The cash for gold business: how India buys back its household gold
SRF Capital Studio Research DeskFunding Intelligence, SRF Capital StudioIndian homes sell back only a sliver of their gold each year, and the buyer's margin on it is thin enough to vanish in one bad week.
Summary
- India recycled about 114 tonnes of gold in 2024, most of it old jewellery. At August 2026 prices that metal is worth roughly ₹1.77 lakh crore.
- A buyer earns a spread on the gold price, roughly 0.5 to 2 percent at an organised chain, on one operator's own figures. Profit therefore rests on volume, a fast cash cycle and tight control of price risk.
- Our view: the scarce asset is the trusted, compliant counter where households hand over gold. Jewellers and gold-loan lenders now want it too, so a stand-alone chain should build either to scale or to sell.
What counts as the gold purchase business?
This report is about one trade: buying used gold from the public for money, testing it, and passing it on to a refiner. People call it cash for gold, gold buyback or the gold purchase business. When we say the gold recycling industry in India, we mean jewellery scrap.
Gold recovered from old phones and circuit boards is a separate business, covered in our piece on urban mining in India. So are the refineries at the end of the chain, which we cover in India's gold refineries and GIFT City.
We wrote it for two readers. One is a founder opening or scaling a chain of gold-buying branches. The other is an investor deciding whether such a chain, or the lenders and refiners beside it, deserves capital. Figures are as of October 2026, and each one is attributed.
How big is the world's scrap gold trade?
Recycling is a large share of the world's gold. The World Gold Council (WGC) counts 1,404 tonnes of recycled gold in 2025, the most since 2012, against 1,365 tonnes in 2024. Total supply was a record 5,002 tonnes, so recycled metal made up about 28 percent of it.
Most of it is old jewellery sold back by its owners. Electronic and industrial scrap is a smaller stream, growing as the electronics industry grows.
The surprise is how little recycling moved with the price. The average gold price rose 44 percent in 2025, yet recycled supply grew only 2 to 3 percent. The WGC put this down to the behaviour of holders in some large markets.
Holders in the US, Europe and Japan sold more. Holders in India, the Middle East and South-East Asia sold less. In India, the WGC says, families swapped old jewellery for new and pledged gold for loans instead of selling it outright.
Where does India sit in world gold recycling?
The WGC's 2022 study of Indian refining and recycling ranked India the world's fourth-largest gold recycler. It has supplied about 8 percent of global scrap on average, a small flow next to what Indian homes own.
Estimates of household gold vary. The WGC uses about 25,000 tonnes. Morgan Stanley put it at 34,600 tonnes in June 2025, worth about 88.8 percent of GDP at the prices of the time. On either number, India sells back well under 1 percent of its stock in a year.
The refining side grew first. Formal refineries rose from fewer than five in 2013 to 33 in 2021, with about 1,800 tonnes of yearly capacity, the WGC found. It named MMTC-PAMP as India's only refinery accredited by the London Bullion Market Association for both gold and silver.
India built the furnaces before it built the counters that feed them. The plant can process far more gold than the country collects. What is scarce is a trusted, compliant way to bring gold out of homes, and that is the business this report is about.
India built the furnaces before it built the counters that feed them.
How much gold does India sell back each year?
India recycled 114.3 tonnes of gold in 2024, down 2 percent from 117.1 tonnes in 2023, according to WGC data reported by PTI. Volumes in 2025 were weaker still. The WGC said Indian recycling stayed soft all year as households exchanged and pledged gold.
This year has sent mixed signals. WGC data put India's recycling at 19.2 tonnes in April to June 2026, down 17 percent on a year earlier. The council pointed to a lower gold price and a larger share of exchange deals.
The India Bullion and Jewellers Association (IBJA) counted the same quarter differently. It estimated close to 50 tonnes of old gold sold, up more than half on a year earlier, as the May duty rise and falling prices hit new buying.
Both can be right. The WGC said more exchange meant less recycling, which suggests exchanged gold sits outside its recycling line. IBJA's broader count of old gold sold appears to include it. When a pitch deck quotes a recycling number, ask which one it is.
