It is considered auspicious to buy gold on the occasion of Dhanteras, Diwali and Akshay Tritiya. One can buy physical gold in the form of jewellery, gold coins, bars and biscuits. While people normally use ‘karat‘ as a measurement unit for the purity of gold, not many are aware that purity of gold is measured in the form of fineness as well.
There are two ways to measure purity of gold – Karat and fineness. According to the World Gold Council website, ‘karat’ is a measurement of purity of gold alloyed with other metals. 24Karat gold is considered pure gold as no other metal is mixed in it. Fineness is another way of expressing the amount of pure gold metal content in any gold object. Fineness is purity expressed in parts per thousand. Hence, a 24Karat gold should be of 1.0 fineness (24/24 = 1.00). However, in practice, there is likely to be a very slight impurity in any gold because normally gold can only be refined to a fineness level of 999.9 parts per thousand. The gold is then described as being of 999.9 fineness.
A jeweller will offer you 24 Karat gold either in terms of 995 fineness or 999 fineness or in both (separately). It is important to understand the difference between the two. Though both are considered 24 karat gold, however, gold of 999 fineness is purer than gold of 995 fineness.
999 fineness is purer than 995 fineness
Vikas Singh, MD & CEO of MMTC-PAMP says, “995, 999 and 999.9 purity levels are an international nomenclature used to define the purity of gold per 1,000 grams. At a weight of 1,000 grams of gold, a purity of 995 means that you get 995 grams of gold with 5 grams of another metal. 999 purity means 999 grams of gold with 1 gram of another metal, while 999.9 means you get only 0.1 gram of another metal while the rest is pure gold. The difference between 995, 999 and 999.9 fineness lies in the purity level of the gold.”
Suvankar Sen, MD & CEO of Senco Gold & Diamonds says, “24Karat gold can be in either 999 or 995 fineness. 999 fineness indicates that it is 99.9% gold and only 0.1% alloy or impurity and 995 fineness means that it is 99.5% gold and 0.5% alloy or impurity.”
Surendra Mehta, National Secretary India Bullion and Jewellers Association Ltd. (IBJA) says, “999 fineness is the purest gold which one can own whereas 995 fineness is considered as standard gold which is used for trading purposes on MCX and for international trading.”
Dr C. Vinod Hayagriv, Managing Director & Director, C. Krishniah Chetty group of jewellers says, “Both 999 and 995 fineness are the purest forms of gold. No gold refinery is able to consistently produce greater than 99.90 or 99.50% pure gold. These two purities are produced consistently for easy business process standardisation. Few gold refineries can produce 99.99% purity of gold, therefore the supply of such gold is inconsistent. Gold in this high purity is mainly used as raw material for manufacturing jewellery.”
Price difference between 999 and 995 fineness
As purity of 999 fineness gold is higher than 995 fineness gold, naturally there will be price difference as well. Sen says, “In terms of the price difference, the international prices of 999 fineness is usually higher by 0.4% or half a percentage as compared to 995 fineness. So accordingly, in the bullion market also, 999 purity gold prices are 0.4% higher than 995 gold purity.”
Mehta from IBJA explains the price difference with an example. According to him, “Price difference is based on purity of the gold. If price of 995 fineness gold, is say 100, then price of 999 fineness gold will be 999/995*100= 100.40”
Type of gold jewellery
If you want to buy the purest form of gold i.e., 999 fineness then what are your options? Can you buy jewellery such as earrings, rings, necklaces etc in 24Karat gold or only gold coins are available in 24Karat gold?
Singh from MMTC-PAMP says, “Gold at 999 fineness is not hard enough to make jewellery. Hence, 22K gold and below is used for the making of jewellery as gold is combined with other metals to improve hardness, malleability and strength. However, gold items in 995 fineness in the market can include coins, bars, pendants and other ornaments.”
Sen says, “Jewellery manufacturing is only done in 22, 18 and 14Karats. Usually, bars and coins are available in 995 and 999 fineness. And in general, 999 and 995 gold jewellery is only available in the form of bars and coins, which can be worn as a pendants with chains.” He further adds, “24Karat jewellery is very rare jewellery for which special machines are required. However, 23Karat jewellery is selling in certain markets of Western India – such jewellery is more culture-based and traditional and available in small sizes and pieces.”
Mehta also says, “Only gold coins and bars can be bought in 999 and 995 fineness.”
There can be certain jewellers offering jewellery in 24Karat gold as well. Hayagriv says, “In 24Karat, gold jewellery – rings and chains mostly – can be bought in 995 fineness only. However, there will be limited designs availability in 995 fineness of 24 karat gold.”
Hallmarking of 24Karat Gold
From June 16, 2021, the government has made hallmarking of gold jewellery mandatory. Hallmarking is mandatory for all the six caratages of gold jewellery/artefacts specified in IS 1417 such as 14, 18, 20, 22, 23 and 24 karat gold jewellery. Further, for 24Karat gold, 995 fineness is used.
Mehta from IBJA says, “If gold jewellery of 24 karat is bought, then hallmarking is mandatory. However, if gold coins, bullions or bars of 24Karat are bought, then hallmarking is not mandatory.”