Gold booms at 30K: Doom for jewellers, buyers

Gold hit a fresh all-time high by adding Rs 100 to Rs 30,400 per 10 grams on June 6 on brisk buying by stockists triggered by a firming global trend.

Silver followed suit, and shot up by Rs 1,200 to Rs 55,500 per kg on increased offtake by industrial units and coin makers.

Traders said the trading sentiment bolstered as gold rose to a four-week high in London on weaker dollar after officials from the world's leading economies said they will collaborate to respond to Europe's crisis, boosting demand for metal as an alternate investment.

How good is this inflation in gold prices?

Will it translate into business boom for jewellers big and small?

How does this high price of gold affect the buyers? Are the prospective bride and groom being forced to put off their marriage plans?

While the price of gold is sky rocketing, the value of rupee is going downhill.

People from various walks of life and trade shared their views.

Here's what they had to say. . .

Rajat Sarkar
Owner of RK Jewellers

Everybody is talking about gold hitting 30K.

But those who deal in the precious metal know that the picture is not as rosy as it seems.

We, the small traders, are the worst hit.

As it is, we have a few big clients.

With the gold price esclating, we are seeing a sharp decline in the orders placed by them.

And the amount of profit earned by us is declining.

Also, government has recently made hallmarking of gold jewellery mandatory.

This is delaying the delivery of finished jewellery.

As a result, the capital inflow is getting affected.

We function with small capital and any holdup in the process eats into both our time and money.

We appeal to the government to take some corrective measures so that gold traders like us do not suffer.

. . .

Ravinath Mohandas
Managing Director, VNM Jewel Crafts Ltd

After the price rise, we have seen a substantial drop in sales. People are waiting for prices to fall before buying. As it is, June is a lean season for us. So sales has not picked up though the prices have fallen today. It has affected our profits as well.

We have seen a 20-25% drop in sales this year so far compared to last year. The rupee's fluctuation against the dollar has worsened the scenario.

Though the demand for jewellery has fallen, for investors, it is good to buy gold. 

We, however, hope to see good business from Non Resident Indians (NRIs) in July. It would be good for them to buy gold as dollar has more purchasing power.

...

Anjali Jewellers
Golpark Branch

The spokesperson of the outlet spoke to rediff.com on condition of anonymity. We were not allowed to photograph the showroom.

Here's what he had to say:

Though gold price is going through the roof, there has been no decline in gold business as far as we are concerned.

In fact, this daily escalation in price has raised great hope in the minds of investors.

People are seeing the yellow metal as a great investment tool.

We have a jewellery incentive scheme whereby a member may opt for monthly deposits of Rs.100, 250, 500, 1000, 2500, 5000, 10000.

A member may even opt for 2 or more memberships of varying amounts.

Under this scheme, a member would have to pay installments for 12, 18 or 24 months of the amount and after one month the incentive will be (1+1), (1+1.5) and (1+2) respectively according to the duration of the membership.

The amount may be redeemed for any jewellery item from any of the showrooms.

Though gold is turning more expensive everyday, we are seeing a steady rise in the number of members.

Also, since Sensex has been going downhill, many people are taking out money from the markets and buying jewellery.

Overall, we, at Anjali Jewellers, welcome this rise in gold prices and have no qualms in admitting that we are benefitting from this.

The image used is for representative purpose only

. . .

Kamal Sikder
Small businessman and investor

I have always invested money in the stock markets.

But of late, the stocks have not earned me good returns.

Now that gold is scaling dizzying heights, I feel I should have invested in gold earlier.

Even 10-12 years ago, gold used to cost Rs 6000/10 gram.

The appreciation in the yellow metal price has been astronomical.

I made a mistake in judgement by opting for stock markets instead of gold.

Having said that, I must also mention that such a huge rise in gold price has an underlying danger: it does not augur well for the Indian economy.

A sharp rise in gold prices is indirectly proportional to the value of rupee.

We are aware of the dismal state that our currency is in at the moment.

Unless and until the government comes up with some effective measures, the economy will face insurmountable crisis in near future.

It's high time the government rose to the occasion.

. . .

Surinder Garhnayak
Driver

Indian economy has lost it.

Everything is going out of the reach of the poor.

Only 10 gm of gold now costs Rs 30,000.

I have not seen that much money in my life.

A few months ago, I had planned to marry my sister off this July.

But as gold has become this expensive, I have to shelve that plan.

I just cannot afford a marriage now.

Even the basic minimum jewellery that one would need to buy for a marriage has become unaffordable.

A pair of decent earrings alone would cost anything between Rs 10,000 and Rs 12,000.

It's sheer madness.

While having my afternoon tea at a roadside dhaba, I overhear people talking about the rupee going downhill and gold price scaling new heights.

I have been hearing such chats for weeks.

Don't we have two able economists (read Manmohan Singh and Pranab Mukherjee) at the helm?

Then why is our economy in such a mess?

What are the pundits doing?

I feel so helpless and furstrated.

Will my sister ever get married?

Who will listen to my woes?

Sarbani Dutta
Frequent Buyer

The fact that the price of gold per 10 gm has shot up to Rs 30,000 makes me happy.

When every other item of daily life is becoming costlier, it is natural for gold too to be more expensive.

One must remember that for women who possess gold, any rise in gold price means an increase in security.

Every asset has some depreciation value.

But for gold, that equation is reversed.

I am no expert but I do feel whoever can afford, should invest in gold at the moment.

It is sure to give great returns.

As government has made hallmarking of gold jewellery mandatory now, it lends a special protection to its value.

With banks now offering gold loans at the drop of a hat, women can now borrow money in lieu of jewellery for any enterprise they want to venture into.

Gold price does not touch 30K every now and then.

Now that it has, one must make the most of this opportunity.

. . .

Gopalan K G
President, Kerala Gold and Silver Dealers Association

Gold prices in India are based on the international rates so the volatility in prices continues to be an issue.

Gold prices change with fluctuations in the dollar value. A supply shortage also affects prices. Any change in the international pricing will affect prices and sales in India.

The demand for gold has dropped considerably. There has been a drop of 40 per cent in the volume of sales in Kerala, however this will not adversely affect jewellers' profits as the price continues to rise.

People are largely buying gold as an investment option. The price rise will deter people from buying gold for sometime.