The Dirty Truth About Indian Gold


wealthymatters.comHere is an article that appeared in the TOI in Jan ’09.If you invest in Indian gold jewellery,this article might just persuade you to have a fire assay done on your hoard to determine its fineness.

ALL THAT GLITTERS IS NOT GOLD 

Your wedding jewellery may not be as pure or as precious as you think it is. Several goldsmiths across India have taken to adulterating the precious metal with iridium and ruthenium,and are getting away with it, as until recently the metals failed to show up on all purity checks. It’s an alchemist’s dream, and the practice is becoming increasingly commonplace if you go by the stocks of the ‘duplicate’ metals at even the smallest of karigar workshops.

Both iridium and ruthenium belong to the platinum family of metals, and when mixed with gold, do not form an alloy but sit tight in the yellow metal.

What makes the adulteration even more alarming is that the metals do not replace silver and copper, which are added to the gold during the jewellery-making process to harden the soft, malleable yellow metal. As Saumen Bhaumik, general manager (Retailing) at Tanishq put it, “The two metals manage to camouflage as gold.’’

TOI tested several pieces of jewellery, and all had some amount of either iridium or ruthenium lurking inconspicuously with the gold. A 22-carat gold bangle bought in 2003 from a century-and-a-half-old jeweller—who has since then expanded from Mumbai to other parts of the country—when tested at the Indian Institute of Technology-Bombay, had 3% iridium in it.

A gold chain bought from a shop in Bangalore in 2002 when tested at another citybased centre had 2.39% ruthenium, while a pair of earrings from Kerala was found to be adulterated with 4.65% of iridium.

On an average, a piece of jewellery or a bar of gold contains nearly 5-6% of the adulterant, and manufacturers—wholesalers and retailers across India—are aware of how rampant this notorious practice is. Consumers, however, are the biggest losers as they have been kept in the dark.

“Most machine-made jewellery contain these adulterants. Overnight, these manufacturers hit the jackpot,’’ said Suresh Hundia, president of The Bombay Bullion Association (BBA).

The situation came to head when several refineries across India noticed that the gold bought from the market, which when melted, contained at least 6% adulterants. “Some refineries complained that a blackish substance kept floating in the aqua regia (mixture of hydrochloric acid and nitric acid, which can dissolve gold).

Moreover, if they bought 1kg of gold, they were losing 50-60gm after refinement. At the time, they didn’t know where the rest of the gold was getting lost,’’ said a Bureau of Indian Standards (BIS) official.

Why it escaped detection

The practice was especially rampant between 2004 and 2006, when there were few checks and balances. Traditional jewellers who checked the purity of gold by rubbing it on a touch-stone, said Bhavesh Sonawala from National Refineries Private Limited, “had no clue about either iridium or ruthenium’’. There was also very little awareness on hallmarking. (Hallmark is a purity certification of gold articles in accordance with Indian Standard specifications.) To add to the problem, XRF machines that are used to test the purity of gold were not calibrated to identify iridium and ruthenium.

It was only after an alert from the trading community that BIS conducted a survey in markets across the country and found an extensive use of iridium and ruthenium in gold. “In 2006, we issued a circular to all hallmarking centres to re-calibrate their XRF machines to look for iridium and ruthenium,’’ said the BIS official.

The results of this survey were never made public. That is when the BBA also started checking for iridium and ruthenium “So, even hallmarked gold sold between 2001 and 2006 could be of dodgy quality,’’ said a member of a city-based hallmarking centre.

Several jewellers believe that the damage has already been done. During this period, tonnes of gold had already exchanged hands and consumers were unknowingly investing in ‘spurious’ jewellery.

Growing demand

By then, the word had spread, and the demand for iridium and ruthenium began to climb. When plotted on a graph, prices of gold, iridium and ruthenium could be seen moving along the same path. For instance, on January 12, 2004, international rate for gold stood at $142.56 for 10gm; the same quantity of iridium was priced at $27.97 and ruthenium at $13.83. In two months, iridium shot up to $73.95 and ruthenium was selling at $21.86—both for 10gm each. All the three metals touched their all time high in February-March 2007; gold was priced at $311.44, iridium was $144.69 and ruthenium was being sold at $273.3.

“This was largely because there was an unprecedented demand for both iridium and ruthenium from all kinds of people dealing in gold across India,’’ explained B H Mehta, proprietor of Varsha Bullion and Elemental Analab Hallmarking centre, a Bureau of Indian Standards (BIS)-approved hallmarking centre.

Even now, as per data from the BBA, only 46% of gold sold in India is hallmarked; the percentage is even lower in tier two cities and villages, which make up close to 70% of India’s gold consumption. It is paradoxical, but both iridium and ruthenium have now become such high-priced substances that buyers get both these adulterants tested too, just to ensure that the metals are not adulterated with another cheaper substance.

Know your metals

Gold is usually hardened by alloying with other metals such as silver and copper. The gold content of an alloy is stated in carats; by definition, pure gold is 24 carats, and thus a 75% gold alloy is 18 carats.

Iridium belongs to the platinum family of metals. It is white with a yellowish hue. Although brittle, it is extremely hard (over four times that of platinum). A shiny, oxidation-resistant metal, iridium also adds to the brilliance and durability of jewellery.

Ruthenium, also a part of the platinum family, remains hard and brittle even at temperatures as high as 1,500C. When mixed with gold, both iridium and ruthenium do not form an alloy, but sit tight in the yellow metal.

Is your gold hallmarked?

Hallmark is a purity certification of gold articles in accordance with Indian Standard specifications. A hallmarked piece of jewellery will have five logos embossed on the back.  These are the logos of the retailer, the hallmarking centre, the Bureau of Indian Standards, the code of the karigar and the year in which the jewellery was hallmarked.

If the jewellery does not meet the standards specified in the bill, the retailer and the hallmarking centre have to make good the loss to the consumer.

 Here’s some info for empowered jewellery shopping –  https://wealthymatters.com/2011/01/18/empowered-jewellery-shopping/

About Keerthika Singaravel
Engineer,Investor,Businessperson

7 Responses to The Dirty Truth About Indian Gold

  1. EndtheFed says:

    Iridium may soon be worth more than gold so not to worry. Besides it is so rare that there will never be enough to compare to gold. You can purchase iridium directly through “preciousmetalpurchase” in California.

    • Glenn,the issue is that Indian customers specifically pay for gold as its seen as an investment for tough times.Platinum and platinum group metals are not very well known or accepted as investments in India.And a person will find almost no place to sell them in India.Hence rarity is not of much use in the circumstance.It’s like meteor rocks,there are buyers in America and they are set in luxury watches but they have no resale value in India.

  2. Gabriel says:

    I like the tips you offer inside your articles. I will bookmark your website and return on a regular basis. I’m sure I will learn lots of new things by this following!

  3. Guzdar says:

    Excellent blog here! Regards and keep posting things like ‘The Dirty Truth About Indian Gold.’They are well worth reading

  4. Deepa says:

    Pretty scary.We really more ethics in India.

  5. Bobby says:

    Truly shocking news.I can’t believe just how much people cheat.

  6. Pierre says:

    I cant understand why Indians are so crazy about gold.Gold is the most dangerous ponzi scheme imaginable set to fall apart for the simple reason that it relies on the greater fool theory of someone else buying gold at a higher price. Gold pays no interest and is such nothing more than a fallacious “investment”.

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