Value is the number that has changed. At ₹15,500 a gram, close to IBJA's 24-carat rate at the end of August 2026, 114 tonnes is worth about ₹1.77 lakh crore. Tonnage barely moved between 2023 and 2024, while the rupee value climbed with the price.
That headline flatters the industry. A buyer keeps a spread, not the gold. If spreads across all channels average 1 to 4 percent, the whole country's gross margin pool is about ₹1,800 to ₹7,100 crore a year, before any costs.
India's gold purchase market in six numbers
| Measure | Figure | Basis |
|---|---|---|
| Recycled gold, India | 114.3 tonnes in 2024, from 117.1 tonnes in 2023 | WGC, via PTI |
| Recycled gold, India, April to June 2026 | 19.2 tonnes, down 17% on a year earlier | WGC, via PTI |
| Old gold sold, April to June 2026 | Close to 50 tonnes | IBJA estimate, a broader count |
| Household gold stock | About 25,000 to 34,600 tonnes | WGC; Morgan Stanley (June 2025) |
| Value of 114 tonnes | About ₹1.77 lakh crore | SRF arithmetic at ₹15,500 a gram |
| Gross spread pool, all channels | About ₹1,800 to ₹7,100 crore a year | SRF arithmetic at 1% to 4% spreads |
Where does India's used gold come from, and where does it go?
Old gold reaches the market through five doors. Each has its own seller, margin and growth pattern, and an operator should know which door it stands at.
The five flows of used gold into India's market
| Flow | Who brings the gold | What drives volume | Margin for the buyer |
|---|---|---|---|
| Cash sales by households | Families needing money, or cashing in at a high price | Price spikes, emergencies, school and wedding bills | Thin to wide, depending on how well the seller knows the rate |
| Released pledged gold | Borrowers who cannot repay, through lenders or agents | The size of the gold-loan book and its defaults | Thin; the seller takes what is offered |
| Old-for-new exchange | Families trading old jewellery for new at a jeweller | Weddings and festivals | Folded into the sale of new jewellery |
| Branded buyback chains | Walk-in sellers who want a tested, published rate | Trust, branch density, formalisation | Moderate, with a brand premium |
| Industrial and e-waste gold | Electronics and component recyclers | Growth of electronics and EV output | Process-led; a different business |
Exchange is the door that pays in new jewellery instead of cash, and at the big chains it is growing fast. Kalyan Jewellers said recycled gold made up 46 percent of its India business in the June 2026 quarter, up from 31 percent in the March quarter, Indian Jeweller reported.
How a gram moves from a cupboard to a refined bar
- Collection comes first. The seller brings gold to a branch, a jeweller or a lender. Whoever owns that trusted touchpoint holds the scarce position in the chain.
- Then the piece is tested. It is weighed and its purity read, usually with an X-ray fluorescence (XRF) machine that measures metal content without damaging it. Trust is won or lost here.
- The buyer pays against a reference rate. That is usually IBJA's published daily rate, less the buyer's spread. Small sums go in cash and larger ones by bank transfer.
- Purchases are pooled and shipped. Branch lots are insured and moved to the refiner. Speed matters most at this step, because every day in transit is a day of price risk.
- The refiner purifies it. It melts, assays and refines the gold to 995 or 999 fineness, and keeps a small fee.
- Bars go back to market. Jewellers, banks and bullion dealers buy them. The buyer's cash comes back, and the cycle starts again.
Who sells used gold, and why should a buyer care?
Most industries segment their market by buyer. This one segments by seller, because who walks in decides the margin, the risk and the paperwork.
