Investments

Neha Sonwalkar
The annual consumption of gold in India which has increased to over 880 tonnes presently about 80% is for jewellery fabrication (mainly over 22 carat purity) for domestic demand, 15% for investor demand and barely 5% for industrial use. The remarkable feature is the way investment in jewellery has come to dominate the market. Urban demand is for adornment jewellery rather than on investment jewellery but in rural areas gold's role is that of an informal barter economy. Here, gold remains a retail cottage industry, and therefore, it can still be said to be performing a monetary role. It barters the economy of the agricultural community which accounts for 70% of all gold consumption in India. In the near future, therefore, the annual demand will continue to be over 8800 tonnes, growing at the rate of around 4% in tandem with anticipated growth in per capita real income.
Indian consumer is very often a victim of irregular metal quality. A buyer, for instance, will be told that he has bought gold of 22 carats. When he goes to sell or exchange it he discovers that the gold is actually only of 18 carats or many customers have lost money in this way. In India the emphasis is on high caratage jewellery, and problems have also arisen through the lack of suitable high carat solders. The traditional handcrafted pieces in 22 carat contain many soldered joints and the use of solder alloys of a much lower caratage has meant a serious level of under-carating.
The oldest types of fraud are those of adulteration by the addition of too much alloy, and the similar fraud of selling, as of gold or silver, articles externally of standard fineness but with base metal cores. These frauds continued till Hallmarking Scheme was launched by BIS.
The handcrafted jewellery is made using traditional tolls and working practices. Melting and alloying is done using charcoal or coke-fired furnaces. Soldering operations are done using a mouth blowpipe with a candle or oil flame. Many small workshops buy scrap which they sometimes re-use without refining, while other refine it themselves using old and crude technology.
Larger factories are equipped with modern electric melting units, investment casting facilities and machinery with their own modern refineries and producing gold either to 999 fineness via electrolytic refining as the final step or to 995 minimum fineness by conventional methods.
Government of India took the cognizance and understood the necessity of protecting the public in its purchases of gold jewellery specially with regard to standards of fineness and the prevention of adulteration, be it deliberate or accidental. The principle objectives of the Hallmarking Scheme are to protect the public against the fraud of adulteration and to oblige manufacturers to maintain legal standards of fineness.
Hallmarking is the accurate determination and official recording of the proportionate content of precious metal in gold. Hallmarks are thus official marks used in many countries as a guarantee of purity or fineness of gold jewellery.

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