A gold shop's stock is not measured by the number of pieces. Two pieces of the same karat can differ in weight, and an 18K piece does not equal a 22K piece of the same weight. That is why gold stock is managed in two units together: grams and karat.
This guide sets out practical steps for keeping control of your stock, from the moment a piece enters the shop until it is counted.
Why counting pieces is not enough
A count tells you that every piece is there; it does not tell you whether its weight has changed. A piece swapped for a lighter one, a weighing error at purchase, or a karat recorded wrongly are all differences that only show up in weight. And in the gold trade, profit and loss are worked out in grams before they are worked out in dinars.
Grams and the 24K equivalent
Karat is the share of pure gold in a piece. 24K is almost pure gold, 22K is 91.7% gold, 21K is 87.5% and 18K is 75%. To add up the weights of different karats in a single figure, convert each weight to its 24K equivalent:
Equivalent weight = weight × karat ÷ 24
| Karat | Weight | 24K equivalent |
|---|---|---|
| 24 | 10.000 g | 10.000 g |
| 22 | 10.000 g | 9.167 g |
| 21 | 10.000 g | 8.750 g |
| 18 | 10.000 g | 7.500 g |
This tells you how much pure gold the whole branch holds, and lets you compare branches whatever their karats. Still keep a separate balance for each karat, because buying and selling happen at the actual karat.
What to record for each piece
When a piece enters stock, whether from a purchase, manufacturing or a transfer, record:
- A unique code (barcode) printed on its tag.
- Its karat and its weight in grams.
- The making cost, because it is part of the piece's cost that does not change with the gold price.
- The branch where it is kept.
If the piece carries precious stones, record the stones at their value in a separate register, and do not count their weight as gold.
Raw and used gold
Not all of a shop's gold is pieces on display. Used gold you buy from customers, slow-moving pieces that are scrapped, and gold sent to the manufacturer are all balances by weight and karat, and they must stay separate from the display stock:
- A raw-gold box in every branch, which used gold enters at its weight and karat.
- A slow-moving piece that is scrapped leaves the display stock, the net weight of its gold goes into raw gold, and the making cost lost in melting is recorded.
- Gold sent for manufacturing or refining stays in the manufacturer's custody by weight until it returns, and any difference is recorded when it comes back.
Reconcile every shift
At the end of every shift, compare the opening and closing balances for each karat: what was sold, what was bought and what was transferred. A difference that shows up today is easy to trace; one that shows up a month later is hard to explain.
Transfers between branches
When one branch sends gold to another, the transfer is not complete when it is sent. The receiving branch weighs what actually arrived, and the transfer is confirmed at the weight received. If the weight is short, the shortage is recorded with its reason and value instead of being ignored.
Regular stock counts
Do not wait for the end of the year. A regular count at each branch catches differences early:
- Scan each piece's barcode, pass an RFID reader over the shelves, or scan from a phone.
- Compare what was counted with what should be there, piece by piece and weight by weight.
- Do not adjust the balance directly when something is missing. Raise a write-off request that the finance officer approves with an accounting entry, and refer any surplus for checking before it is added.
Stock value and the gold price
The weight of your stock stays the same from one day to the next, but its value moves with the gold price. So when you value stock, separate the metal from the making: the metal is valued at the gold price, and the making stays at its cost. That way you know which part of a profit or loss came from the price moving, and which part came from your work in selling.
Common gold inventory mistakes
- Recording a piece without its weight, or with an estimated karat.
- Mixing used gold with display stock in one balance.
- Adding up the weights of different karats without converting them to 24K.
- Settling differences with a direct adjustment, with no reason and no approval.
- Counting stock once a year.
How ZMZMGold helps
ZMZMGold manages gold stock this way: each branch's balance in grams for every karat and its 24K equivalent; a barcode, karat, weight and making cost for every piece; a raw-gold box; scrapping of slow-moving pieces; manufacturer custody; transfers confirmed at the weight received; and stock counts by barcode, RFID and phone, with write-offs approved by the finance officer.
Details are on the gold and jewellery shop management software page, and in our previous article, How to choose the best gold and jewellery shop software in Kuwait.
The bottom line
Manage gold stock in grams and karats together, keep display stock apart from raw gold, reconcile every shift, count regularly, and never correct a difference without a reason and an approval. With these five habits you know, on any day, how much gold is in your shop and where it is.