GOLD ADULTERATION - A NEW RISK TO GOLD JEWELLERY INDUSTRY The rising gold price and competition among the

jewellers i.e. Price war, has pumped a lot of malpractices in the gold jewellery industry. Earlier, gold ornaments were made using Gold, silver and copper, normally standard mix of gold purity arrives as 91.6% of gold and 8.4% of either copper or silver or combination of both. Due to the sharp price increase of yellow metal, now large jewellery manufacturing houses have started to mix other metals especially from the platinum family viz. iridium, palladium, ruthenium, osmium, the main advantage of mixing these metals are due to their characteristics. Normal melting point of gold is 1064 degree Celsius, where as the melting point of iridium, palladium, ruthenium and osmium are 2410, 1554, 2250, 3045 degrees respectively, which means if mixed with the gold and expose to a temperature close to 1064degrees, gold will get melted whereas the platinum family metals will be still, in the solid form and will stay in the same form inside the melted bar. Price wise platinum family metals are cheaper compare to gold and the density is also somewhat par with gold. Another interesting thing about these mix is that even carat analyser will be a failure to detect the presence of platinum family metals in the gold. Carat analyser will give the purity of only outer surface i.e. about 0.75 micron depth, beyond that analyser rays will be hard to penetrate. Moreover carat analyser requires calibration with all sample metals, but majority of the jewelleries have calibrated their carat analyser only main metals viz. platinum, gold, silver and copper, hence the presence of platinum family metals will not be traceable through carat analyser. Bureaus of Indian Standard (BIS) has issued notification to all hall marking centres situated in different parts of the country about the calibration of carat analyser with all metals used in the gold industry, but the status of implementation is still in dark. Below mentioned table will give an insight on the scientific and economic characteristics of these metals

Sl. No. 1 2 3

Characteristics Density (g/cm ) Melting Point Celsius

o 3

Platinum 21.45 1772 1674

Palladium 12.02 1554 699

Iridium 22.65 2410 1085

Ruthenium 12.2 2250 125

Osmium 22.4 3045 1040

Gold 19.69 1064 1665

Silver 10.51 961 32.63

Copper 8.96 1083 3.88

Price in $/troy ounce As on 20.03.2012

From the above table it is evident that gold adulteration is possible without compromising any other economic values i.e., price margin

How Gold Adulteration affects the customers ? Normally public invest in gold in the form of bullions or ornaments, in case of ornaments standard purity should be 916 or 22CT, which means if a customer has purchased 10gms of 22CT item then it should contain 91.6% i.e. 9.16 gms of gold and 8.4% which is 0.84 gms of copper or silver or combination of both. But in the adulterated gold inside the ornaments presence of low cost platinum family members will be there in solid form itself which inter alia will reduce the actual content of gold, in other words, in adulterated 22CT gold, presence of gold will be only 86% to 88% and 14% to 12% will be iridium, palladium, ruthenium, silver and copper. Normally children have the habit of chewing the locket in chains or chains itself, as gold will not harm the body, but the platinum family members may invite a few disorders in the form of allergy, radiation effect in the body on oral consumption. How to detect Gold Adulteration ? It can be detected only by assaying i.e., refining of gold using aqua regia mixture of Hydrochloric acid and nitric acid made up of a ratio of 1:3 parts Nitric Acid and Hydrochloric Acid. Calibrating the carat analyser with metals used for adulteration viz. iridium, palladium, ruthenium and osmium also will help to detect the presence of impurities to a certain extent.

Published on 20th March, 2012

Raghu.G DGM Internal Audit Manappuram Gold Manappuram Finance Ltd Phone : 9847715645