Good Returns.
Do the Calculations
The price of jewelry, in addition to the per gram price, will usually include wastage and making charges. If you're interested in a piece of gold jewelry, make sure you determine how much gold you're really getting for the price you're paying.
For example, if the asking price is 35,000 rupees for a 10 gram gold chain, you'll essentially be paying 3,500 rupees per gram. Check this against the actually per gram price for the gold on the day, and see how much extra you're bring charged.
Where to Buy Gold
If you want to buy gold purely for savings and investment, pure gold bars or coins are the way to go. While it's possible to get gold bars at a cheaper rate than smaller gold coins, the catch is they're not as saleable. Some prominent Indian banks, such as ICICI and Axis Bank, sell pure gold online to their customers. Be aware that they charge more than market price and will not buy it back from you though!
Other credible online sources of gold coins include Tanishq, which is owned by the respected Tata group.
However, the most common and cost-effective way of buying gold is from retail stores. There are only about 13,000 BIS licensed jewelers in India. It's not a legal requirement to be licensed, and some jewelers claim they are when they in fact aren't.
Many cities in India have specialist gold markets where you'll find numerous stores in one area. In Mumbai, head to Zaveri Bazaar (opposite Crawford Market), which is the oldest and largest gold market in India. In Delhi, Karol Bagh and South Extension have many gold jewelers. In Chennai, try the gold stores in T. Nagar. In Bangalore, gold is plentiful on Commercial Street and nearby Dickenson Road. Also check out Raja market in Bangalore's Chikpet area.
Note When Demand for Gold is Highest
There are a number of festival occasions on the Hindu calendar that are considered to be particularly auspicious for buying gold. Demand increases significantly on those days, often driving the price up.
The most auspicious occasion is Dhanteras, the first day of the five day Diwali festival. On this day, all metals and especially gold are worshiped. Other important occasions include Akshaya Tritiya, Navaratri, Dussehra, Ugadi/Gudi Padwa, and Makar Sankranti.