9 Things You Should Know Before Buying Gold

"Gold is a hedge against economic uncertainty and inflation, and it's also a form of insurance against currency debasement." - Frank Holmes

Gold has remained an attraction for generations for aesthetic purposes, and for the investment value. Gold coins are a great attraction for the investor and the tasteful buyer. They come in different forms and sizes depending upon the utility and price. Gold bars and coins are the most preferred types of variations in shapes. A careful buyer of gold coins for investment or decorative purpose need to ensure seven essential things to provide the value and worth of the gold coins he/she purchase. Gold is something that many Indians buy during festivals such as Akshaya Tritiya, Dhanteras.

The price of gold is increasing. The increase in gold price is mainly due to fresh buying opportunity of the upcoming Diwali festival. Many Indians plans to buy a bar of gold during festival season. Buying gold during Diwali festival is considered as auspicious. They either buy physical gold in the form of gold coin, bars or ornaments or they purchase e-gold via ETF route. If you are also planning to buy gold, please consider the following things. There are some dimensions to be considered while buying gold coin are Hallmarking, Purity, Packaging, machine craft or hand-crafted, denominations, making charges and Brand value of Jewellery store.

1. Gold Price 

The first thing to consider before buying gold is the price of Gold. The price of gold is variable and depending on multiple factors. Make sure that you are buying a gold at a reasonable price. You can check the gold rate from online websites, newspaper, Future exchanges. It is advisable to go through historical gold rate, in case you are buying a gold for investment.

2. Purity 

The most important aspect that a gold buyer has to ensure is the purity of the gold coin or ornaments they purchase. The focus remains that the weight percentage in the alloy and the fineness exists in the gold article. The purity of gold is expressed in carats often represented by ‘K’. The highest form of purity is 24K, and all other kinds are measured in relation to 24-carat gold. Fineness is measured in parts per 1000. It is the percentage of precious metal against the other alloying elements and impurities in the alloy of gold.

3. Hallmarking 

Hallmarking ensures credibility and the validity of the claims of purity of gold coins and ornaments by the manufacturer. The international hallmarking convection mandates that gold percentage in the alloy is above the threshold. BIS (Bureau of Indian Standards), the Government of India regulatory body which maintains the standard issues certificates to gold coins and jewellers that meets that standards of the convention as per norms of Government of India and International hallmarking convention. Hallmarking did by stamping or by laser etching provides identification of purity, identification of Jeweller and the Year of Hallmarking. 

4. Packaging 

This crucial factor increase credibility to the purchaser. Tamper-proof packaging is a must to ensure the purity and fineness of gold coin and item remains intact against adulteration. One should avoid tampered packages since jewellers offer no validity towards claims of less weight or purity in such conditions. 

5. Human-made or machine-made ornaments 

Modern-day technological advancement have entered the jewellery business also and machine-made gold coins and ornaments have lesser price than the traditional handmade items which requires skilled craftsmanship and more extended working hours resulting in higher cost attached to making changes. While machine-made articles in investment options improve authenticity through mechanized hallmarking using laser and stamping facilities, traditional skilled craftsmanship in ornaments and decoration items are highly sought after giving priority to humanmade ornaments. 

6. Making Charges:​ 

Manufacturing procedure will influence making charges levied by jewellers on coins and ornaments. The relative effort and craftsmanship used in making complicate jewellery designs make it cost higher at about 8-10% higher from the actual value of gold, and this makes gold in the form of coins and bars more affordable for investment purpose. Purchase of gold coins can be preferred from machine-made options since it reduces unnecessary making charges 

7. Check for the buy-back policy

Many people sell old silver or gold jewellery to buy a new one. While buying new silver jewellery or utensils, ask the jeweller about the buy-back policy. How much money will you get if you decide to sell the article purchased on a future date back to the same jeweller? For instance, if you have bought silver jewellery of 925 grade than at the time of selling your jeweller will pay you only for 92.5 per cent of silver. Therefore, you should know the various charges that will be taken into account in calculating the sale price of your jewellery. 

 8. Denominations: ​ 

The investment options and the prices factors are crucial in deciding the number of gold coins purchased. Various jewellers and manufacturers offer a wide variety of denominations to customers. The range of denominations varies from 0.5 grams to 50 grams depending on the size and trend of the market. The current rate of small gold coins available for purchase is around Rs.1800-Rs2000/- but is dependent on market fluctuations. 

9. Jewellery Store

The brand value and credibility of the Jewellery store and gold coin manufacturer are vital since there are high chances for adulterations and contamination in the purity of gold coin when purchases are made from a local jeweller with no brand value. Preferably, purchase of gold coin for investment purpose can be made through stockholding Corporation of India attested vendor outlets which may be financial and non-financial institutions. Gold prices fluctuate depending on international prices and financial situations. In India, it is also dependent on the festive and seasonal variations. 

Purchase of Gold peaks in festive seasons making the prices also to soar high. A wise investor in gold will make purchases when the rates are low and when jewellery stores and manufacturers provide various offers during the offseason.