5 ways to save money on new gold/diamond jewellery

I have been wanting to write this post before the recent drop in gold prices but time not permitting, I kept procrastinating till now. With the current gold prices its never too late I guess.

SO here I am aggregating 5 ways to save money if gold purchasing is on the agenda:

1) Stretch the money thin: 1 gm gold ornaments are a hit and available at many stores. Read more on this here and here.

2)14k Gold: Jewellery ornaments made in 14K contain less gold. I mentioned all the virtues of going for low caratage in your jewellery here.

3) Chains minus the weight: You can find a lot of very heavy looking chains which are actually hollow. "A lot of chains are being made hollow and the reduction in weight is compensating for the rise in gold prices," said Roy Lynch, director of Strictly Gold.

4) Join a loyalty program : Retailers(likeTanishq, Kathana) entice consumers with a loyalty program where points accumulates and can be redeemed for various discounts and sometimes with free gold.

5) Exchange Old gold for New: Read my earlier blog post on this here.

Photo Credits: 24thcentury via flickr.com

And gold came tumbling after....

the stock market meltdown. Gold prices are down to Rs. 12,250(24K) from Rs.13,450 just 3 days ago. Earlier the stock market saw valuations eroding due to profit booking and now the gold investors have followed suit.

Gold buyers can heave a sigh of relief now albeit with some caution. Since the turmoil is going to continue it will be some more days before the dust settles on this.

This news comes almost at the end of the wedding season. So a lot of consumers had resorted to either exchanging their old jewellery or keeping jewellery purchases to a minimum. A lot of jewellers (including us) saw sales going down substantially upto even 85%. So with this news, even the jeweller community can now take off their oxygen ventilators.

Deconstructing a Jewellery Advertisement

This is a picture of a typical ad published in print. It came out in the middle week of February and is a perfect example to talk about the current state of affairs in jewellery retailing. I have deliberately blurred the name and contact of the jeweller because this isn't about finger pointing but more about education. To make it simple I have numbered the issues I will bring up in this post.

But first lets consider the advt. Its really straight out of a thriller and can set your pulse racing by the time you finish going through it.

1)Bombay Rate Showroom
Gold is inexpensive by almost Rs.150-200 per 10 grams in Bombay and if you can get the same price in a Delhi showroom then its clearly a Sone Pe Suhaga(if I may borrow the title from our blog).

2)Today's Gold Rate
The gold rate of Rs. 9590 per 10 grams advertised during the second week of February when the gold rate was hovering close to 12,000 is almost a 20% below market rate. You may rightly argue that you are being passed the benefits of "frozen gold prices". Gold purchased by the retailer when the prices weren't blood sucking.

3)Low, So Low Making Charges
Almost as important as the "frozen" price of gold is the oh-so-low-making charges. So low that its hard for even a seasoned bargain hunter to come up with any reason not to give it a second thought.

4)100% Buy Back Guarantee
Usually accompanied with " Hum hain Naa, Behenji". This guarantee will unarm a naive or seasoned customer alike. A 100% buy back guarantee is sure to convince you of the value you are getting.

5)Rs.4000 per Carat Diamonds
Diamonds so affordable. Now who wouldnt give in to that.

Now consider these simple questions YOU as a consumer can ask.

1) Is It HALLMARKED?
Just this question is enough to dilute the positioning, first 3 points in the ad had taken. I have done some back of the envelope calculation to show how this one critical question can make the gold look copper and low making charges look a big sham in disguise. The economics of selling below market price is questionable. I have raised this issue earlier(Check out the related articles).

2) Is Buy Back is equal to Cash Back and not Exchange Back?
It is a guarantee of taking back the jewellery but assuming its going to be a cash back offer can put you in soup. It might well be an exchange only offer. This brings to the next question. If exchanged, Do I lose 10% of the value or 20% 0r even 30%?

3) What color, shade are these diamonds for?
Knowing that you get what you pay for is especially true in case of diamonds. The diamonds at this price are usually brown in shade, which is not clearly evident because they are mounted.

Marketing can be cleverly used to disguise real issues like hallmarking, buy back etc. Hope this makes you a more informed buyer.

Related Articles:

Handling Volatile Gold Prices: A Jeweller's Perspective
Take a hard look at buy back policy
How to avoid the Low Making Charges trap when buying jewellery