To discourage buying for investment
Anticipating a shortfall in gold supply, jewellery retailers across the country are planning to stop selling coins and bars. “We are seriously considering this. Maybe in a week from now, we will stop selling 24-carat gold coins and 22-carat bars. The idea is to discourage gold buying for investment,” said N. Anantha Padmanaban, Regional Chairman and Director, All-India Gem and Jewellery Trade Federation (GJF).
The Government’s curbs on gold imports, meant to arrest the current account deficit, has resulted in short supply. Since the May-July season is usually a lean period for jewellery retailers, it has not affected the market much so far.
“But the industry will feel the pinch in the next couple of weeks, when festival sales begin. And it is better to act now,” says L.K.S. Syed Ahmed, Chief Advisor, Tamil Nadu Jewellers Federation.
Banks not selling
According to Padmanaban, if retailers stop selling gold coins and bars, an additional 60-70 tonnes would be available for manufacturing jewellery. On an average, India imports 800 tonnes of gold every year. Over 80 per cent of this is used by the jewellery industry, while 8 per cent is sold as coins and bars.
Oriental Bank of Commerce and Reliance Capital have announced that they will not sell physical gold. Reliance has also said it will stop sales through India Post. In addition, Reliance Capital’s commercial finance division has decided to suspend financing against gold as a security.
As gold is ruling low, people are not keen on exchanging old jewellery for new. To encourage recycling, jewellery retailer Malabar Gold has a new ad campaign — Exchange Gold Enjoy Benefits. It offers a bonus of Rs 100 a gm on exchange.
“Other retailers in the trade federation may also consider similar campaigns,” said Padmanaban of GJF.
Pure gold (99.9 per cent purity) dropped to Rs 26,950 for 10 gm in Mumbai on Monday.