Whether you cherish it as a wise investment, a magnificent accessory, or a precious family heirloom, understanding the value of gold jewellery makes you appreciate it even more. After all, gold is not just a legacy piece or a pride giver, it also gives you a sense of financial security. In the East, it is a prized possession that women love to see in their closet.
Knowing the factors that add to this value can make you better perceive their worth and help you make purchase decisions. However, the question that arises here is - do you know everything about the value of gold jewellery? Do you know how to calculate gold prices?z
Read More: Understanding Different Types Of Gold Carats
Here, we are demystifying the math behind it so that you can start calculating the value of gold jewellery. Know the reason behind the rise in gold price, what is the gold calculation formula and most importantly, how to find whether the gold is pure or not. So, as our readers, it's our foremost duty to clear these doubts and let you know everything about every single concept related to the value of gold jewellery, from the legal smart to how much you may ask for it in the market based on craftsmanship and design.
Understanding Gold Purity
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Gold purity means the fineness of gold usually in karats (KT/K) denoting the percentage of pure gold in any gold jewellery piece or an object of gold. 24 carat gold is in its purest form whereas the gold usually traded is of lesser purity – 22 carat or 18 carat or 14 carats. As 24-carat gold is too soft to be used in normal forms, that is why it is mixed with silver, copper, or zinc to improve its strength. These alloys have the implication of altering not only the hardness and color of the gold but the material value thereof for different purposes.
Read More: Why Buy Physical Gold? 15 Reasons to Invest in Physical Gold
Demystifying Karats (KT): A Guide to Gold Purity
And so, when you visit jewellery stores you should take note of the Karat System. This is the most common method whereby the purity is defined by the number of karats and the purest form of this precious metal is 24 karats. Here’s a breakdown of the common karat ratings:
24K Gold: 24-carat gold – usually minted into coins, but not suitable for everyday wear because of its extreme softness and value.
22K Gold: Contains 91. 67% pure gold –Slightly alloyed for added strength and is primarily used in crafting jewellery pieces.
18K Gold: It is a combination of 75% pure gold with 25% additional metal; this means that the coin is around 75% gold which shows that this coin is more durable and less expensive than the other gold coins and suitable for jewellery.
14K Gold: Comprises of a total of 58.3% pure gold alloyed with 41.7% silver or copper. It is known for its high strength and economic value and is suitable for wear as pieces of jewellery in day-to-day activities.
10K Gold: Contains 41.7 % pure Gold – with a high ratio of alloyed metals calculated at approximately 58.3%. This is the hardest and relatively cheapest option in gold jewellery.
The Ever-Changing Market: Understanding Gold Price Fluctuations
Without a shadow of a doubt, gold is a representation of wealth and security amidst the difficult economic situation. Therefore, whatever position you are taking as an investor, collector, or consumer of the precious metal, you should remember that the price of gold varies because of several factors, not just one. Let’s explore these factors and learn deeply about their involvement in drafting the fluctuating gold price.
Read More: Choosing the Right Gold: Comparing 10K, 14K, 18K, 22K ,24K
What Drives Gold Price Fluctuations?
Mark the calculations for the jewellery piece you wish to buy
- Economic Indicators: Generally gold prices also react to various economic benchmarks like level of inflation rates, interest rates, and economic growth figures.
- Global Geopolitical Events: The potential for conflict and tensions may also result in higher gold demand.
- Currency Movements: The prices of gold also directly depend on the US dollar. The reason why investors demand a higher gold price is that the dollar is weak, and thus gold becomes less expensive for consumers using other currencies.
- Supply and Demand Dynamics: Such as changes in mine production and recycling of gold as well as gold demand from the jewellery, technological, or investment sectors determine the price of gold.
- Central Bank Policies: Central banks of the majority of countries across the world hold significant amounts of gold and their gold buying and selling decisions can impact the prices of gold.
Read More: What is 916 Gold? Purity Standards for Gold
Gold Making Charges Explained
Additionally, one of the main factors that contribute significantly to the final price tag of jewellery like gold chains is the making charges. These charges can often be a source of concern and confusion to the buyers but these charges are necessary in the understanding of the total cost of gold jewellery. Goldsmithing is the term used to define the price of processing raw gold or producing jewellery from it. In these cases, the charges reflect a wide range of costs including the workmanship, man-hours spent, design, and sometimes even the cost of the tools and machinery used in the production. The cost of the gold itself is based on the weight and purity of the gold while making charge will vary according to the labour and effort involved in crafting the jewellery
Read More: Why Gold Matters:Everything You Need to Know?
