Golden Truth: 10 things to know before buying gold

The experts at Malabar Gold & Diamonds, one of the world leaders in gold business, list out 10 must-follow things that one should keep in mind before investing in gold.
Buying quality gold is not as easy and simple as buying grocery or electronic items from a shop or supermarket of your choice. More often than not, the gold you bought may not meet all your requirements and the final product may fall short of your expectations. That is why people prefer to go to a reliable jewellery brand to buy gold, which in itself is a valuable investment in the life.
Malabar Gold has been in the gold business for over three decades and has grown with the trust and loyalty of their customers by selling only the superior quality jewellery with BIS Hallmark. The group has now launched a campaign called `Say No to Bad Gold’ to create awareness among the general public about the quality parameters of gold. As part of this campaign, the in-house experts at Malabar Gold & Diamonds have listed out 10 cardinal principles to bear in mind, before planning to buy and wear gold.

1. What is Hallmarked Gold?

Hallmark is the testimony to the purity of gold. It is a guarantee of the quality of your investment. Ever since hallmarking was introduced in 2000 in the country, Malabar has made sure that only hallmarked ornaments aresold across its showrooms.

2. What is Hallmark Unique Identification or HUID?

HUID is a special six-letter alphanumeric code through which the customers can verify the purity, weight and the veracity of both the hallmarking centre and the showroom, with the help of an official online app. This is the best measure introduced so far to ensure the quality of gold ornaments in the country. Till recently, the customers could not fully verify the quality of the ornaments they bought. But, HUID has filled this critical gap. Moreover, it helps the customer identify the sourcing of gold, which is another crucial element in gold business. HUID can track the entire process of gold business, right from mining to selling. Customers should make sure that the products they buy have HUID mark on them. The BIS Care App has a feature of `verify HUID’ that helps customers to substantiate the quality of the gold.

3. Is metal purity enough?

Metal purity is a key factor however, only if this purity is endorsed by the laws of the land and business ethics, gold will really be pure and precious in letter as well as in spirit. One wears gold ornaments on the most special and holy occasions. Hence, such ornaments should not be made in an illegal manner.

4. What does a Responsible Jeweller mean?

A responsible jeweller should be a responsible citizen of the society in all senses and should be committed to the society at all levels of his business. The journey of ornaments starts with the sourcing of bullion from the international market. It goes through a long process, from sourcing to manufacturing before it reaches its final destination, the customer. Each stage should be transparent, eco-friendly, and in accordance with the rules and regulations. He should fulfill all what is promised, not just to the customer but also to his own employees. The wages and working conditions should be good and exemplary. Malabar has always kept their social responsibility as a top priority. The Group stands out as a model for other businesses in environmental, social and governance (ESG) policies. It earmarks 5% of its profits for its corporate social responsibility programmes.

5. How can a business ensure ethical and responsible sourcing of gold?

A business establishment should adhere to ethical values right from sourcing to selling of any product or service to the valued customer. The entire process, from procuring to delivering should be done in a responsible manner. Then only, we can claim it as a responsible and ethical business. It is a known fact that gold is mined in Latin American and African countries in unscientific and unpolished conditions, causing harm to the environment and the people. If the gold is mined legally and responsibly, without harming the people, mineworkers, human rights and environment, it is ethical, too. Gold mined from authorised sources should reach the customers after duly paying the taxes as per laws of the respective countries and in case of India, import duties and GST. In this modern era, we can ensure purity of the process with the help of technology. Malabar Group has been buying gold only from authorised sources and in a legal manner, fulfilling all social responsibilities.

6. How do we know that gold has been sourced responsibly?

If gold is sourced from those in the good delivery list of London Bullion Market Association (LBMA), India Good Delivery Standards, Dubai Good Delivery or similar approved and reliable agencies, we can rest assured about ethical and responsible sourcing. Blockchain distributed ledger, used by these responsible agencies, make sure that the entire process is tracked and verified on a real time basis and across the supply chain. Those sourced through illegal channels are in the bad delivery list. Leading jewellery chains like Malabar sells only good delivery gold.

7. Why should I insist on bill?

Indian laws ensure that it is the right of every customer to ask for a bill against any product or service. Besides, the prosperity of the nation and the economy is dependent on the quantum of taxes we pay. Proper billing ensures that tax is paid duly. So, it also becomes a patriotic gesture on the part of the customer. On the other hand, if one buys gold without a bill, they are anti-escaping from their duty as a citizen.

8. Why should we pay tax when we can buy gold without a bill and save some money?

GST on gold is just 3% whereas many other products have up to 18% GST. So, paying tax and buying gold with a valid bill is the legal route. Being a guarantee to the quality of the ornament, a bill also brings you peace of mind. On the other hand, trade without bill is an encouragement to illegal players and big rackets.

9. What are the dangers of buying gold without paying tax?

Indirectly, we are supporting smuggling, illegal trade, black money and other human rights violations when we buy gold without paying tax and bill.

10. Is there any harm in buying gold from an irresponsible source but with a bill?

As per Section 111 of Chapter 14 of the Indian Customs Laws, government can, at any time, confiscate a product procured from unauthorised sources or bought in violation of the standard procedures and norms set by the government, even if one has a proper bill for the said product. Hence, apart from proper billing and taxes, it should also be made sure that gold is bought from responsible sources and ethical establishments. The bill is also necessary to claim insurance against the loss of gold. Though we insist on bill in case of many items, some are not keen to insist on bills while buying expensive gold ornaments, which also brings you money through resale. We should never forget that bill is the official document of the gold you have and it is important to keep it safe. Knowing the above will empower one as a consumer so that they don't become a victim of fraud. Therefore, buy only BIS certified HUID hallmarked jewellery from trusted sellers like Malabar Gold and Diamonds.