Kochi: If you thought gold sales may have plummeted due to the steep rise in price that seems to hit new records almost on a daily basis, then you are mistaken.
With the advent of the Malayalam month of Chingam and the wedding season, customers are flocking to gold showrooms in Kerala undeterred by the high price. Among them are those who had made bookings three or four months ago and are now buying it for Rs 4,000 to 5,000 cheaper than the prevailing price. They had made the booking by paying 10% of the price of gold then.
The practice now is to book gold by paying an advance as soon as the wedding date is fixed. The ornaments are then collected a week or a couple of days before the marriage, by when the gold price would have likely increased. It would cost about Rs 50 lakh if someone, for example, plans to buy gold ornaments of about 100 sovereigns. They can make a booking by paying 10% of that amount or Rs 5 lakh. This benefits not only the customers but also the showrooms, who can know in advance how much gold will be sold. They also get an advance.
Big businesses can also hedge to ensure they don’t make a loss even if gold price increases.
Many weddings take place before and even after Onam. People who have saved the expenses on wedding feasts and marriage halls due to COVID are using the amount to buy more gold.
The daily sale of a small shop ranges from 10 grammes to 60 grammes, while for medium-sized shops, it is about 100 grammes to 500 grammes. Big showrooms sell 4 kg to 10 kg of gold daily.
Those who had bought gold coins about a year ago are now sitting on a profit of Rs 11,000 to Rs 12,000 per sovereign. In the past few years, there has been a steady increase in the number of people buying gold coins as investment.
Many are using the money saved due to the lockdown to buy gold. Large showrooms have been reporting gold coin sales of over 100 sovereigns a day.
The high price has meant all these investors are sitting on pretty profits.
Just like investors, customers also continue to buy gold. If they buy ornaments worth Rs 10 lakh for the elder daughter, they will spend the same amount for the younger daughter, too. There is no shortage of money to spend. Also, gold becomes a savings for the future.