Who sells used gold, and what each seller means for the buyer
| Seller | Why they sell | How easily they switch buyers | How hard they bargain |
|---|---|---|---|
| Household in need | Medical bills, school fees, a business shortfall | Very easily; goes to the nearest counter it trusts | Wants the most money, fast |
| Household upgrading | Old designs traded for new jewellery | Less easily; tied to its jeweller | Accepts the rate bundled into a purchase |
| Borrower in default | Cannot redeem pledged gold | Little choice; the lender or agent handles it | Takes what is offered |
| Small jeweller or artisan | Turning scrap and crude bars into usable metal | Rarely; ties are personal and often on credit | Hard; fractions of a percent matter |
Every seller has the same problem. They cannot check what the piece weighs once stones and solder come out, what its true purity is, or what the fair rate is that minute.
The buyer's margin lives inside that gap. An opaque counter widens it with deductions the seller cannot see. A transparent chain narrows it on purpose: the XRF reading on a screen, the rate on the wall, every deduction on the invoice.
The transparent chain earns less per gram and makes it back on volume and repeat visits. In this trade, trust is the product, and transparency is how it is sold.
Where does the margin in gold buying come from?
The operator never earns the gold price. It earns the difference between what it pays the seller and what the refiner pays it. Testing, refining, branch costs and the cost of cash tied up in between all come out of that difference.
We found no independent survey of these spreads. The most detailed public account comes from an operator, Attica Gold Company, whose May 2026 explainer gives several ranges that do not fully agree with each other.
Read with that caution, its figures run as follows. An organised chain takes roughly 0.5 to 2 percent of the IBJA rate, and 0.8 to 1.5 percent is quoted for ISO-certified chains. Mid-tier jewellers take 2 to 4 percent, informal counters 4 to 10 percent. The refiner keeps about 0.3 to 0.8 percent.
Spreads by channel, as one operator describes them
| Channel | Spread on the reference rate | What the spread rests on |
|---|---|---|
| Informal counter or pop-up stall | 4% to 10%, sometimes more | The seller not knowing the rate; deductions with no audit trail |
| Local jeweller or pawnbroker | 2% to 4% | Relationships, local trust, bundling with new jewellery |
| Organised chain | 0.5% to 2% (0.8% to 1.5% for ISO-certified chains) | Volume, brand and a refiner relationship |
| Refiner | 0.3% to 0.8% | Plant, assaying and volume |
Two things follow. The widest spreads sit with the sellers least able to check them, which is the business formalisation erodes. And an organised chain's net margin is a fraction of 1 percent. Attica's page puts a buyer's net profit at 0.1 to 0.7 percent, depending on which of its tables you read.
Large jewellers see the spread differently. Kalyan Jewellers' executive director, Ramesh Kalyanaraman, said cash for gold should offset the margin it gives up on exchanges. Recycled gold can be bought below spot and turned into new stock without importing it. For a jeweller, buying is a cheaper raw material first and a profit line second.
What one gold-buying branch earns: an illustration
The figures below are an illustration built from arithmetic, not data from any company. They assume ₹15,500 per gram of fine gold, a 1.5 percent gross spread, a 0.4 percent refining and assay cost, and a ten-day cash cycle.
Running costs for the branch cover rent, two or three staff, an XRF machine, security and insurance. We assume ₹2.5 lakh a month, rising to ₹3 lakh at the highest volume.
Illustrative economics of one gold-buying branch at three volumes
| Fine gold bought a month | Value bought | Spread after refining | Operating profit a month | Cash tied up, 10-day cycle | Yearly return on that cash |
|---|---|---|---|---|---|
| 1 kg | ₹1.55 crore | ₹1.71 lakh | Loss of ₹0.80 lakh | ₹0.52 crore | Negative |
| 2 kg | ₹3.10 crore | ₹3.41 lakh | ₹0.91 lakh | ₹1.03 crore | About 11% |
| 4 kg | ₹6.20 crore | ₹6.82 lakh | ₹3.82 lakh | ₹2.07 crore | About 22% |
Break-even in this example comes at about 1.5 kg of fine gold a month. Below that, the branch loses money however carefully it is run. Above it, most of each extra gram's spread is profit, because rent and salaries do not rise with volume.
Why is return on capital the number to watch in gold buying?
Margin percentages mislead in this trade, because the gold passing through dwarfs the profit kept. The better measure is how hard each rupee of working capital works. How often can a branch buy, ship, get paid and buy again?
