How the Value of Gold Jewellery Is Actually Calculated

When people hear two different figures for the same set from two counters, they usually assume one of them is cheating. More often, the two are measuring different things. Understanding the pieces of the calculation removes most of that suspicion.

Purity, in karat and fineness

Pure gold is 24 karat. Jewellery is rarely pure, because pure gold is too soft to hold a shape, so it is alloyed. 22 karat is roughly 91.6 per cent gold, 18 karat is 75 per cent. Hallmarked jewellery carries the fineness stamped on it — 916 or 750, for example.

A hallmark is a useful starting point, not a substitute for testing. A responsible counter will still cross-check.

Gross weight versus net weight

Gross weight is everything on the scale. Net gold weight is what remains after the parts that are not gold are excluded — stones, beads, kundan setting, lac filling, thread, sometimes the clasp.

This is where the biggest surprises happen. A heavy stone-set necklace can carry far less gold than its weight suggests, while a plain chain of the same weight is almost all gold. Neither is anyone's fault; they are simply different objects.

Putting it together

• Establish purity for each item, since a set may mix purities.
• Weigh each item and subtract non-gold material to get net gold weight.
• Apply the prevailing rate for that purity to the net weight.
• Any deduction beyond that should be stated openly and explained.

What does not come back

Making charges, wastage and GST paid at the time of buying are part of the purchase price, not part of the gold. They do not return when the jewellery is sold. Expecting the original bill amount back is the most common disappointment in this trade, and it has nothing to do with the buyer in front of you.

If you want to see this worked out on your own jewellery, bring it to Bharat Gold in Rayachoti. The weighing and testing happen at the counter and each figure is explained as we go.