Bars, Coins and Jewellery: What You Really Pay for Gold

What a gold price quote is made of

The gold rate a jeweller or dealer shows is only the starting point. The final amount on your bill, and the amount you get when you sell, usually has these parts:

• Metal value: weight × purity × the rate per unit (gram, tola or troy ounce). Purity means how much of the item is pure gold. See Gold Karats and Purity and Ounce, Tola and Gram.
• Premium: an extra amount above the metal value. It is charged on bars and coins for refining, minting, branding and the dealer's margin.
• Making charges: the jeweller's fee for labour and design. It applies mainly to jewellery.
• Wastage or deductions: some jewellers add a charge for metal lost in making. When you sell, they may deduct for impurities, solder or stones.
• Buyback spread: the gap between the dealer's selling rate and the rate at which they buy back the same gold.

Use the calculator below to find the metal value from weight, unit and purity at a rate you type in. This page does not show a live gold price. Take the rate from the dealer's written quote or from a source you trust.

Gold bars: the lowest extra cost per gram

A bar is the simplest form of physical gold. You pay for the metal plus a premium. The premium per gram tends to be lower on larger bars, because the cost of refining, stamping and packaging is spread over more gold. Small bars are easier to afford and to sell in parts, but they usually carry a higher premium per gram.

Points to check when you look at a gold bar price in Pakistan:

• the refinery or brand stamped on the bar, plus its weight and fineness
• whether the bar comes with an assay certificate or sealed packaging
• whether the dealer will buy it back, and on what terms
• whether the quote is per gram, per tola or per bar, and whether any tax is included

Gold coins: convenient, often pricier

Gold coin buying works like buying bars, but the premium is usually higher. Minting a coin costs more per gram than casting a bar. Well-known bullion coins are easy to identify and resell. Commemorative or collector coins can carry a large premium tied to design or rarity, and a local dealer may buy them back only for their metal value. That premium can be lost on resale.

Jewellery: making charges matter most

With jewellery, the metal is only part of the price. Jewellery making charges pay for design and labour. They are quoted in one of three ways:

• a fixed amount per gram or per tola
• a percentage of the metal value
• a lump sum for the piece

Intricate or handmade designs cost more to make. Jewellery is also usually made in lower karats than bars, because pure gold is soft. So the same weight contains less pure gold. If the piece has stones, ask whether their weight is counted as gold weight. If it is, you are paying the gold rate for stones.

When you sell jewellery back, making charges are generally not returned. The buyer also tends to value the piece only by its pure gold content after deductions. This is the main reason jewellery is a costly way to hold gold as savings. See Gold as Investment for the wider trade-offs.

Buyback spreads and deductions

Every dealer buys below the price at which they sell. Ask for both rates on the same day, in writing. On top of the spread, the buyer may:

• test purity and pay for a lower karat than stamped (see Check Gold Purity)
• deduct for solder, clasps, stones or enamel
• pay less if you have no original receipt
• pay more if you sell back to the shop that sold you the item, according to its own policy

Worked example

This example uses letters instead of amounts so you can apply it to any quote. Enter your own figures in the calculator above.

Say you are comparing a bar and a necklace of the same weight W.

Bar

1. Metal value = W × purity of the bar × rate R.
2. Add the premium P.
3. Cost of the bar = metal value + P.

Necklace

1. Metal value = W × purity of the necklace × R. This is lower than the bar's if the karat is lower.
2. Add making charges M and any wastage charge.
3. Cost of the necklace = metal value + M + wastage.

Selling both back on the same day

• Bar: you get roughly W × purity × the dealer's buying rate, which is below R.
• Necklace: you get W, minus deductions for non-gold parts, × the tested purity × the buying rate. M and wastage are not returned.

Compare what you paid with what you would get back. The gap is your cost of owning that form of gold before any price move. For jewellery the gap is usually wider, because of M and the deductions.

Price risk still applies

These costs come on top of the gold price itself, and the gold price can fall as well as rise. If you buy and the rate drops, you lose on the price and on the premium or making charges. To understand what moves the rate, see How Gold Price Is Set and Gold in Pakistan.

Paper forms of gold have their own costs and risks. Leveraged gold CFDs can lose money fast and are a different product from owning metal. See Physical vs Paper Gold. Once you own physical gold, read Storing Gold Safely.

Frequent questions

What is a gold premium?

It is the amount you pay above the metal value of a bar or coin. It covers refining, minting, branding and the dealer's margin.

Why are making charges not paid back when I sell jewellery?

The buyer values the piece by its gold content. The labour and design you paid for do not add to that value.

Are coins better than bars?

Neither is better in general. Coins usually carry a higher premium per gram. Bars are usually cheaper to buy per gram. Compare the written buy and sell quotes for both.

Does this page show the current gold rate?

No. Type the rate from your dealer's quote into the calculator to work out the metal value.

How can I reduce the gap between buying and selling?

Ask for written buy and buyback rates, keep receipts and certificates, check purity, and ask how stones and other non-gold parts are counted before you pay.