Inflation Calculator

January 22, 2011 24 Comments


wealthymatters.comInflation affects the purchasing power of a currency.So the one lakh rupees of last year does not buy the same amount of goods and services as the one lakh rupees of today.To find out exactly how much a given sum of rupees of the yesteryears would have been able to purchase in terms of today’s rupees or vice versa we can use this nifty calculator at http://www.yetanothersite.com/inflation-calculator-for-india.htm .Also by assuming an inflation rate we can project how many rupees we might need in future to buy something which costs a certain amount today.

This calculator is a great help in financial planning.We can use it to estimate how much something might cost in future.So by feeding in today’s rates and an array of inflation rates we can estimate how much we need to put aside to buy a house in the future or to pay for a child’s college education or just to retire, depending on various inflation scenarios.As an additional check on our projections we can feed in the data from our parents or grand parents time and check it against today’s prices.So if we know for a fact that our parents managed to retire comfortably on xyz rupees we can take the same number xyz, assume an inflation rate and project it out to our own retirement horizon.Then if we have the same lifestyle as our parents in retirement we too should theoretically be able to enjoy our retirements.

This calculator can also help us estimate the real returns on our investments.So if we bought a house for x rupees 10 years ago and we know its resale value today,we can project out the inflation adjusted rate for x rupees and compare it with the resale value.Similarly we can use this calculator to find out the real returns on any investment avenues we might be considering.We could also key in the data for various assets we have purchased over time and see how inflation has treated assets of various classes.

Do play round with this calculator,the insights it will provide are priceless.

PS: for the missing figures you no longer have to guess.Plug in the figures from here:https://wealthymatters.com/2011/06/29/some-inflation-figures/ , available courtesy CRISIL.

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Acid Test For Gold

January 22, 2011 7 Comments


All that glitters is not gold .Assaying determines just how much of that glitter is gold.

wealthymatters.comThe simplest way in which jewellers roughly estimate the purity of gold is by using a touchstone.This method has been in use since ancient times.A touchstone is a small tablet of dark stone such as fieldstone, slate, or lydite which has a finely grained surface on which soft metals like  gold leave a visible trace. Because different alloys of gold have different colours , depending on the different metals added to the gold and their quantities , the test sample can be compared to samples of known purity to estimate the gold content of the sample.Additionally, the fact, that the trace from the test sample will react differently to specific concentrations of nitric acid or aqua regia, can be used to estimate the quality of the gold.Unfortunately using a touchstone involves scratching the sample and each time the test is performed a tiny bit of gold is lost.And the results obtained by this method are not considered conclusive.

wealthymatters.com non destructive testingTo avoid scratching gold,especially finished jewellery, we can use  X-Ray Fluorescence Spectroscopy (XRF) which is a non-destructive technique used to identify and determine the concentrations of elements.This is the technology used in the carat meters,like the picture on the right, found in places like the Tanishq showrooms. But carat meters only assesses the metal 5 mm from the surface . So they can detect only surface adulterants.Also the machines do not identify a metal unless a sample has been fed (calibrated) into them.This is why for a long time iridium and ruthenium adulteration went undetected in India.

 The only fool-proof method of determining the purity of gold is to go in for a fire assay. This is the method used in various BIS certified labs to conclusively establish the purity of gold.Unfortunately it is a destructive test. Read more of this post

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Gulf Gold Bars – Caution

January 22, 2011 1 Comment


wealthymatters.comHere is an article of interest for all those who by gold bars from the Gulf.It appeared in TOI in August’10. 

 Purity of gold a big concern for jewellers

MUMBAI: After having detected the presence of platinum group metals in certain 24-carat gold bars imported from a few Middle Eastern countries, a leading jewellery industry body has urged the government to install sophisticated photosynthesising machines at each of the airports through which gold is channelised into the country. According to the trade, there are less than 4 such machines in the 150 hallmarking centres across the country.

“Over the past few years, we have been finding that certain 24-carat gold bars imported from some Middle Eastern countries contain traces of platinum group metals such as iridium and ruthenium,” said Vinod Hayagriv, chairman of All India Gems & Jewellery Trade Federation (GJF). “In light of this, we have asked the government to install photosynthesising machines, which cost over Rs 1 crore a piece, at customs in each of the cities’ international airports.”

Mr Hayagriv confirmed that though the incorporation of such metals in gold bars was limited to miniscule volumes of imported gold, the trade had to be “forewarned” of their likely presence. He was speaking at the launch of Swiss-made Milleret watches by Veeline Jewels & Watches at the recently concluded IIJS 2010, a business-to-business trade show organised by Gems & Jewellery Export Promotion Council.

Gold melts at 1063 degree celsius but the process begins at 800 degree C. Iridium and ruthenium melt at 1900-2000 degree C and can be melted along with gold. While gold starts melting at 800 degree C, ruthenium remains unmelted (the melting process begins at 2000 degrees C) in the form of a globule in some block of gold. As it remains unmelted the total weight of gold — the yellow metal is sold on weight — goes up. Read more of this post

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