Gold derives this value from several factors, some of which are listed below:
Gold, in its elemental form, is a relatively hefty atom. Although it is not the rarest of metals, it isn’t easy to find and extract gold in large quantities. This contributes to its high perceived value.
Gold is a highly coveted metal in a county like India. So, it generally enjoys a high demand all year round, but its supply falls short to meet that. As a result, gold prices tend to increase with time.
One of gold’s many attractive aspects is its liquidity. Gold has an active, reliable and a ready market of buyers at almost all times. As a result, it can be readily converted to cash, which makes it a highly liquid asset.
It is universally accepted as a commodity of value, especially under a free market system. Gold reserves ensure the strength and stability of the currency and eliminate the pitfalls of fiat money.
The implementation of GST has particularly affected the prices of commodities like gold.
Effect of GST on Gold Prices
As per the new tax structure, the GST on gold is set at 3% for both finished and unfinished products, which will be paid by the end consumer.
Apart from this, the tax regime also levies an additional 5% on making charges of gold jewellery. The additional charges have upshot the price of gold as there were no making charges in the previous taxation system. This rate is, however, a revised version which was initially set at 18%. The initial GST on making charges would have affected the prices of the finished products massively since end-consumers had to bear all the expenses. However, the 3% GST, the 10% import duty, and 5% making charges have made the yellow metal’s price increase by 0.75%.
Gold has always been one of the most significant investment options for Indians. The high liquidity of gold and its consistent value makes it a popular option for investment purposes. It also acts as a hedge against fluctuations in the market. Gold can either be pledged in the form of a gold loan or it can be sold to meet urgent financial deficits. It pays to be aware of the value of gold to prevent unscrupulous activities by the lenders or jewelers. It is not very complicated to calculate the value of the gold. The weight and the purity of the gold will have to be tested at an assaying laboratory. There are two methods to calculate the purity of the gold. It can be denoted in percentage or in karat.
Gold holds an impeccable value in terms of quantifying one’s wealth as well as for investment. Thus, judging the quality and purity of gold is of utmost importance, both for buyers and for traders.
Primarily, the gold’s purity is determined through the Karat system that measures the same on a scale from 0 to 24. For instance, a 24 karats gold jewellery contains 100% gold. On the other hand, in a 14K gold jewellery, the percentage of gold is 58.33%, and the rest is other metal or alloy.
The gold purity can be measured both by percentage and parts per thousand. However, to convert the Karat into a percentage, one needs to divide the Karat number by 24 and then multiply it by 100.
Another easy way to determine gold’s purity is by checking the hallmark stamp on gold jewellery. This hallmark includes the authorised logo, date of manufacturing, carat weight or fineness of the gold in question. In several countries, including India, it is mandatory to sell gold jewellery with hallmark stamp.
Lastly, the traders generally use an electronic gold tester to measure the quality and purity of gold. It shows the result accurately within seconds.
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