Take the 4 kg branch. On a ten-day cycle it ties up about ₹2.07 crore and earns about 22 percent a year on it. Cut the cycle to five days and the same profit needs half the cash, so the return roughly doubles to 44 percent.
Attica's explainer says refiners take 7 to 14 days to pay a buyer. A refiner that pays fast can be worth more than one that pays a few hundredths of a percent more, because speed is what frees the cash.
What happens to a gold buyer when the price moves?
When the price rises, households may sell more, and every gram is worth more. The cash needed to buy the same weight rises too. A chain growing into a price spike can run short of money just as business booms.
When the price falls, sellers wait. Gold bought yesterday is sold to the refiner at today's lower price, and on a thin spread that turns a profit into a loss.
The operator earns about 1 percent but carries all of the gold price on every gram it holds. In the 2 kg branch above, ten days of stock is worth about ₹1.03 crore. A 3 percent fall over those ten days costs ₹3.1 lakh, more than three months of the branch's operating profit.
The operator earns about 1 percent but carries all of the gold price on every gram it holds.
Good operators keep the holding window short. They buy, pool into a lot and ship within a day or two, and they price every purchase off the live rate. Where volume allows, they hedge the gold in transit on the commodity exchange, so they earn the spread and leave the price alone.
High prices do not guarantee volume. In 2025 Indian households met record prices by pledging gold more than selling it. ICRA puts the organised gold-loan market at about ₹18 lakh crore in March 2026 and expects it to pass ₹30 lakh crore by March 2028.
Every family that borrows against its gold is a seller who chose not to sell. For a buyer, the loan book is a rival today and, when loans go bad, a source of metal later.
How mature are India's gold-buying operators?
Operators at very different stages compete on the same street. At one end sits an owner with a scale and a touchstone. At the other is a refiner-backed chain across several states, with XRF machines, a central rate and a hedging desk.
Four stages of a gold-buying business
| Stage | Gold handled a year | Typical profile | What drives growth | Next prize |
|---|---|---|---|---|
| 1. Counter operator | Under ₹20 crore (about 13 kg) | Owner-run, mostly cash | Word of mouth | Formalising, and surviving it |
| 2. Organised regional buyer | ₹20 crore to ₹200 crore (about 13 to 130 kg) | A few branches, XRF testing, GST registered | Branch density | A brand and a refiner tie-up |
| 3. Scaled chain | ₹200 crore to ₹2,000 crore (about 130 kg to 1.3 tonnes) | Owned and franchised branches, written procedures | Franchising with central hedging | A national brand and seller data |
| 4. Refiner-integrated group | Above ₹2,000 crore (above 1.3 tonnes) | Owns or anchors a refinery | Backward integration | The full spread from counter to bar |
The steps between stages are not gradual. Each needs a different kind of money and discipline, and most operators stop at one of two walls.
Where do gold buyers stall as they grow?
Why the first wall for a gold buyer is formalisation
Moving from one counter to a compliant regional business costs more than it earns at first. GST registration, full KYC, bank payments above the cash limits and an XRF machine all add cost. The informal counter next door carries none of it.
So many owners never cross. In the short run, opacity pays better than openness. Those who cross are buying an option on formalisation: organised refiners will deal with them, and they can build a brand the informal trade cannot.
Why the second wall is control across many branches
Going from a handful of branches to dozens is a control problem. Every branch handles valuable, interchangeable metal that is easy to mis-grade, honestly or otherwise.
Scaling safely takes standard testing, one central rate, daily reconciliation of gold and cash, insured transport and price risk run from head office. A chain that adds branches faster than controls adds fraud and price losses to a thin-margin business. This is where monthly planning and controls pay for themselves.
What is pulling scrap gold into the organised trade?
Six forces are moving gold from informal counters to compliant ones. Some are slow and structural. Others arrived only this year.
