Indian households hold an estimated 25,000 tonnes of gold. With gold prices hitting all-time highs, many families are taking their old jewellery out of the locker to sell it for cash.
But there is a catch. When you hand your gold necklace to the jeweller, the cash value they offer you is almost never what you expected. Where did the money go?
Let's break down the exact mathematics of selling old gold so you never get cheated again.
1. The Purity Discount (24K vs 22K)
When you see the headline "Gold crosses ₹75,000", that price is for 24 Karat (24K) gold. 24K gold is 99.9% pure.
However, pure gold is too soft to make jewellery. Indian jewellers mix it with copper or zinc to make it durable, creating 22 Karat (22K) gold.
22K gold means it is 22 parts gold and 2 parts alloy. Mathematically, that is:
22 / 24 = 0.9167 or 91.67% pure.
If the 24K rate is ₹75,000 per 10 grams, the maximum possible value of 10 grams of your 22K jewellery is:
₹75,000 × 0.9167 = ₹68,750
Rule #1: Always calculate the exact purity multiplier before you walk into the store.
2. The Loss of Making Charges
When you bought the jewellery, you paid a "Making Charge" (usually 10% to 25% of the gold's value). This covered the labor of the artisan.
When you sell old gold, you lose 100% of the making charges. You are no longer selling a piece of art; you are selling raw metal scrap. The jeweller is going to melt it down, so they will not pay you for the labor it took to create it.
3. The "Melting Loss" (Wastage)
This is where the most cheating happens. When a jeweller melts your necklace to extract the pure gold, the alloys (copper/zinc) and some dirt/impurities are burned away. This results in a physical loss of weight.
Standard industry practice dictates a 2% to 3% deduction for melting loss. However, many unorganized jewellers will arbitrarily tell you, "Sir, there is 8% wastage in this design" just to pocket the difference.
For 10 grams of 22K gold, a fair 3% deduction on the ₹68,750 value would be ₹2,062. If they deduct 8%, you are losing ₹5,500.
How to Protect Yourself
- Use an XRF Machine: Never let a jeweller guess the purity. Ask them to put it in an XRF (X-ray fluorescence) machine in front of you. It takes 30 seconds and tells you the exact purity (e.g., 91.6%).
- Weigh it yourself: Take the weight before you hand it over.
- Use a Calculator: Before you agree to the price, open our Old Gold Selling Calculator, plug in the exact weight and purity, and see what the fair cash value should be.
Mathematics is your best defense against hidden deductions. Do the math before you sell.