Gold holds deep emotional and financial value for most Indians. While we often see gold in its glittering, finished form – as jewellery or coins – it undergoes a fascinating transformation before reaching that state. Understanding this transformation is more than just a matter of curiosity. It plays a crucial role in determining the value of your gold, especially when you are applying for a Gold Loan . In this blog, let’s understand the gold refining process into 5 simple steps and how the purity of gold directly impacts its loan value. Read on!
Why Refining Gold is Necessary
Raw gold is often extracted from mines or recovered from recycled items, containing impurities like silver, copper, and other metals. These impurities lower the purity of gold and market value. Hence, cleaning raw gold is essential before it can be used for jewellery, investment, or as collateral for a Gold Loan.
How Raw Gold Becomes Pure Gold: Step-by-step Breakdown
Let’s explore the 5 key steps that are involved in transforming raw gold into pure gold:
Step 1: Collection and Initial Inspection
The process begins with collecting raw gold, which could be in the form of:
- Mined gold ore
- Scrap jewellery
- Industrial by-products
Experts examine the gold visually and weigh it to determine the initial content and composition.
Step 2: Melting the Gold
The collected gold is then melted in a high temperature furnace. This step:
- Separates metal with lower melting points
- Turns solid gold into a molten state for further refining
The molten gold is then poured into moulds to form what are called gold bars or doré bars. This is further made ready for further purification.
Step 3: Chemical Treatment
This is the most crucial stage in the gold refining process. Chemicals like aqua regia (a mix of nitric and hydrochloric acid) or chlorine gas are used to:
- Dissolve impurities
- Separate base metals like copper, silver, and zinc
Safety precautions and modern machinery ensure that the gold is handled without environmental damage.
Step 4: Electrolysis
Electro-refining uses electric current to further purify the gold. In this process:
- The gold bar acts as an anode
- A thin sheet of pure gold serves as a cathode
- When the current passes through, pure gold ions deposit on the cathode
This method yields up to 99.99% pure gold.
Step 5: Testing and Certification
Once the gold is purified, it’s tested using:
- XRF (X-ray Fluorescence) for instant purity checks
- Fire assay for precise measurement
The refined gold is then hallmarked, certifying its purity in karats. This certification is vital when using gold as collateral for loans.
How Refined Gold Impacts Gold Loan Value
The purity of gold has a direct influence on how much loan you can secure. Lenders use gold’s purity and weight to calculate its loan-to-value (LTV) ratio. Let’s explore how.
|
So, if you’re planning to apply for a Gold Loan, ensure that gold is either refined or certified to get the best possible terms.
To Conclude
Understanding how raw gold is turned into pure gold is not just educational but practical. The process of refining gold directly impacts its quality, valuation, and ultimately, the loan amount you can use against it. For anyone looking to meet urgent financial needs, pledging pure, certified gold can be a smart financial move.
Frequently Asked Questions
What forms of raw gold are typically refined?
Raw gold can come from mined ore, scrap jewellery, or industrial by-products. All these forms undergo refining to become pure gold.
What chemicals are used in the gold refining process?
Common chemicals include aqua regia (a mix of nitric and hydrochloric acid) and chlorine gas, which help dissolve and separate impurities from gold.
How does gold purity affect the loan amount I can get?
Higher purity gold has a higher market value per gram, which increases the loan-to-value (LTV) ratio and the total loan amount you can receive.
Does refined gold impact the interest rate or loan tenure?
Yes. Refined high-purity gold is considered low-risk collateral, which may lead to lower interest rates and more flexible repayment options.
We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Loan disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply