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Diwali: The Festival of Lights and Sparkling Gold

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Diwali is a five-day celebration by millions of Hindus, Sikhs and Jains across the world. Known as the Festival of Lights, this religious holiday usually consists of feasts, fireworks, and lamp lighting.

This year, Diwali falls on November 14th, but the planning of gift-buying for the festival started long before this date.  According to one article, The History of the Diwali Holiday and Gold Buying, “One tradition that is recognised among almost everyone who celebrates Diwali is the exchanging of gifts and the purchasing of goods for the home. Purchasing and/or exchanging gifts of gold (and sometimes silver) is especially popular, as it is believed that the precious metal will help attract wealth and prosperity. Among those who celebrate the birth of Lakshmi, the first day of Diwali, called ‘Dhanteras,’ is a day of purchasing and exchanging gold with friends, family, and neighbours.”

The article goes on to say that jewellers and gold coin dealers in India frequently see a spike of 20%-30% in sales leading up to the festival.

A recent article reported that “jewellers and companies in India are stocking up on gold in anticipation of this festive season demand. The import of gold into India rose by a whopping 107% month-on-month in August, according to Mumbai-based investment firm Edelweiss investor research.”

However, The India Times reported last month that gold imports were down 57% to USD 6.8 billion in H1 FY21. “India is the largest importer of gold, which mainly caters to the demand of the jewellery industry. In volume terms, the country imports 800-900 tons of gold annually.” However, another issue of the India Times says that there have been improvements in demand and gold imports are likely to be 25-30 tons in October, as against 11 tons in September.

It can be very confusing.  What is even more confusing, however, is that when it comes to jewellery and other precious metal items, the gold may look the same but the content may vary. Fine gold is basically pure gold with fineness of 999 or above. Gold alloys include yellow gold, which has silver as the main alloying element, rose gold, which is alloyed with copper, and white gold, which has either palladium or nickel as the main alloying elements.

Since gold is trading at over $1,900 per ounce at this writing, it is crucial to know the exact metal content of the item.  Determining what other precious metals besides gold may be present in a sample can be a challenge.  As we wrote in a previous article, it may also be difficult to determine the right karats or to detect gold plating.

An important issue is the difficulty of keeping the sample intact when doing a test to determine the true precious metal content of a sample. Another challenge is the market competition. Pawn shops and cash for gold businesses have to offer very high prices to close a deal, and at the same time, make sure that the transaction is profitable. Margins are very tight, and the price of gold fluctuates every day. But one of the biggest risks is people trying to commit fraud.

Verification tests that businesses use to combat these risks include the scratch and acid test, which is widely used but not very accurate and potentially dangerous. The most precise method is fire assay, but this method destroys the sample. Laboratory methods with expensive machines require extensive sample preparation. Finally, there is portable X-ray florescence (XRF), a non-destructive method that measures up to 22 elements in one reading. For businesses that need an accurate, fast, easy, non-destructive method for a reasonable price, portable XRF analysers are the best possible solution among all the techniques.

Source: Thermo Fisher Scientific – Analyzing Metals

Blog, Diwali, gold, jewellery, Precious Metals, XRF