Buyback
What a jeweller will pay to take a piece back. Almost always based on metal content alone.
Buyback is calculated on the gold weight and purity at the day's rate. Making charges, wastage and GST are not returned.
That means a piece bought with 20% making charges starts around 20% underwater on day one, before any change in the gold rate.
Terms vary a great deal. Some jewellers deduct a further percentage for melting; some pay full rate only against a new purchase.
What you will hear
“Gold jewellery is a safe investment because you can always sell it back.”
In fact: You can, but you recover metal value only. Making charges, wastage and tax are spent. Jewellery is a purchase you can partly liquidate, not an investment.
When you are buying
Get the buyback policy in writing at the time of purchase, and read whether it is cash or exchange-only. Stones, pearls and enamel usually count for nothing at buyback, so a heavily set piece returns less than its price suggests.
Making Charges
What you pay for craftsmanship on top of the metal, charged either per gram or as a percentage.
Wastage
An extra percentage added to the gold weight to cover metal lost during manufacture. Often charged even when no metal is lost.
Gold Rate
The day's price of gold per gram at a stated purity. The base every gold bill is built on.
Valuation
An independent written assessment of what a piece is worth, usually for insurance rather than for sale.
Resale Value
What a piece fetches when sold on. For most jewellery it is the metal value, with the craftsmanship written off.