Soaring gold prices bring cheers, but tears too
Gold may be a glittering investment opportunity on account of a sustained upward spiral in prices, but the meteoric ascent has brought tears to many families in Kerala, where gifting ornaments to brides for their marriage is a common practice.
With gold breaching the Rs 20,000-mark for a sovereign recently, market figures show there has been no let-up in retail buying, as gold is an integral part of marriage, cutting across caste and community divides in Kerala.
According to market leaders, an average of 60-70 tonnes of gold is sold annually in the state, contributing around Rs 200 crore to the state exchequer in tax.
"The rich people, to a certain extent, are aware of the upsurge in gold price and will make advance buying plans to meet their present or future requirements. But what will the lower middle class or working class people do if the trend continues?" Josco Jewellers Executive Sales Head Joy George said.
"We see many touching scenes these days like parents of prospective brides breaking into tears at jewel shops finding their plans and calculations going awry," George said.
On the other hand, market statistics show that the soaring prices have made the metal a reliable investment option for the rich.
"The steady march of gold price has raised investors' interests in the precious metal. The number of people seeing gold as a safe investment option is increasing," he said.
The investors prefer coins, 24-carat biscuits and pure gold bars over ornaments.
Gold crossed the Rs 10,000 per kg mark in October, 2008, after which it has continued to gain ground, with its value almost doubling in three years.
All-Kerala Gold Silver Merchants Association President B Girirajan said the recent surge in prices has strengthened the gold market in the state.
"The demand for gold coins and bars is at an all-time high in the Kerala market. This shows the number of people considering gold as a better investment option has gone up. As the demand for coins and bars increased, the sale of ornaments had suffered some dip very recently. It is just a minor dip and not a big fall," he said.
Traders have come out with strategies to ensure that the increasing prices do not dent demand. Major jewellers in the state have launched schemes like "advance booking", which offer delivery of gold at a future date at the prevailing rate on the day of booking.
According to World Gold Council (WGC) Director K Shivram, Kerala is the leading gold purchasing state in South India.
"India's gold demand in the present year has exceeded 450 tonnes in the first six months itself. Of the total demand, 45 per cent comes from southern states and Kerala is the leading gold purchasing state among them," he said.
The recent developments in the US economy and problems in the euro zone are the major reasons for the spurt in gold prices, he said.
The trend, however, is being viewed with concern by social activists and women's rights outfits.
Kerala Women's Commission Chairperson Justice D Sreedevi said the price increase was a good thing to a certain extent, if it dampened Keralites' craze for the precious metal.
"I wish the gold price would scale more greater heights in the coming days. There is no other way to stop Keralites' insatiable appetite for the precious metal," she said.
According to Sreedevi, in many cases, gold is given as dowry during marriages. The KWC has been getting many complaints of grooms and relatives taking the ornaments away from the bride or making use of them without the girl's consent, she said.
Cases of parents becoming bankrupt and even being driven to suicide after running into an inextricable debt trap have also been reported.
"I fear the present gold price hike will add to the woes of the parents of girl children in the state," she said.
