Academy · Foundation

Selling back, and old-gold exchange

Lesson 06 of 0810 min readFree · no sign-in

When you sell gold jewellery you are paid for the metal, and only for the metal. The making charge does not come back. The wastage does not come back. The tax does not come back. The stones usually come back at a fraction of what they cost, if at all.

That is not a scandal — it is arithmetic that follows from everything in Lesson 04 and Lesson 05. But almost nobody works it out before buying, and the number is larger than people expect.

This lesson puts a figure on it, explains why exchange schemes look so much better than cash, and lists the four things to insist on before anything is weighed, tested or melted.

The same necklace, sold back the same afternoon

The piece from the last two lessons: 22-karat, net gold 22.0 g, bought for a finished bill of ₹246,002 at a board rate of ₹9,850 per gram. Nothing has happened to the gold price. You walk back in an hour later and ask to sell it.

Illustrative figures, carried forward from Lesson 05. Deduction rates vary by shop and by city; ask for the actual number.

  • The buyer values the metal: 22.0 g × ₹9,850 = ₹216,700. That is the ceiling.
  • A typical melt or refining deduction of 3% takes it to ₹210,199.
  • You paid ₹246,002. You receive ₹210,199. The gap is ₹35,802 — about 14.6% of what you paid, before the gold price has moved a rupee.

Put the other way round: the gold price has to rise about 17% before that purchase breaks even. That is the single most useful sentence in this lesson.

THE SAME NECKLACE, THE SAME AFTERNOON YOU PAID ₹246,002 YOU GET BACK ₹210,199 ₹35,802 · 14.6% METAL MAKING + TAX MELT DEDUCTION THE GOLD PRICE MUST RISE ABOUT 17% BEFORE THIS PURCHASE BREAKS EVEN
Nothing in this picture is a scam. It is the ordinary cost of turning metal into a wearable object, paid on the way in and not recovered on the way out — which is why it belongs in the decision, not in the surprise afterwards.

Where the money went

Nothing was taken from you at the sale. The gap was created at the purchase, and it breaks down cleanly:

  • The making charge, ₹21,670. You bought a service — a craftsman's time and a workshop's overhead. It was consumed. There is nothing to sell back.
  • The tax, ₹7,585. Paid to the government, not to the jeweller. It never comes back.
  • The hallmarking charge, ₹47. Small, and equally gone.
  • The melt deduction, ₹6,501. The only part charged at the sale, and the only part you can argue about.

Notice the ranking. The deduction you will spend your energy negotiating at the counter is a fifth of the cost you accepted without discussion when you bought. If reducing this gap matters to you, the place to act is the purchase, not the sale.

Exchange, and why the offer looks so much better

Ask about exchange instead of cash and the number improves at once. Many shops will credit the full metal value with no deduction at all — ₹216,700 rather than ₹210,199 — provided the credit goes straight into a new piece.

That concession is real, and so is the reason for it. The shop is not giving up ₹6,501; it is buying a sale. The new piece carries its own making charge, its own wastage and its own tax, and the margin on those comfortably covers the deduction it waived.

So the exchange offer is genuine and the arithmetic still favours the shop. Both things are true. What matters is that you compare the right pair of numbers:

  • What is the cash offer, in rupees, stated plainly?
  • What is the exchange credit, in rupees, stated plainly?
  • What is the all-in per-gram price of the new piece — the Lesson 05 number — before the credit is applied?

An exchange scheme that adds ₹6,501 to your credit and ₹15,000 to the new piece's making charge has cost you money while looking generous. Work out the new piece's price on its own merits first, then apply the credit.

Why every shop is pushing exchange right now The World Gold Council's Q2 2026 India report found retailers reporting a 10–20% rise in exchange volumes, with exchange-led purchases "accounting for up to 70% of sales in some cases". At the same time consumers were buying "lighter, lower-carat pieces" and net recycling fell to 19 tonnes, the lowest in eleven quarters — people are trading up rather than cashing out. Exchange is where the volume is, which is exactly why it is promoted so hard.

Selling to a shop that did not sell it to you

Perfectly normal, and often the only option. Expect a slightly worse number, for a reason that is not unfair: the buyer cannot verify the provenance, has to assay the piece properly, and carries the refining risk.

What changes is the process. Your piece will be tested — usually by XRF, sometimes by a touchstone, occasionally by cutting a sample — and paid on the assayed fineness rather than the marked one. If the mark is honest that costs you nothing. If it is not, this is the moment you find out, and Lesson 03 is the lesson you wish you had read first.

A hallmarked piece with a readable HUID is markedly easier to sell than an unmarked one, and usually fetches more. That is a real, quantifiable benefit of buying hallmarked which nobody mentions at the time of purchase.

Four things to insist on, in this order 1. Weighed in front of you, on a scale you can read, with gross and net stated separately. 2. Tested in front of you, and tell me which test and what it read. 3. The deduction stated as a number, before anything happens — not a percentage of an unnamed base, and not "we will see after melting". 4. Nothing melted or cut until you have agreed the figure in writing. Once the piece is melted you have no leverage and no evidence.

Buyback promises, and how to read them

"Lifetime 100% buyback" is common on signage and rarely means what it appears to. The terms usually restrict it in at least one of these ways, and often all of them:

  • Only at the same shop, and often only the same branch.
  • Only against a new purchase, not for cash.
  • Only on their own pieces, with the original invoice.
  • 100% of the gold value — which was never in doubt — not 100% of what you paid.

That last one is the crux. "100% buyback" almost always means the metal, at the day's rate. It has never meant the making charge, and no shop can afford it to.

Bank-sold coins are the sharpest version of this. Banks in India sell gold coins and, as a rule, will not buy them back. You are buying from a seller who has no obligation to be a buyer, which narrows your exit to jewellers and dealers who will price it as ordinary metal.

Old gold: the practical checklist

  • Take the original invoice if you have it. It settles weight and purity arguments before they start.
  • Ask for stones to be removed and returned, or valued separately, before the gold is weighed. Do not let stone weight vanish into a single figure.
  • Get quotes from two or three buyers on the same day. The metal rate is public; the deduction is not, and that is where they differ.
  • Understand that solder and joints are lower-purity metal and a careful buyer will account for them. That is legitimate; a vague "wastage" on top of it is not.
  • Get a receipt for what you handed over before you hand it over.

What this lesson cannot tell you

It cannot tell you whether to sell. That depends on why you hold the gold, what you would do with the money, and what the piece means to somebody in your family — and none of those are arithmetic.

What it can tell you is that the exit is worth understanding before the entrance. If you know a piece must rise 17% before it breaks even, you will buy differently — and if what you want is metal rather than an object, Lesson 07 is about the products that carry a far smaller gap.

Kept in this browser only — no account, and nothing is sent anywhere. Finish all eight and you can claim a certificate.

Educational content only. Not financial, investment or tax advice. Aurix does not buy, sell, store or broker metal, and does not quote executable prices. Market figures are from the World Gold Council's Gold Demand Trends: India Focus, Q2 2026, read 24 August 2026.