During my childhood days, one of my dad’s friend was Jeweller. Whenever we used to go for Jewellery purchase, i used to pity on him as i used to think that how this poor chap earn his living. He used to sell gold at market rate i.e. same rate at which he has bought. Now i pity on my thought process as the same poor chap is now richest person of town.
In my opinion, Jewellery purchase is the only domain where females don’t bargain at all and women can be cheated easily. I have closely observed purchase cycle and found out many loopholes in entire chain. It’s very high margin business and customer can be easily fooled to the extent of 35%-40% of total sale value (Which is clean profit margin for jeweller). In my opinion, its not cheating but a fraud in broad daylight. Let’s discuss these points in details
1. Making Charges: The biggest culprit among all. Jeweller can charge making charges upto 40% of sale value. The sale and purchase of Jewellery is a mind game. The Jeweller play with the mind of customer specially females. This is the smartest trick of any trade. If you have observed closely then most of the salesmen try to convince accompanying female member specially in real estate and jewellery purchase. Once they gauge the mind then price is being quoted. You will never find price mentioned on any of jewellery unit. Instead of price, some code is being mentioned so jewellary price is not standardized. Some time back, i visited one of very reputed Jeweller with pan india presence. He quoted price of necklace as 1 Lac Rs. when i asked him price breakup, he became uncomfortable and told me that no one ask for breakup. He was trying to show that as if i am some idiot who has come for jewellery purchase for 1st time. When i insisted, he gave break up as 70k is value of gold and 30k is making charges. He pitched that making charges are just 30% of this beautiful necklace but way to look at it is that for 70k asset you are paying 30k making charges i.e. approx 43%. Now you can image the extent of cheating.
2. Gold Purity: The purity of Gold is measured in carat. 24 Carat is purest form of Gold available but you cannot make any jewellery from 24 Carat Gold. 24 Carat Gold can be held only in the form of gold coin or gold brick. 18 Carat Gold means that it contains 18 part of Gold and 6 part of another metal i.e. 75% purity. Purest form of jewellery is 22 Carat. The Hallmark gold contain Gold Purity seal but to value concious customers, Jeweller pitch low carat gold and charge high. Reason for this is customer has particular budget in mind and jeweller try to fit customer’s requirement in customers budget with low carat gold. In this bargain, he cheat customer on Gold Purity. In small towns, still the Jeweller’s word is final on Gold purity. They sell 18 Carat gold and charge for 22 carat gold. The oral guarantee of Jeweller in small towns is biggest guarantee for customer.
3. You are Paying Gold Rate for Ordinary Stones: Any piece of jewellery is incomplete without colorful stones. When you are buying this jewellery piece then jeweller weigh the entire piece and charge @ Gold Price but have you thought that you are paying the price of Gold for ordinary stones costing few hundred bucks embedded in jewellery. If you go for exchange of same piece then jeweller will deduct the weight of stones as impurity from total value. Assuming these stones weigh 10% of total weight then at the time of purchase, you are paying 10% xtra and at the time of sale, you will get 10% less value. It’s a double loss for customer.
4. Wastage: Normally Jewellers charge 5%-7% of total gold weight as wastage during making. It is different from making charges and it implies the qty of gold wasted during making. Trust me not even a single gram gold is wasted during making as Gold can be melted and used again.
5. Jewellery Cleaning: This is complementary service from Jewellers and as customer we thank Jeweller that he is such a nice human being that he is cleaning jewellery for FREE….Friends, there are no free lunches in this world. For cleaning gold jewellery, the jeweller put the jewellery in one solution which is basically acid. Whenever gold is put in this acid then gold particles are dissolved in this acid. If you weigh the jewellery before and after cleaning then you will observe the difference of a gram or few fraction of same. So if jeweller is cleaning 100 pieces in a month then he can easily extract 60-70 gram gold from acid solution which will cost approx 2 Lac today.
6. Converting Gold Coins to Jewellery: Many people invest in form of Gold Coins from bank or jeweller. If you are selling Gold Coins back to jeweller from whom you bought the same then you will get complete value. But if u are selling or converting Gold Coins purchased from bank to jeweller then no one will buy at market rate. Despite being of 24 carat purity gold coins of banks are accepted @ 20% to 25% discount by Jewellers. Gold coins of other Jeweller’s are accepted at 5%-10% discount. Its a heavy loss for customer and nothing less then cheating.
7. Under Valuation of Gold Jewellery: If you buy any gold jewellery worth 1 Lac today then i can bet and give it in writing that no other jeweller will value the same more then 95k at same gold rate same day. Jewellers tend to undervalue the jewellery purchased from other Jeweller.
I hope that this article will be useful for readers to make informed and correct decision while buying Gold jewellery. You cannot avoid 100% cheating but can minimize the extent of loss by questioning the jeweller regarding pricing.
Copyright © 2011-2013 Nitin Bhatia. All Rights Reserved.
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