- Formalisation is under way, slowly. The WGC estimated the unorganised share of scrap collection fell from 70 to 75 percent in 2015 to 60 to 65 percent in 2021. It expected organised refiners' share to rise from under 20 percent to 35 to 40 percent within four to five years. We found no later count showing whether that happened.
- Prices make every gram worth more. Gold crossed ₹1.6 lakh per 10 grams in August 2026, Indian Jeweller reported. A family's old necklace now fetches far more than it did a few years ago, even if households have so far held on.
- Gold loans built a collection grid. A gold-loan branch is already trusted, insured, KYC-compliant and equipped to test gold. NBFC gold loans grew 69.3 percent in the year to June 2026, to ₹3.41 lakh crore, per RBI data. Each such branch could buy outright at little extra cost.
- The rules reward a clean audit trail. Hallmarking with a six-digit HUID, anti-money-laundering reporting and cash limits raise costs for opaque buyers more than for compliant ones. The next section sets them out.
- Jewellers have started buying for cash. Kalyan Jewellers and Titan's Tanishq introduced or expanded cash-for-gold offers from June 2026, and Joyalukkas offers one too. Industry data cited by Indian Jeweller put such deals at about 20 percent of jewellery business in August, against about 5 percent a year earlier.
- Electronics add a second stream. Gold recovered from circuit boards and components is small today. It depends less on household sentiment, and it grows with the country's electronics and EV output.
What rules apply to a gold buying business in India?
We found no licence specific to buying used gold from the public. What applies instead is a set of tax, anti-money-laundering and consumer rules. Together they decide who can operate at scale.
The main rules that shape a gold-buying business
| Rule | What it requires | What it means for a buyer |
|---|---|---|
| GST | Registration above the turnover threshold; 3% GST on gold | Any buyer of real size must register and keep GST-grade books |
| Income-tax Act, section 269ST | No one may receive ₹2 lakh or more in cash from one person in a day or for one transaction | Sellers of larger lots must be paid through the bank |
| Income-tax Act, section 40A(3) | Cash payments above ₹10,000 a day to one person are disallowed as business expenses | Small sums go in cash and the rest by bank transfer |
| PMLA notification of 28 December 2020 | Dealers in precious metals with cash deals of ₹10 lakh or more with a customer become reporting entities | Customer checks, record-keeping and reports to FIU-IND |
| BIS hallmarking with HUID | Where hallmarking is mandatory, jewellers may sell only pieces carrying a six-digit HUID; consumers may still sell old unhallmarked pieces | Old gold keeps coming in, and purity claims are easier to check |
| Customs duty | Effective 15% on imported gold since 13 May 2026 | Domestic scrap is a more attractive substitute for imports; a cut would reverse some of that |
Tax on resold used gold depends on the facts. The GST margin scheme for second-hand goods can apply to some resales, but not once the gold is melted or reworked. Take advice before building a price on it.
Lending against gold is regulated separately. Banks and NBFCs answer to the RBI, whose new gold and silver lending directions took effect on 1 April 2026, and pawnbrokers to state law. A buyer that drifts into lending needs those permissions.
Duty is the live variable. Why it rose to 15 percent is covered in why Modi asked Indians to stop buying gold. Outlook Business reported in late August that a cut was under discussion, so model the business at the old 6 percent rate as well.
How does a gold buyer create value?
Value compounds in a sequence. First, earn the trust that draws volume without overpaying. Then cut the cost of turning ornaments into bars, and ride the shift of gold from informal to organised hands.
- Win the formalisation shift. If organised refiners gained 15 to 20 points of share on about 114 tonnes, 17 to 23 tonnes a year would move into formal hands. That is ₹26,500 to ₹35,300 crore of gold. At a 1.1 percent net spread, it is a profit pool of only ₹290 to ₹390 crore a year.
- Move closer to the refiner. Conversion is the largest cost between an ornament and a bar. As an illustration, a buyer handling 10 tonnes a year, about 9 percent of India's 2024 recycling, handles ₹15,500 crore of gold. Saving 0.3 percent on conversion adds about ₹46.5 crore a year.
