Akshaya Tritiya 2022: Buying gold jewellery has become easier with hallmarking rules

Buying coins and bars

Investors look for coins and bars to avoid making charges. But National Refinery offers a rough cut gold lagadi (a rough cut gold biscuit) in different weight options that completely do away with making charges. So, if you fall for the coins with images of gods and goddesses like Lakshmi and Ganesh, then remember such coins also involve making charges worth Rs 200-450 a coin.

Gold accumulation plans

The monthly purchase of gold in instalments is termed as the gold accumulation plan or advance purchase plan. In 2014 limitations were placed on private limited companies by the MCA under the Companies Act. A jeweller can offer an accumulation plan for only up to 25 percent of the declared net worth of the company.

“Rules allow us to take savings for 11 months only. The purchase can be made within a year from the maturity date,” says Vinod Hayagriv, Managing Director, C Krishniah Chetty Group Of Jewellers.

So, remember not to park your funds with any jeweller for more than 12 months (11 months of putting in money plus one month’s contribution offered as a discount by the jeweller), even though you may be offered lucrative deals. No returns or interest can be promised, so usually, the last instalment is termed as a discount or waiver under the accumulation plan.

There are options that help you get the best rate of gold over a period by timing the purchase. Look for such options if available with your jeweller. “Even when global gold prices are reducing, rates in India are rising. The fluctuation in metal (gold, silver and platinum) rates, dollar and various other factors such as diamond rates mean that prices don’t always move in tandem. So, we came up with a thousand different combinations to ensure that rates are protected for the consumers,” says Hayagriv.

In simple words, Hayagriv means that a single piece of jewellery might contain various materials, such as gold, platinum, precious stones and so on. Pricing is arrived at by buying different materials on different days to try and keep the overall purchase cost of raw materials low.

Jewellery purchases

While making jewellery purchases, look for the triangular logo of BIS and the amount of gold mentioned in units per 1,000 points. So, an imprint of 1,000 would mean 24K gold; 916 would mean 22K gold and 750 would be equivalent to 18K.

Pay for the Karat that you find embossed on the piece. “If a piece has 18K gold on one side of the jewellery and 22K on the other side, then the hallmarking on the jewellery mentions the lower of the two – i.e. 18K,” says Hayagriv.

Remember that kundan, jadau and polki jewellery, which use stones or abstract shapes, are not yet under the mandatory hallmarking net. Similarly, jewellery purchased at international exhibitions or meant for the jewellery business only is not hallmarked.

To be sure, jewellery is also purchased to be displayed in exhibitions meant for jewellery manufacturers and not customers. This jewellery is not hallmarked.

Online jewellery

Selecting an online jewellery option is convenient but safety shouldn’t be overlooked. “Look for certified credibility, proof of authenticity and service level features that are actually delivering,” suggests Nanda.

With the pandemic, online jewellery purchases have been adopted by many women. But ensuring that the size you wish to buy is what is actually being offered, is difficult when you are just going by the images on your screen. If you are looking to purchase jewellery online, then ask for a real-life reference size.

“To tackle the issue of illusion and size discrepancy, we have started sizing references that are both informational as well as visual. A customer may not always know her size by number but she will know by visual reference of on-body jewellery,” Nanda adds.

After the jewellery is delivered, if the product is found damaged, communicate the same within 48 hours of delivery to avoid replacement hassles.

Digital gold

Refineries such as MMTC PAMP, Augmont, SafeGold offer 24K gold of 99.5 or 99.99 purity through different distributors, such as digital payment service providers PayTM, PhonePe, e-commerce platforms and even jewellers, in the form of digital gold.

The price of digital gold is based on the intra-day price movements of gold in the commodity market and you don’t physically get to experience this gold as it is stored in special vaults hired by refiners. Storage of such digital gold purchases is free for the first five years and later a fee is charged.

There are also concerns linked to the actual purchase of gold being held in the custody of the refiners, due to which stock-market regulator Securities and Exchange Board of India has barred brokers from offering digital gold.

Also Read: Just because it's convenient to buy digital gold, doesn't mean you should buy it

Better alternatives

So, if you’re looking to accumulate gold for a future goal such as a daughter’s marriage or for investment purposes, opt for gold exchange traded funds (ETFs), gold savings funds and sovereign gold bonds.

Gold ETFs are units of gold that can be purchased and sold through the stock exchange. They give you returns on gold metal based on your investment period.

“The cost of acquisition of Gold ETFs is low given the absence of making charges and other related expenses. Gold ETFs offer absolute flexibility when it comes to buying and selling since they are listed on the exchanges, and an investor can carry out a transaction at any point in time during trading hours,” says Chintan Haria, Head—Product Development & Strategy, ICICI Prudential Asset Management Company.

Another option is the government-offering of Sovereign Gold Bonds, which not only provides the option of investing in gold but also offers returns on the stored gold. Says Suresh Sadagopan, founder of Ladder7 Financial Advisories, “Regulated products are best from the investor’s point of view. The Sovereign Gold Bond is a good product from the Government. This is tax-free at the end of an eight-year holding period. Also, one gets 2.5% p.a. returns on the invested amount. That is a bonus.”

How much gold should you own?

Hayagriv suggests that you should own a bit of gold in many forms: physical gold, digital gold, ETFs, collectible pieces, with diamonds, platinum and silverware.

That’s easier said than done. And many financial planners would disagree.

Do not go overboard. “Look at gold from an asset allocation point of view. Allocate around 10-15 percent of your portfolio to gold (excluding physical jewellery),” suggests Haria of ICICI Prudential AMC.