Gold, How it is Adulterated and How Consumers are Being Cheated?

GOLD – the metal that

every consumer covets...!

 As you all are aware, Akshaya Tritiya is an important day in the Indian Calendar and the most auspicious day for purchase of gold.  This year 2015 it falls on 21st April and Consumers Association of India, have called press  people to share with some revealing facts about Gold, how it is adulterated and how consumers are being cheated.

After several months of a thorough study on this subject, we have put together
a power point presentation which will give you details of the methods adopted
by the trade, how gullible consumers are cheated and how consumers can
empower themselves to ensure that they get good quality Hallmarked jewellery
approved by BIS. 
Mr. Desikan, Nirmala Desikan ,
Consumers Association of India
In search of Gold …..
The metal humans covet
to quench their thirst for
Treasure and Security

A presentation
by
Consumers Association of India



žGold is a chemical Element with Symbol Au and Atomic Number 79.

ž

žGold occurs as free elemental form, as nuggets or grains in rocks, and alluvial soil deposit.


žGold is naturally alloyed with Copper and Palladium


žGold with AN 79 makes it one of the higher atomic number elements that occur naturally in universe.

It is believed traditionally that gold in its present form is produced by Supernova nucleosynthesis.


žSince earth was molten, when it was formed all the gold present in the earth sank to the earth’s core, Asteroid impacts 4 billion years ago brought the gold to the crust and mantle.

THE PUZZLE OF KING HIERO’S CROWN..!

žKing Hiero had commissioned a new royal crown for which he provided solid gold to the goldsmith. When the crown arrived, King Hiero was suspicious that the goldsmith added some other metal to make the crown the correct weight.
ž
žThis task was given to Archimedes – to find out the purity of gold
ž
žArchimedes was perplexed but found inspiration while taking a bath. He noticed his bath tub overflowed, when he lowered himself into the tub, and realised that he could use the technique to find the gold’s purity.
ž
žBut today we long for gold. With all the scientific revolution and development,
access to pure gold is really a ?????? (myth)

žThe modern community invented methods like – Melting furnace, cupellation furnace, annealing furnace, fume chambers to process and convert gold into jewels and coins etc.

žThese methods are used to establish the purity of gold by the step method.

žStep Method is the process which we have to adhere to, to find the pure form of Au.(gold)

žThese methods are in practice under the law but is it controlled??

žDo we have a regulatory check ?

How is 916 gold 
made for commercial use?

To make 8 gms of gold ornament, the goldsmith takes 8x916=7328 mg that is pure gold

ž8000-7328mg= 672 mg. This is the extent to which copper is blended with the gold to make it malleable and ductile

žThe percentage ( is called as touch in the jeweller’s commercial parlance during the making of gold)

žIf 1 touch is reduced the 90.6% (percent) will be the availability of pure gold. (73.28mg in 8gms)

žHallmarking Centers are established by BIS to verify and determine the purity of gold with 91.6% touch.

Surprisingly, the available Hallmarked gold is not 91.6% touch, but always less than this.

žWhen gold is mixed with Copper the colour of the Gold will turn into yellow within days of its making.

žIf Copper & Silver are added to make Gold,  the colour  lasts for years without fading.
ž
Various Methods are used to find the quality and quantity of gold
ž
XRF ( x-ray –fluorescence) is a method adopted to find the purity of gold. (This also depends on  the penetration level of the Xray) and it is specific to only one point in the ornament
žThe penetration depth of the x-ray beam is only 20 microns which is less than the thickness of human hair. The Xray beam is focused to only one point with width of 1mm (collimator)

žThis means no gold is THOROUGHLY verified for its purity.

žHence it cannot be the accurate method of determining the purity of gold.

žWhen ornaments are made, it can be from a gold sheet, chain with links, of any shape. The ornaments are joined (welded) together with either Zinc or Kdm powder.

žHowever when different pieces of gold ornaments made at different goldsmith centers are fused, all the joined parts are not scanned or verified for the purity. XRF – is only a dermis test and not detailed one.

ž žLets get an insight into weighing of gold

žAs said earlier taking 10gms for each ornament made, the total value of the 880 tonnes of gold made into jewellery and weighed, would be around Rs.9 crores and each jewel will be weighed and sold.

žThe error in the weighment of gold can be identified only by the department of Metrology also known as department of W&M

žOnly 2.6 tonnes of error is permissible as per the regulation in the 880 tonnes of gold.

žWhereas the error which has been practiced and perpetrated in the gold jewellery trade while selling to consumers is much more than the permissible error.

žDo we have any concrete established method to understand and evaluate the purity of Gold?