- Build density before breadth. Each extra branch in a gold-heavy region shortens the seller's trip and adds volume against the same central overhead. A scattered branch starts from zero.
- Treat compliance as a credential. Clean KYC trails, certified testing and disciplined GST books take years to build. They make a buyer's gold acceptable to top refiners with less re-testing.
- Use what you learn about sellers. A compliant chain knows who sells, how much, how often and at what purity. That record supports gold loans, savings plans and exchange offers, and turns a one-off sale into a relationship.
Who holds India's gold-buying market, and how concentrated is it?
No one dominates gold buying in India. The trade is split across a very large number of jewellers, pawnbrokers and informal counters, with a thin organised layer on top. Large, well-funded neighbours could enter at low cost.
Scale in the organised layer is still modest. Attica Gold Company says it has more than 200 branches across Karnataka, Tamil Nadu, Andhra Pradesh, Telangana and Puducherry. Muthoot Gold Point opened its 111th branch in June 2026. Neither publishes volumes, so no reliable ranking by gold handled exists.
The four tiers of India's gold-buying trade
| Tier | Who | Strength | Weakness |
|---|---|---|---|
| Informal | Pawnbrokers, pop-up counters, small dealers | Nearby, cash on the spot, no paperwork | No audit trail; squeezed by every new rule |
| Jeweller-led | Local and regional jewellers, and since mid-2026 large chains such as Kalyan and Tanishq | Footfall, exchange flow, existing customer trust | Buying is a side line; opaque deductions at smaller shops |
| Branded buyback chains | Attica Gold, Muthoot Gold Point | Brand, XRF testing, published rates, refiner ties | Capital, price risk, fraud control |
| Lender and refiner-backed | Gold-loan NBFCs and banks; refiners such as mmtc-pamp | Capital, branch networks, the refining spread | Further from the walk-in seller who wants cash today |
How were the leading gold buying chains built?
How Attica built a pure-play gold-buying chain
Attica built a brand that does one thing: buy gold from the public. Its website leans on three trust signals: XRF testing, daily IBJA-linked rates and ISO 9001:2015 certification. It grew across the southern states.
The format can be copied. Years of local trust in its home states cannot be copied quickly, and that is the part a rival would need most.
How Muthoot's gold-buying arm used its parent's name
Muthoot Gold Point is run by Muthoot Exim, the precious-metals arm of the 138-year-old Muthoot Pappachan Group. It says it was the first organised player to open a gold recycling centre in India. Its branches pay cash instantly up to ₹10,000 and larger sums by IMPS, NEFT or RTGS.
The buying process is easy to copy. The parent's name and long experience of handling gold are not. That is what an adjacent business brings to this trade.
What makes a gold buying business hard to copy?
Margins are thin and a storefront is easy to copy. The moat is a set of assets that lower the cost of trust and of conversion at scale.
What protects a gold-buying business
| Advantage | How long it lasts | Time to build | Why it matters |
|---|---|---|---|
| Brand trust at the counter | Long | Years | Draws volume without overpaying |
| Refiner relationship or ownership | Long | Years | Cuts conversion cost and speeds payment |
| Branch density in gold-heavy regions | Long | Years and capital | Shortens the seller's trip |
| Compliance record (kyc, iso, GST) | Long | Years | Makes the gold acceptable to top refiners |
| Hedging and price discipline | Medium | Months | Protects the thin spread |
| Seller records | Medium to long | Years | Supports repeat sales and cross-selling |
For a mid-sized player the order matters. Earn trust first, with open testing and published rates, because volume follows trust. Lock in a refiner early. Fill one region before entering the next, and franchise only once central pricing and hedging are fixed.
Which new entrants should a gold buyer worry about?
The biggest threat to a stand-alone chain is a business that already handles gold for another reason. It can add buying at little extra cost.
- Large jewellers have moved first. Kalyan says its cash-for-gold share reached double digits in the June 2026 quarter. Titan introduced or expanded the service from June, but Arun Narayan, who runs its jewellery division, said it was "not seeing significant traction".
