All that glitters is hallmarked gold

Reshma Krishnan

EVER wonder if your gold is worth all that money you paid? When you approach another jeweller to sell it, are you shocked when he offers far less than you thought it was worth? How much is your gold worth anyway?.

Till recently, there was no way of judging its purity. But now it is possible -- with hallmarking. This procedure allows you to measure the value of gold products or any other precious metal jewellery by looking at certain marks made on them. This process is called hallmarking.

The two parameters in judging gold's worth are its fineness and purity. Hallmarking is the accurate determination and official recording of the proportionate content of precious metal in gold ware. Assaying is the determination of the content of gold or other precious metal.

The marks made on the precious metal indicate that the jewellery has been evaluated and certified by an official assay office and, that it conforms to national or international standards of fineness and purity.

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Why is hallmarking necessary and how does it benefit your investment in gold?

Ensuring the value of gold and paying the right price is important, especially for the Indian customer. Compare how jewellery is bought in India vis-a-vis elsewhere in the world. Indians buy jewellery traditionally, on the basis of weight rather than design. Therefore, the pricing is based on the weight and caratage of gold, not the design. Practices of buying gold have remained the same over the ages. A `family jeweller' plays an important role in the kind of designs made for special occasions, and is also trusted completely in matters of money.

Today, as a matter of routine, the Indian customer asks for discounts. As each piece of jewellery is priced on the basis of weight, this has a direct impact on the retailer's profit. A jeweller has no control over the prices. Gold price is the sum total of the actual daily international price of gold converted into rupees plus the import duty and the sales tax. The jeweller makes his margin from the ``making charges'' that cover the labour involved in craftsmanship, the design and the wastage. But a jeweller who offers discounts to keep his client satisfied, could also be compromising on the quality of the gold to keep his margins.

As a result, the customer buys gold of unreliable quality that can be a mixture of different alloys, a layer of pure gold, on a core base metal. This practice not only affects the consumer but the retailers themselves, whose goods are rejected in the export market. Consequently, this affects the credibility of the industry. All these problems arise because India has not had a competent hallmarking system or even a regulatory body for gold sales.

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The schemeIn the interest of the consumer and the Government, the Bureau of Indian Standard (BIS) has launched the BIS scheme for hallmarking gold jewellery. The scheme has been introduced on a voluntary basis under the BIS Act 1986. BIS-recognised assaying and hallmarking centres will certify purity of gold jewellery in accordance with the India Standard ISO: 1417 grades of gold and alloys, which is equivalent to the international standard. Jewellers certified by the BIS will have the licence to get their jewellery assayed and hallmarked by any BIS-recognised assaying and hallmarking centre.

The system will work like the British one practised for over a century. Under the Indian system, any jeweller who wants to hallmark their jewellery has to be certified by the BIS. The jewellers' quality management system and conforming test will form the basis of certification.

How does this benefit the customer? Now you can buy a piece of jewellery that is guaranteed for purity and originality. This will help you analyse its true financial potential as a form of investment and help you calculate its value more accurately. It might also fetch a premium price at the time of selling, compared to the jewellery that is not hallmarked. Hallmarked gold can also be traded for equivalent value anywhere in the world as it is benchmarked with an international standard. At a time when gold prices are falling fast, it would be beneficial to buy gold at right prices and of assured quality.

But the scheme has evoked a mixed response, mainly for two reasons: One, there is the feeling that no international standard can replace the guarantee of a family jeweller who may offer to buy your jewellery anytime and at the prevailing gold price. Second, the cost of the jewellery itself. Hallmarked jewellery will cost more. Most big jewellery houses have registered themselves in this scheme. As the scheme is not mandatory, it is unlikely that small jewellery houses will have the economies of scale to adopt this.