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Gold still glitters...

... as people's trust in the yellow metal grows by the day. Take a look at what those in the business say



The gold rush is still on: shops in the city offer a stunning variety

"FACTORY OUTLET. Rs. 45 less per gram. No making charges. Lotteries" invites the billboard. "For the first time in India - Lowest Price Guarantee Card! Save more than Rs. 45 per gram of gold!" replies a rival in prominent print. Others have buy-back offers and big promos. What's the gold trade trying to tell us?

With the price touching Rs. 600 per gram, there's anxiety that gold bought this season could be in the pallus and borders of saris and pavadais. Will the prices take some of the glitter off gold jewellery? With 25 per cent consumption of world output, how come India has no control over the price of gold? Is it because of the lack of raw material alone?

Why are prices high?


The scenario is still this: If Uncle Sam sneezes gold markets reach out for tissues. According to the closely watched "Arden Forecast", a deficit-centric U.S. economy has weakened the dollar, making gold an appealing alternative. Whether it's B (Iraq war will intensify, oil prices and inflation will balloon leaving the greenback a paler shade) or K (other countries share the cost in Iraq, the savings would be shifted to domestic spending), deficits would grow. "This in turn would be very bullish for gold shares since gold is the ultimate inflation hedge and rises as the dollar falls."

Major gold jewellers in the city accept this analysis albeit with their own take. "Oil prices make a big difference," agrees Princeson Jose, managing director, Prince Jewellery. "In the run up to the elections, the economy is kept buoyant. After the elections the price might slide, but it'll be nominal."

Says Tushar Mehta, chairman, Gold Club of Chennai, "Gold prices are quoted in dollars. Arabs buy gold when oil prices go up. The West pushes up prices by stopping unloading of gold. War fears and election uncertainties contribute. When the stock market goes down, gold is the parking slot."

"International trading in London and New York determines the price. Here, physical buying is only 10 per cent, paper buying in tonnes. Gold goes from ounce to tola weight to INR and gains customs duty and sales tax. I do not anticipate short-term coming down of price," is how Kishore Jain, managing director, Khazana, sees it.

The result?

"Sales have been affected," admits Kishore Jain. "In the last three years prices have gone up by 70 per cent. Consumption of gold has come down. People buy thinner jewellery." Adds Abhay Mehta: "There's huge competition in jewellery shops. Gold trade was built in nuggets. If you do not patronise a concept, it will die. A lower price will squeeze the artisan."

Pankaj Kamal Chetan, managing director, Khwaahish, is unperturbed by all this brouhaha. "The buyers who patronise my shop are not price-conscious," he says. "My products are not available outside. I deal in ready-made Italian jewellery. My clientele is exclusive and buys to accessorise modern outfits. In the Indian jewellery I sell, the content of gold is so low that price fluctuation does not matter. We have no `run-of-the-mill' products."

Damage control?

A shower of "value-additions" drenches the undecided customers. "Jewellers are moving stock by selling gold at last year's prices," says an appalled Tushar Mehta. "An ornament's price is determined by turnover, workmanship. Jewellers cannot sell jewellery like commodities. It's making for less, with a little less."

Catalogue buying

"Today, young people buy jewellery without training. They browse the net to find the best price. Craft and originality of design do not matter. It's catalogue buying. Some jewellers outsource their production. Customers should support craftsmen to maintain quality."

"Watch out for hidden charges," warns Princeson. "The `art' of manufacturing and the labour cost should set the price." He too rides the promo bandwagon. "No making charges in all three showrooms though it's the Cathedral Road inaugural offer. We sell gold cheaper because of turnover in Chennai."

"To keep my customers I have to offer a discount," admits Kishore Jain. "We give the lowest-price guarantee card in India. Most customers are looking for common items like chains and rings. So we promise cash back if they find the price lower elsewhere within 48 hours."

Low profit margin



Precious asset: gold continues to be a good investment option -- Pic. by K. V. Srinivasan

"Keeping profit margin low plus personal rapport" is the strategy Kirtilals and GRT adopt. For Sam Philip, executive, Business Promotions, Kirtilals, value additions include "free jewellery maintenance and insurance for one year for the product. We hold trade seminars and exhibitions (one in Tidel Park) to gauge trends. When there's more ad spend, there's more awareness of jewels.

As for retaining customers, we are pro-active. Our range is so vast that no customer goes away disappointed." The exchange offer is a strong theme for G. R. Radhakrishnan.

Chetan's price tag is kept friendly to find acceptance. "We have a buy-back offer on coloured stones. We give you 50 per cent of the cost. For diamonds, we buy back at 105 per cent after a year. Ours is a new concept in Chennai."

Says a confident Tuhin Mehta: "We cater to a young, trendy market now. We sell 18 carat white platinum, 18 yellow, 22 red, yellow, black and antique. Purchasing power has doubled among the youth. They pick up something to suit their style. There's a growing market for men's wear. Earrings are big. So are cuff links, pendants and rings for the teen to 25 crowd influenced by western designs. Light weight enamel work is also lapped up."

Most shops have a complete lightweight section. Branded and "affordable" jewellery is plugged in a big way. Designs are constantly upgraded. A diamond finger ring comes for just Rs. 3,000. It's "bringing gold from the locker room to the wardrobe".

The brighter side

"Prices even out during the year," shrugs Tushar Mehta. Princeson oozes optimism. "Bank deposit rates have come down, benefit funds are unreliable. Middle and lower middle class can only invest in gold. Indian women have traditionally done that. Deepavali bonus is also converted into gold."

Abhay Mehta echoes this sentiment. "Why should gold prices stay low? The industry should make money." Sam Philip believes, "There is more trust in gold now. People know more old gold is coming into the market because of high prices. Whatever the cost, gold will be bought."

Dos and don'ts


* Check for BIS Hallmark certification that includes the assaying centre's code number and the jeweller's seal.

* Compare gold prices in different shops.

* Do not bargain - pay a reasonable and just price

* Rodium dipping, white gold alloy, coloured gold -

make sure it's genuine gold

* Go to a store you trust. Go by the lineage.

Some sparklers this season


At Prince:

"Muhurtham" collection: 80 gm to 600 gm.

"Vibe" collection starts at Rs. 8,000.

"Eterna" collection is one of a kind.

The entire range of Smita Sarah Fenn's designs on display at the Cathedral Road showroom.

At Mehta's:

A wide range of trendy stone jewellery.

Black diamond range

At GRT:

Imported pieces from Italy, Hong Kong and Dubai

Navrang — with precious stones, semi-precious stones and diamonds

Maya collection — solitaire look at a lesser cost

Kalyan collection — heavy jewellery, complete set from Rs. 35,000 to more than Rs. 10 lakhs

Custom-made out of stones brought from abroad

"Divine products" include crowns, shells and puja articles.

At Khwaahish:


Imported Italian jewellery worn in high societies abroad.

Fine, multi-strand, chains that sparkle in all colours of gold.

Stone encrusted pieces with only 20 per cent gold.

At Kirtilals:

Jewellery made by 40 designers.

Swarna Utsav in Kochi. Will come to the city.

When you buy you enter a design contest. Write a slogan to win up to a kg of gold.

At Khazana:

Mumbai-designed jewellery

Hansa - antique collection

GEETA PADMANABHAN

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