Selling Gold Or Recycling Old Gold

Home »  Gold »  Selling Gold Or Recycling Old Gold
Selling Gold Or Recycling Old Gold
Keyur Shah - 18 October 2019

In India, consumers do not have a transparent mechanism to sell their gold. People usually sell gold at the shop they purchased it from. Mostly, the supplier first tries to push an exchange scheme, and if unsuccessful, offers an amount as buy-back value, without much details. A bigger challenge for migrant customers is that they are forced to sell their gold to unknown shops in a new city/town, wherein the purity of the gold isn’t usually acknowledged. This non-transparency, especially among unorganised players, leads to a sizeable reduction in the buy-back value for consumers. Hence, it is imperative to empower consumers with information to help them get the best value for their gold.

Gold Purity Assessment

India is far behind in terms of the percentage of hallmarked gold being sold in the market. Most sellers put their own mark on the article, which they may accept when the piece is sold back to them. However, other players may not accept it as a stamp of purity and insist on re-assessment. The traditional method for gold assessment in the market is the touch-stone test. This methodology requires a trained eye, which a qualified assessor may possess. However, for consumers, it is a non-transparent, outdated and subjective method leaving them in no position to argue over the authenticity of assessed value.

XRF machines offer better technology to assess the gold wherein the metal is placed in the machine and the exact purity of gold is determined via a non-intrusive method (x-rays). XRF machines have their own limitations as the x-rays can penetrate the gold article only up to a certain depth; hence, thick items may not be assessed easily/properly. But there are ways to mitigate these challenges such as – taking multiple readings from various points of the article or melting the gold before assessment.

Knowing The Exact Weight

Being a precious metal, every fraction of the consumer’s gold is important and needs to be accounted for. Many unorganised players round off the gold weight to the nearest lower decimal. There are weighing machines that can weigh up to 3 decimal points which should be made known to the consumers.

Selling Price Per Gram

Most shops display only the purchase rate but rarely the per gram rate at which consumers can sell their gold. Like any commodity or forex, there is a buy and sell rate. Hence, consumers should be informed of the rate at which their gold can be bought by these shops.

In case of exchange scheme, it is advisable to select the new gold, and instead of exchanging, sell the old gold separately in a transparent manner, collect the money and purchase the new gold on the same day. This way consumers can be sure of avoiding any losses in the calculation related to exchange i.e. melting loss, conversion of caratage of old gold versus new gold. This also applies at exchange for pure gold coins/bars for jewellery.

From a gold recycling entity standpoint, recyclers should endeavour to bring transparency, standardisation and a scientific platform for consumers to sell their gold. The consumers should be informed beforehand about any service charges. Considering more than 24,000 tonnes of gold are lying in private possession, this is the true way to fulfil the government’s objective of reducing India’s overdependence on gold imports, by recycling the existing huge stocks of gold. Overall, consumer empowerment should be seen as an imperative by all the players in the gold industry along with the philosophy to achieve the macro economic objectives.

The author is CEO at Muthoot EXIM

RBI Liberalises Gold Monetisation Scheme
Gold Prices To Remain Firm In 2020

Related Articles