T Nagar is normally a terrible place to drive through when peak hour traffic is, well, at its peak. That terrible reputation notwithstanding, last week was truly horrendous for the average motorist in Chennai. Jewellery shops were clogged with the city’s populace examining pieces of moulded gold; others were waiting in cars in huge lines outside, hopeful of getting a parking spot; security guards had all but forgotten the promised ‘valet’ services their shopowners advertised; and traffic cops threw up their hands in despair. If you’re wondering what all the hullabaloo was about, here’s a ‘golden’ hint: gold sales have skyrocketed ever since prices fell by over 20 per cent as compared to the cost one year ago and all of this chaos is simply the aftermath.
Ever since the first price slide on Monday last, the rate of 22-carat gold has dipped even lower, ending at `2,420 to the gram on Saturday — which is an appreciable `85/gm lesser than three days ago. The cost of 24-carat gold wasn’t too far away, retailing at `2,640 to the gram. Now, for those people who buy gold ornaments because they think a necklace looks pretty, this dip may not mean much. But for the larger section of people who invest in gold jewels — for future weddings, collateral and a source of instant cash — this sort of price dip was the pre-Akshaya Tritiya godsend they were hoping for.
The gold marts are happy. Whatever they might have lost because of the dip in prices, they’ve more than gained in the extraordinary volume of sales last week. “Sales have indeed gone up and we have been observing a rise in demand for gold. We expect the sales volume to have increased by 40-50 per cent,” said M Karthik, manager of Khazana Jewellery. He said that sales would have anyway increased in the next few weeks because wedding season was around the corner. Things were even better at Sri Kumaran Thanga Maligai, another of T Nagar’s popular gold showrooms, where 200-300 groups of people came in and sales were “much better than last year” for this corresponding period. Needless to say, the big guns like OKJ, Joyalukkas, GRT, Kumaran and Saravana Stores in T Nagar were open much later than usual, last week.
In a rush to spend out a given amount of money that they have saved, people throng stores and look for jewellery that they like, failing which they purchase items like studs, bangles or bracelets that fall within their budget. “Most often people come with an amount like `2-6 lakh and want to buy gold for that amount. They let the family choose whatever they want as long as it’s gold. As a result, diamonds, precious stones and intricately worked ornaments are losing out in the gold rush,” said an employee with GRT Thanga Maligai.
There are two groups of people who come by to purchase gold – people who’re looking for jewellery to wear and people who want to buy gold cheap so that they can sell it when the rate peaks. “Most often we get people who want to buy gold just as a savings measure or an investment. They usually opt for coins because the wastage is minimal and there is no making charge,” he added.
Unfortunately for most of these gold hunters, quite a few jewellery shops have “run out” of gold coins. Though store employees attribute it to the massive sales this week, habitual gold buyers are suspicious. “I do not believe it,” said R Parthasarathi, an accountant. “They do this every time the gold price dips. They stop selling coins because otherwise most of the people will not buy their jewels,” he added. Refuting the charge, R Prasad, senior manager of KTM said, “We don’t have a problem meeting any sort of demand as long as we have time to procure the supply.”
It hasn’t been all cheery though. People who invested in the metal at a much higher prices earlier are worried. “I was asked to join a scheme offered by a jeweller, through which I would pay every month and get a jewellery piece at the end, at a lower price. Now I am losing so much, given today’s price,” said Asha Matthew, a homemaker. Besides Asha, several other lower-middle class people who were counting on selling their gold ahead of wedding expenditure to be incurred in May, are worried. “It may not seem like much, but for people like me getting `20,000 less for selling gold is a big blow,” said Munusamy, a coolie residing in Naduvankarai.
One thing is for certain though: no matter what kind of investment options are made available to people, the belief that few of them are ‘worth their weight in gold’, does not look like it will recede anytime soon.
(With inputs from Subhakeerthana S, Thushara Mathew, Anita Raghuraman and Pavithra)