- Gold-loan lenders hold the grid. NBFCs and banks have dense branches, KYC, assaying and walk-in borrowers. They can add outright buying and reach distressed sellers and defaulted gold first.
- Refiners want feed. A refinery with spare capacity needs steady, documented scrap. Sponsoring a branded collection arm is one way to get it and keep the full spread.
Rahul Guha of Crisil Ratings told Indian Jeweller that wider cash-for-gold adoption would probably bring tighter purity checks. That favours buyers who already test in the open.
A pure-play buyer cannot out-branch Muthoot Finance or Manappuram. It can out-focus them: be the most trusted, best-paying and fastest-settling buyer in one region. In a consolidating market, that also makes it an attractive acquisition.
What can go wrong for a gold buyer?
Weigh each risk on three things: how likely it is in a given year, how much it hurts, and how much an operator can control it. The deadly risks here are mostly controllable. The slow ones are harder to escape.
The main risks for a gold-buying business, with our rating
| Risk | What happens | Likelihood | Damage | Control |
|---|---|---|---|---|
| Unhedged price exposure | A 3% move in days wipes out weeks of spread | High | Severe | High, through a short holding window and hedging |
| Branch fraud and mis-grading | Overpaying colluding sellers, under-recorded purity, skimming on melt loss | High | High | High, through open XRF, dual weighing, daily reconciliation, CCTV and central rates |
| Anti-money-laundering and KYC enforcement | Penalties or closure for weak KYC and cash handling | Medium | High | Mostly, by over-complying early |
| Working-capital squeeze | Rising prices need more cash for the same weight | Medium | High | High, through fast refiner payment and credit sized to peak prices |
| Volume not following price | Households pledge or hold instead of selling | Medium | Medium | Partly, by keeping costs variable |
| Policy swings | Duty, cash limits or tax treatment change at short notice | Medium | Medium | Partly, by modelling more than one setting |
Three fears come up often and are overstated. A price crash does not kill a hedged buyer, because its income is the spread. Refiners are unlikely to cut buyers out, since collection is the costly part they lack. And the metal is not running out: households hold tens of thousands of tonnes and sell back about a hundred a year.
Working capital is where we see good buyers get caught. Credit lines sized to average prices fail at peak prices. Debt built around the gold-to-cash cycle should be sized for the top of the range.
What will the next ten years bring for gold buyers?
These are our expectations, not forecasts with a model behind them. Recycling volume will stay roughly where it has been, near 100 to 140 tonnes in most years. The organised share of it will grow faster than the total.
We expect one or two national buying brands with a thousand or more collection points by the early 2030s. Most likely they will be built on, or bought by, a gold-loan lender, a refiner or a large jeweller.
Tighter KYC enforcement and more exchange-traded delivery through GIFT City's bullion exchange should widen the gap between compliant and informal buyers. Electronic scrap should grow from a niche into a steadier second source.
The losers are the opaque single counters whose margin depended on sellers not knowing the rate. Published rates, cheap testing and trusted brands are competing that margin away.
What should a founder opening or scaling a gold buying chain do?
- Build trust before branch count. Show the XRF reading, post the rate and itemise every deduction. Volume follows trust; the reverse rarely works.
- Know each branch's break-even volume. In our illustration it is about 1.5 kg of fine gold a month. Do not open a branch you cannot see reaching it within a year.
- Sign a refiner before the tenth branch. Negotiate on speed of payment as hard as on the fee. A faster cycle can double the return on the same cash.
- Centralise the rate and the hedge. No branch should set its own price or hold gold overnight without head office knowing. Ship within a day or two.
- Over-comply from the first day. Bank payments above the cash limits, full KYC and GST-grade books cost money now and become the moat later.
- Fill one region, then the next. Density compounds; scattered branches do not.
- Decide early whether you are building to scale or to sell. Jewellers, lenders and refiners will all want trusted collection. Keep books and seller records clean enough for their diligence.
Our market intelligence work helps founders size a region and its competitors before the first lease is signed.
What should an investor ask before backing a gold buyer?
