It is very often seen in India that when in dire need of cash, people turn to monetising their gold holdings- especially jewellery. In most cases, it has been observed that money encashed on selling gold tends to be much lower than one's expectation.
Inorder to avoid further disappointment, following are the few checks before selling gold ornaments
1) Retain invoice
A good jeweller will always ask for the purchase document or invoice when you go to sell jewellery. If you are heading to the same shop from where you brought the piece, years before; incase of any disputes regarding purity etc, the retailer won't be in a position to contest, as the details of the same will be clearly stated in the bill of purchase.
2) What's it worth?
It is very important to have a proper understanding of the worth of gold that you are intending to sell. For this reason take quotes from multiple stores. Since there are no standardized methods which can be used to determine the sell price, there can be quiet some difference between the quotes procured. Get atleast three to four quotes, such that one can fully appraise the value of the jewellery and settle for the highest price possible for the piece you are parting with.
3) Check purity
Before you sell, check if your jewellery is hallmarked or not. Hallmarking establishes the purity of gold jewellery. Any jewellery that bears a 916 hallmark means 91.6% purity of gold for 22 carat gold. Jewelers would anytime prefer a 916 hallmarked gold than a non-hallmarked gold as there is no authenticity of its purity.
Now for the jewellery that is not hallmarked, take it first to a store which has a carat meter, which establishes the purity of gold. Incase, you want a neutral ground, if you are a Mumbai resident, one can avail the services of Bombay Bullion Association, located at Zaveri Bazaar. Post testing the gold ornament, a certificate with the details regarding proportion of various other elements (silver, copper etc) other than gold in that jewellery along with its final purity (in karats) will be issued.
4) Deciding the final price
Gold shops which take used gold will first melt the jewellery in an induction furnace and the gold available thereafter which is free of any impurities is taken for deciding the price. This entire process is done at a nominal cost which will be deducted from the final price of gold. This deduction ranges between 4-6%.
In some other cases, shops have a decided sell price for every 10 grams, in the same manner as that of a buy price. It is generally observed that the sell price tends to be lower than the buy price by 6-7%.
Finally, remember, in the process of selling gold jewellery, one will lose out on the entire making/labour charge paid at the time of purchase (which forms a major chunk of jewellery price) and also the tax paid.
5) Where to sell
The best option is to go to a reputed jewellery store as the chances of getting a fair price (market value) is the highest. However, there's a small glitch here. As a policy, several stores will buyback only those pieces of jewellery which have been brought from them and not that of other stores even if you posses the bill of the item.
In India, pawn shops/ gold buyers are the other option where one goes in times of emergency. But please note that these shops often indulge in malpractices and one may end up getting the reduced price for ones possession.