Purity: The Foundation of Value
The first point of difference is purity, measured in karats. Gold coins are typically sold as 24 karat (24K) gold, which is 99.9% pure, making them the purest form of physical gold available. This standardisation makes their value easy to calculate based
on the day's market rate. In contrast, gold jewellery is usually made from 22K or 18K gold. Pure 24K gold is too soft for crafting durable ornaments, so it's mixed with alloys like copper or zinc to enhance strength. While this is necessary for wearability, it means that gram for gram, jewellery contains less gold than a coin, which directly impacts its base resale price.
Making Charges: The Unrecoverable Cost
Perhaps the most significant factor affecting resale value is the 'making charge'. This is the fee jewellers add for the craftsmanship, labour, and design of an ornament. These charges can range anywhere from 5% to over 25% of the gold's value, depending on the intricacy of the design. When you buy jewellery, you pay for both the gold and the artistry. However, when you sell it, these making charges are almost never recovered. The buyer is only interested in the raw gold content. Gold coins, on the other hand, have minimal to no making charges, ensuring that the price you pay is almost entirely for the metal itself.
Resale Deductions and Wastage
When you sell gold jewellery, jewellers will deduct a certain amount for 'wastage' and other impurities. Wastage charges account for the small amount of gold supposedly lost during the manufacturing process. Additionally, the weight of any stones, enamel, or wax in the piece will be deducted. These factors combined mean that the final resale value of jewellery can be 10-15% lower than its purchase price, even if gold rates have risen. Gold coins, being of certified purity and standard weight, face far fewer deductions. Reputable sellers and banks often have transparent buy-back policies, offering a price very close to the prevailing market rate.
The Role of Hallmarking
The Bureau of Indian Standards (BIS) hallmark is a crucial certification of purity for both coins and jewellery. Since 2021, hallmarking has been mandatory for gold jewellery in India, which helps protect consumers and ensures a standard of quality. A hallmarked item, whether a coin or a necklace, assures the buyer of its gold content, making the resale process smoother and more transparent. Selling non-hallmarked gold can result in buyers offering a lower price to account for the risk of impurity, so always insist on BIS-hallmarked products to secure a better resale value.
GST and Other Taxes
When purchasing gold in India, you pay a 3% Goods and Services Tax (GST) on the value of the gold and a 5% GST on the making charges. This tax is paid at the time of purchase but is not refunded when you sell the item as an individual. This effectively adds to the initial cost, which you need to overcome through price appreciation before making a profit. While this applies to both coins and jewellery, the impact is greater on jewellery due to the additional GST on higher making charges.