- Ask for grams, not rupees. Revenue moves with the price. Ask for kilograms of fine gold bought per branch per month, for three years.
- Ask for return on working capital. Margin percentages say little here. The useful figure is yearly profit over the average cash tied up.
- Test price-risk discipline. Ask for the average days from purchase to refiner payment, and how much is hedged. Then look at the worst month of the last three years.
- Check that controls keep pace with openings. Reconciliation, melt-loss tracking and findings should grow with the branch count.
- Map the neighbours. Count gold-loan branches and large jewellers offering cash for gold in each core district.
- Value the exit. In a consolidating market, the likely acquirer and its price can be most of the return.
SRF works with businesses in this trade, among them Value Gold Private Limited. For the wider jewellery chain, see our gems and jewellery page. For a jeweller weighing a buyback counter against more display stock, read our MSME gold guide.
Frequently asked questions
How does a cash for gold business make money?
It pays the seller a little below the reference rate, sells the gold to a refiner close to that rate, and keeps the difference. Testing, refining and running costs come out of it. One operator puts organised chains' spreads at roughly 0.5 to 2 percent.
Is the cash for gold business profitable in India?
It can be, on volume. Net profit is a fraction of 1 percent of the gold handled. A branch must buy enough each month, about 1.5 kg in our illustration, and turn its cash quickly.
Do you need a licence to start a cash for gold business?
We found no licence specific to buying used gold. You need GST registration, local shop registration, KYC and bank payments above the tax cash limits. PMLA reporting applies once cash deals with a customer reach ₹10 lakh, and lending against gold needs separate permission.
Which are the biggest cash for gold companies in India?
No one publishes volumes, so there is no ranking. Among dedicated buyers, Attica Gold says it has more than 200 branches in the south, and Muthoot Gold Point had 111 by June 2026. Large jewellers, including Kalyan and Tanishq, introduced or expanded cash-for-gold offers in 2026.
How much gold is recycled in India?
The WGC counted 114.3 tonnes in 2024 and weaker volumes through 2025. Its figure for April to June 2026 was 19.2 tonnes. IBJA's broader count of old gold sold in that quarter was close to 50 tonnes.
Method and sources
SRF Capital Studio's research desk built this report from public data and checked it on 14 October 2026. Where sources count differently, as the WGC and IBJA do on recycling, we name both. The branch economics are an illustration from stated assumptions, and figures we could not confirm were removed.
- World Gold Council: Gold Demand Trends, full year 2025 (January 2026) and Q2 2026 (July 2026), supply sections.
- World Gold Council: Gold refining and recycling, India gold market series (21 June 2022).
- PTI, via Tribune India and HDFC Sky: WGC India figures for 2024 and for April to June 2026.
- India Bullion and Jewellers Association: old gold sales estimate for April to June 2026, via Kotak Neo (1 July 2026); 24-carat rate of 31 August 2026, via Bhaskar English.
- Morgan Stanley: Indian household gold holdings estimate (June 2025), via Business Standard (10 October 2025).
- ICRA: organised gold-loan market update (July 2026), via Business Today (29 July 2026).
- Reserve Bank of India: sectoral credit data, NBFC gold loans to June 2026, via press reports (August 2026); Lending Against Gold and Silver Collateral Directions, 2025.
- Indian Jeweller: Cash-for-Gold Gains Ground as Jewellers Prepare for Festive Demand (25 August 2026); Old Gold Sales Rise as Prices Cross INR 1.6 Lakh (27 August 2026).
- Attica Gold Company: How gold buyers make money (6 May 2026) and company website.
- Muthoot Exim: Muthoot Gold Point 111th branch release (27 June 2026).
- Ministry of Finance: PMLA notification G.S.R. 799(E) (28 December 2020), via RSM India; Customs Notifications 15 to 18/2026 (May 2026).
- Income-tax Act, 1961: sections 269ST and 40A(3), as summarised by TaxGuru.
- Bureau of Indian Standards: mandatory hallmarking FAQs.
- Outlook Business: report on a possible gold duty cut (26 August 2026).
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