Unveiling the Cost of Craft: What are Gold Making Charges?
As mentioned, gold-making charges are directly related to the cost of craft which explains that you are not paying for the weight of gold that you have bought, but for the work of the artisans who were involved in the entire jewellery-making process. The process of designing gold jewellery is not an easy job and it requires great skill and experience, so people who work their edges off to design unique pieces of magnificent gold jewellery are paid well. So, the money you pay to this artisan for designing your favorite gold jewellery is the gold-making charge.
Factors Influencing Making Charges
When we are talking about the price of crafting raw gold into brilliant pieces of jewellery, we are calculating the making charges on gold. And, these not only depend on the amount and quality of work of the artisan but also include other factors like:
- Complexity of Designs: The making charges are also dependent on the intricacy of the gold jewellery designs (here you can include the link for the beautiful intricate budget-friendly gold designs). The more it has a delicate design the more skill and time it demands, thus increasing the making charges of gold per gram.
- Purity of the metal: Since 24 karat is the purest form of gold then making fine jewellery pieces out of this pure form is almost impossible as it is too soft to retain its shape for longer. Thus, if the metal purity is high, the amount of making charges will also be high.
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Weight of the jewellery piece: When it comes to size, if you choose a large piece with a delicate design, it directly indicates that you are buying more gold that includes the extensive work done by skilled artisans. So, the making charges will be on the higher side when you compare them to the normal ones.
Demystifying the Numbers: How to Calculate Gold-Making Charges
There are basically three methods of calculating the gold-making charges.
Fixed Rate per Gram: A Straightforward Approach
Under a fixed rate per gram, you have to pay a fixed amount of making charges on gold concerning per gram weightage. The more it weighs, the more you have to pay as the making charges for gold. Some make it simpler by putting up a fixed charge cost on a specific amount of gold which is comparatively easy to understand and calculate.
Design based approach:
Under the design-based approach, the gold-making charges are calculated on the level of complexity in the designs. If you are buying gold earrings for women with unique and intricate designs, you have to pay more for making charges when compared to a simple gold ring for men of the same weight.
Percentage of Gold Price: A Variable Cost
The charges are calculated as a percentage of the gold price – higher prices lead to higher charges and vice versa. This implies that making charges vary as the market price of gold varies. The jeweller sets a certain rate and this is multiplied by the price of the gold that has been used in making the jewellery.
The formula for Calculating Gold Jewelry Price
The exact formula for calculating gold jewellery price is
"Price of Gold Jewellery=(Weight of Gold × Gold Rate per Gram)+Making Charges +GST (Goods and Services Tax)"
The Price Equation: Calculating the Final Cost of Gold Jewelry
As per the formula, we must know the gold price per gram, weight in grams, the making charges on gold jewellery, and GST. Let’s break down this formula:
Gold price per gram: This is defined as the value of gold per gram that is used to produce the jewellery.
Weight in grams: The weight of gold is always expressed in metric grams form.
Making charges: The money that we pay for crafting the gold jewellery piece from raw gold.
GST: As far as selling gold jewellery is concerned, we have to pay the Goods and Service tax to the government. It differs from one country and state as well.
Final Price = (Gold Price per gram x Weight in grams) + Making Charges + GST
Putting it into Practice: A Step-by-Step Example of Calculating Gold Jewellery Price
To bring more light to this formula for calculating the final price of a jewellery piece, let’s take an example of you buying a gold chain.
At present, the value of 18k Gold is Rs 5,481 (keeps on fluctuating constantly) and you are buying a gold chain weighing 11 grams of gold.
Price of 11 grams 18KT gold chain*: Rs 60,291 (Rs 5.481 X 11 grams)
Making charges for 11 grams gold chain: Rs 5,500 (Rs 500 X 11 grams)
Total price of gold chain: Rs 65,791 (Rs 60,291 + Rs 5,500)
Adding GST @ 3%: Rs 1,973 (3% of Rs 65,791)
Hallmarking charges: Rs 45
Final bill: Rs 67,809
Tips for Negotiating Making Charges
If you are looking to save money every time you shop for gold jewellery then you need to learn how to negotiate with the jeweller for the making charges. Here are some interesting and helpful suggestions that could be of help.
- You must understand the standard market rates because you can use the information to compare with the offers from the sellers.
- Always compare the price offered by different jewellers because sometimes you miss a good opportunity just because you didn’t know about it.
- You can use the referral and loyalty programs to save money on gold-making charges.
- Use the power of negotiation on bulk orders.
- Be polite and ask the jeweller if he still has something for you hiding under the table.