žNow in India. The Retail ornaments are not available with the specified purity of gold

žVarious White metals like Osmium (76) Palladium (46) , Iridium(77),Ruthenium(44) are added to the gold

žSince these white metals have different melting points they are pulverized into fine amorphous powder and are added to the gold during molten stage. So it will go unidentified and cannot be traced. But the jeweler while examining the gold can easily move the XRF beam, so that white metals cannot be identified.
žThe estimated value of the Jewellery trade by 2018 is expected to be Rs 530,000 cr as per AT KEARNEY review 2013

žAs per PTI report India is the largest consumer of gold in the world. The report by GFMS analyst at Thomson Reuters stated that India consumes 880 tonnes of gold; in spite of global trade declining by 18.7 %, in the same period India has grown by 14%

žFor e.g.: considering adulteration by other metals even at 2% in 880 tonnes 17.6 tonnes of gold is impure and not as per Hallmark standards laid by BIS.

žThe value of such adulterated gold is Rs.4048 crores at Rs.2300 per gram


žThis data can be correlated to Hall marked gold jewellery
žThe non hallmarked jewellery comes with only 60% purity in suburbs and non developed towns and cities. There is no regulation to cross check these areas of selling points.


žThis is estimated to be 480 tonnes and consumers pay for 99.99% pure gold.


žThis gold jewellery with 60%purity is not considered in regular Gold consumption.


žConsidering 30% mixed gold in total consumption PAN India, this 60% mixed jewellery would be worth Rs.33120 crores - the extent to which the consumer is getting cheated annually.
žLets get an insight into weighing of gold


žAs said earlier taking 10gms for each ornament made, the total value of the 880 tonnes of gold made into jewellery and weighed, would be around Rs.9 crores and each jewel will be weighed and sold.


žThe error in the weighment of gold can be identified only by the department of Metrology also known as department of W&M


žOnly 2.6 tonnes of error is permissible as per the regulation in the 880 tonnes of gold.


žWhereas the error which has been practiced and perpetrated in the gold jewellery trade while selling to consumers is much more than the permissible error.


žThis contributes to a big loss for the consumer and big gain to the seller.


žMost of the time the weighing is rounded off to confuse and convince the consumer while buying gold. Top corporates also ignore correct weighing and use a special key called sample button and round it off to the nearest value.


žThus the customers are cheated in the weighing of the ornaments
ž
žWe don’t have any strict regular monitoring system in the country to save the consumers. 
How to Protect 
Consumers?
žThe Govt of India should bring in a strict rule that, any gold jewellery seller not following the exact weighment of Gold jewellery as well as the quality and quantity, will be punished with the barring of his licence for gold trade.


žA notice should also be issued which should be pasted in a prominent place at the shop. The same information should also be issued to all the media.


žThis will ensure that no shop keeper will dare to cheat the consumer and all others will become compliant to the regulation by Govt.


ž žToday a large number of Non Hallmarked Jewellery contains 31% alloys 
( White Metal ) which are not silver or Copper.


žIn the last few years white metals are used to adulterate 22ct gold jewellery to a minimum extent of 2%to31%.


žNon Hallmarked Gold can contain 31%white metal not even silver or copper.


žThis terrible practice in the gold jewellery business started less than 3 years ago


žThese white metals cost only few hundred rupees as compared to 1 gm of gold which costs Rs 2300.

žGovt of India should ensure that any Jewellery Retailer found guilty of selling gold jewellery mixed with white metals and metals other than silver and copper should be fined heavily and their licence for manufacturing and retail should be banned for at least 10 years.


žThere are only 324 hall marking centres in India certified by BIS. However India consumes 880 tonnes of gold in jewellery. As per approved test method only 500 ornaments can be Hallmarked by each Hallmarking center if done by appropriate standard methods. 
Taking into consideration 324 X 500 ornaments, this would mean 1,62,000 ornaments per day.


žOn an average of 10gms per jewel the Total for all hallmarked jewellery would contribute to 1.62 tonnes per day


žOn a per year calculation 591 tonnes of gold only can be Hallmarked out of the total consumption of 880 tonnes.


For Consumer 

Complaints

For any complaint regarding 

purity of gold consumers can contact


Mrs. Meenakshi Ganesan
Scientists –E
Bureau of Indian Standards
Government of India
CIT Campus, IV Cross Road
Taramani, Chennai 600 113
Phone: 044 2254 1988, 044 2254 1216 
Mobile: 9380082849
E-mail: meenu@bis.org.in

Mr.S.P.Hiremath
Scientist F & Head
covering Kerala & Karnataka)
Bangalore Branch Laboratory
Bureau of Indian Standards
Peenya Industrial Area,
1st Stage, Bangaluru –  Tumkur Road,
Bangaluru 560 058
080 23721442
Fax:080-23721298
Email: bnbol@bis.org.in
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