Don't Get Cheated While Buying Gold

Hello friends. This is Vijay Bhambwani here. I hope you're doing great in the markets and the markets are treating you well. I hope my videos are also helping you become better traders and investors and helping to decipher the India once is of the market a whole lot better.

Friends, thank you for your response to the video on buying gold cheap. Yes, I have received a lot of feedback from you asking a lot of questions, asking more information, and the fact that you want more on gold has basically compelled me to recall another video on this contentious and lovely topic.

Download Now: 7 Unstoppable Growth Engines of India's $10 Trillion Bull Run...

This one is about how to safeguard yourself from being conned, scammed, cheated, looted by unscrupulous elements and how to buy gold and ensure peace of mind.

You see there are a couple of things that you need to keep in mind when you're investing in bullion. Yes, it is a safe heaven. It is the safest form of investing where people for generation after generation have reposed their trust in gold, used it as a store of value, and also generated profits because it is excellent hedge against inflation.

But have you noticed how many times you've got some gold or inherited some gold and you've gone to the market for the want of any other word, let's say Zaveri Bazaar. Zaveri Bazaar is a place where most of the jewellery stores are, and any and everything right from bullion bars, coins, custom made jewellery, even fake jewellery is made Estelle as it's called.

You will basically remember how many times you either heard somebody or even experienced this. You've had some old gold and you've gone to either melt it, exchange it for some other piece of jewellery or bullion itself and you're told, this is not 22 carat. It is 18 carat or 14 carats, and there is a mixture of copper and what not. This is commonplace, especially in the inherited gold.

So how do you avoid this kind of a situation occurring, now that you're buying gold and possibly passing on to your future generations and they do not go through this kind of harassment and don't get conned, scammed or cheated, the way you heard and seen the present generation has experienced many a times?

So I am gonna share a couple of points with you. Do keep in mind that these are all to be fulfilled simultaneously. It's not that you do one of these and you're fine. You have to do them all.

So point number one. Go to a reputed wholesaler. Why Wholesaler? Because a wholesaler imports bullion in bulk. Most of the bullion that we are seeing changing hands in Zaveri Bazaar or jewellery markets, in wholesale jewellery markets, is imported. Obviously the bigger is the economy of scale and fewer hands in the supply chain that the gold passes through, the smaller will be the profit margin or lesser will be the profit margin of hands that are changing gold.

So you're gonna buy from a retail small time corner friendly neighbourhood jewellery store, it would have come from a semi wholesaler and then a wholesaler, and then an importer. Everybody would have marked up their profit share and therefore you're gonna wind up buying gold more expensive. So point number one. Always buy from a government approved wholesaler.

Point number two. Ensure that if you're buying from a wholesaler, he had an established government approved, government recognised business. He will Hallmark the gold, which is a stamp on the gold, specifying the purity of the gold and also wherever possible and wherever I'm sure 99.99% of the time this is possible, the wholesaler's, his own logo is embossed from the gold.

Why? Because if you go back to him and like I told you in my previous video, the difference between buy and sell price of gold, provided you're buying and selling through the same guy, I can be as little as Rs 120 to may be Rs 150 for 10 grams.

But many a times when you go and try to sell gold, he might give your two way quote, but if you give him somebody else's Hallmarked or embossed gold, he might deduct a fee because he will have to melt that gold and then put his own mark.

So things are always better if you're buying and selling to the same guy. Ensure that his logo, his stamp is embossed in gold along with Hallmarking which is specification of the purity of the bullion that you're buying.

Number three. Insists on a Hallmark certificate. This is a certificate which ensures that you get the right price when you try to sell it. Maybe you want to pass it on to your future generations. At least you will have peace of mind and they will have peace of mind that they have inherited gold and not dust.

Avoid the temptation of trying to beat GST and buying gold off the books, off the records, in cash. Many a times you might be enticed, you know, if you don't insist on a bill, I can sell you this gold cheap.

But then you know what? There will be no embossing, there will be no logo, there will be no hallmarking, and lo and behold, when you think you've bought 22 carat gold, and when you try to go and sell it at a later date, it might be 14 carat and guest what?

You have no records. You have no protection. You have no redressal of your complaint. There is no written record anywhere of your proof of purchase. So avoid the temptation of a couple of percentage points that you're paying by way of GST because you will be able to sleep better. By trying to beat 3% GST, you might wind up losing 97% or 50% or 40% depending on how adulterated your gold is.

Last, but not the least, and my most important point in buying gold. Gone are the days when sellers of gold, jewellers, wholesalers, semi wholesalers, or retailers used to cheat people when they sold gold to them, either by putting on a layer or a film of gold plating or cheating them by manipulating weights and measures. Those are those childish stuffs. Nobody does that anymore. Things have gotten a lot more sophisticated, and you have to be smart enough to beat the sophisticated crooks.

So I am going to give you an example. For the sake of understanding let's treat this as piece of gold. Normally, what would happen is when you buy gold and you tell a third party evaluator to check the bullion that you have bought, he would take a black coloured stone, most of the times it is oval, and he would rub that gold on that stone to basically see what kind of dust it leaves on the stone.

An experienced eye will be able to discern whether the gold is 14, 16, 18, 22 carat, whatever. But now, there is a problem. What if only the top 30 or 40% of this is actual gold? What if the core, the centre, is copper or iron or steel or whatever? We have also learned how people have purchased mobile phones, especially the more expensive ones online. And they have got soaps, bricks, stones in the packing. Yes, that kind of thing happens.

So the conventional rub test, you know, going and examining the physical surface of gold is no more valid because it can only tell you that the surface is pure. It tells you nothing about the core. Only electronic testing of gold will certify that the gold is pure right till the core.

It'll cost you a little bit of money. Not too much. Here again, charges might way. I am talking about Delhi, Mumbai, Kolkata, and Chennai. I can assure you that it will cost you less than what you would pay for a butter masala dosa in a reasonably upscale restaurant. That is a pay difference. You sleep much better after spending a few Rs 100 to get that bar, brick, coin whatever, certified by an electronic third party tester.

Don't try to get it tested by the seller itself, because here you are trying to tell the wolf to guard the chicken. Always get your gold evaluated by a third party testing agency and do it as soon as you leave the shop, the office, or whatever you want to call it of the guy you both this gold from. Don't come home without getting in certifying and tested electronically.

These are simple steps which will ensure that your hard earned money is always safe. And when the guy who's selling you the gold knows that you're a savvy person, he is basically likely to be deterred in trying to con you. He might charge you Rs 50 or Rs 100 more per 10 grams. That's all that there is to it in wholesale prices of gold. You might wind up being 50, 100 or maybe 150 rupees for every 10 gram of gold. But you're going to get the real thing and that when you try to sell it back, is what matters. Purity.

So get what you pay for, get the real deal, follow these steps and don't go wrong.

On this cheerful note I bid goodbye to you, not before reminding you to click like on this video, if you like what you saw. Subscribe to my YouTube channel if you haven't already done so. Click on the bell icon to receive instant alerts about fresh videos being put up out here. In the comments section, good, bad or ugly, I'd love to hear your feedback and let me know if you want more content and more information on bullion. I'll be very happy to oblige.

Also, help me reach out to fellow like-minded investors who are looking out for knowledge-based investments and trades by referring my videos to your family and friends. Thank you for your patience and watching my video. This is Vijay Bhambwani signing off for now till we meet again in my next.

Have a very, very profitable day. Stay safe. Take care. Bye.