What Actually Happens to Gold Between the Shop and the Workshop

A customer sees a finished piece in a case and a bill at a counter. Between those two things sits a relationship that most buyers never think about: the one between the shop and the karigar who actually made what they are buying.

Almost no retail jewellery shop in Nepal manufactures everything it sells. Metal goes out, work comes back, and the arithmetic of that exchange is where a jewellery business is either sound or quietly bleeding.

The round trip

In simplified form it runs like this.

1. The shop issues metal to a karigar by weight, at a recorded purity.
2. The karigar works it, adding solder and sometimes additional alloy.
3. The finished piece comes back, weighed again.
4. The shop pays for the labour, and accounts for the difference between the metal that went out and the metal that came back.

Step four is the one that matters. Some of the difference is legitimate loss. Some of it is solder that has been added. Some of it should have come back as scrap and sweep, and did.

Why the weights never simply match

Several reasons, all real.

• Filing and polishing remove metal, and while a workshop collects what it can, collection is never complete.
• Soldering adds a different alloy at every joint, so a finished piece can come back heavier in gross terms while containing the same or less fine gold.
• Melting loss occurs each time metal is taken to temperature.
• Rejected work has to be melted and started again, and the loss happens twice.

None of this is unusual and none of it is suspicious. What matters is that it is measured, agreed in advance as a percentage, and reconciled.

Where it goes wrong

Rarely through dishonesty, in most shops. Overwhelmingly through not writing things down.

A busy shop in a wedding season issues metal to several karigars, takes in old gold from customers, sends some of it for refining, and receives finished pieces back on different days from the ones the paperwork suggests. If issues and receipts are not recorded against each other at the time, the position becomes unrecoverable within weeks. Not wrong — unrecoverable, which is worse, because there is no way to find out.

The result is a shop that knows its cash position precisely and its metal position not at all. Since metal is the overwhelming majority of the capital in the business, that is a serious blind spot to run with.

What good practice looks like

• Every issue of metal recorded with date, karigar, weight and purity.
• Every receipt recorded against the issue it belongs to, not simply as an arrival.
• An agreed wastage percentage per karigar and per type of work, set in advance.
• Scrap and sweep returned and weighed, rather than assumed.
• A periodic reconciliation — metal issued, metal returned as finished work, metal returned as scrap, and the difference compared against the agreed allowance.

Shops that do this find the discrepancies are small and explainable. Shops that do not, find out at a stock count, at which point the explanation is gone.

Why a customer should care at all

Two reasons, both practical.

The first is that the wastage percentage on your bill is not arbitrary. It reflects a real cost that the shop itself incurs, and a shop with good control over its workshop losses can charge less for it. If you are comparing two quotes, a much lower wastage figure often means better workshop discipline rather than a lower margin.

The second is that when you leave your own old gold with a shop to be remade, you are entering this same system. The care with which a shop records its karigar movements is a fair proxy for the care with which it will record yours.

Ask, when you hand over old gold, what receipt you will be given and what it will say. The answer tells you a great deal about the business, and it takes ten seconds.