Enter the Web of Retail Trading in Physical Bullion
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I have grown up seeing jewelry shops with the owners sitting in air conditioned shops, wearing extra-ordinary heavy accessories and driving expensive cars. The question that bugged me always was how can they money by selling something at market rate if they are also supposed to but it at market rate themselves?
This is what I have learned after speaking to a Jeweler himself spilling some of the beans of the trade. There are various ways a jeweler earns by selling a gold ornament and we will talk about them here. This source of margin is not a big how to make money in gold trading in india unless there is huge increase in gold prices over the period of buy and sell.
You may or may not know this but all gold ornaments that you buy are NOT made of pure 24 carat gold. Jewelry is mostly made with 20 or lower carat gold and mixing other metals. The difference between 24 carat and the one sold to you is the trade margin i.
Sounds rubbish but have you ever checked the purity of your gold jewelry while buying? This gives us a sense of satisfaction that the gold should be good as the jeweler is ready to buy it himself. This is the biggest catch in this business. As the Jeweler who sold the gold knows its purity, he would be able to buy it back with little doubt.
Example Current Gold rate: INR 20, per 10 gms 1 tola of 24 carat gold Polishing and making charges: INR per gm of Gold. We assume that the how to make money in gold trading in india gold purity in the jewelry is 20 carat. Hence the actual cost of gold should be INR 16, for 20 carat of gold. So, the difference between the actual calculation i. One should clearly mark the gold purity and charge the buyer with correct price.
Unfortunately, this is not the way jewelry industry works in our country and is one of the main reason we recommend buying a BIS marked jewelry. Making and Polishing Charges: Jewelers add these charges on top of the gold rate of the ornament. These vary from INR 50 to per gram of Gold depending upon the quality of gold designer. The jeweler would save money on ornament production as they produce in bulk but charge you the amount per gram. Used Gold purchase or buy-back at a lower rate: Thinking of selling your old gold jewelry?
If yes, you would most certainly go back to the same jeweler you purchased it from. Now, this percentage is again their income as the jeweler will resell the same ornament after polishing at the current market rate. Weight of extras counted in gold weight: And what happens to the weight of these extra while selling it back? They are simply kept out and only gold weight is counted. This is another area of margin for the Jeweler.
What if we buy BIS hallmark jewelry? Yes, BIS hallmark is a good tool to know the purity of gold while buying. I bet you would have not.
This is how to make money in gold trading in india, here a jeweler cannot cheat you with the carat count but still need to make profit. Hence, they will charge higher on polishing, designing and how to make money in gold trading in india charges of the jewelry. Please note that BIS mark does not mean that the gold is 24 carat pure. There are different marks for different levels of purity as:. It can then be sold to any jeweler without worrying about the buy back deductions for obvious reasons.
Business model of a Jeweler trade There are various ways a jeweler earns by selling a gold ornament and we will talk about them here. They stock this gold and sell at a time when the prices have increased. How Jewellers Earn Money.