India witnesses a massive demand for gold yearly for various purposes ranging from traditional jewellery to investment pursuits. Over the years, gold has been a perfect hedge against inflation, and individuals are becoming more inclined to make gold a component of their assets. According to the World Gold Council-India, India’s demand for gold in 2022 was projected to be approximately 800 to 850 tonnes.
What exactly happens when one seeks to sell their old gold jewellery? How much are the returns? What would be the estimated return on investment in gold ornaments? Here is a deep dive into how the resale value of old gold jewellery is calculated.
Gold Calculation Formula
While selling old jewellery, individuals calculate the expected returns they would receive. The formula for calculating the value of old gold jewellery is as follows:
Value of gold in the sample = [weight of gold * purity of gold * gold selling price today] / 24
Here is an example to simplify it-
Suppose an individual wants to sell their old jewellery. The weight of gold in the jewellery is 10 grams, and the gold purity is 22 karat. Assume the current gold rate is Rs. 5,000.
The value of gold in the jewellery would be [ weight of gold (10 grams) * purity of gold (22 Karat) * gold selling price today (Rs. 5,000) ] / 24= Rs. 45,834
Alternatively, the value of gold can also be calculated using the purity percentage of the metal.
Value of gold = [weight of gold * percentage purity * gold selling price today] / 100
In the above example, 22 Karat gold would have 91.67% pure gold in its composition.
The value of gold = [ weight of gold (10 grams) * percentage purity (91.67) * gold selling price today (5,000) ] / 100 = Rs. 45,835.
The two formulas fetch similar results. Therefore individuals can use either of these Gold calculation formula to estimate the value of their old gold jewellery.
Things to Remember when selling old gold jewellery
Here is a deep dive into the factors that may affect the resale price of old gold jewellery.
1. Purity – Gold’s purity is measured in terms of karat. 24 Karat is the purest form of gold, followed by 22 karats, 20 karats and so on. A higher karat holds more value and gives higher returns.
2. Gold Rate – The current gold rate is an important constituent determining the resale value of old gold jewellery. The gold rate may be influenced by factors such as supply & demand, interest rates, economic stability, and changes in government policy.
3. Gold Valuation – Many jewellers use advanced XRF machines to compute gold’s value, weight and purity right in front of the customers. This helps conduct a transparent resale process and generates a reasonable value for the seller.
4. Selecting the right gold buyer – Choosing a trusted gold buyer is crucial to get compensated reasonably. Reliable gold buyers conduct a fine valuation process and offer reasonable returns.
Individuals seeking to sell their old gold jewellery can calculate the gold value before going to a gold buyer. The primary constituents to calculate gold value include gold rate, purity and weight.