ECONOMY: Gold high to export low – temporarily to switch artisans to sliver & gemstones ?!!
FROM THE TELEGRAPH
BY POULOMI BANERJEE
Galloping prices have dulled the shine of the gold market abroad and the city exporters are among the worst hit.
The price of the yellow metal hit an all-time high around Puja and then dropped marginally before peaking at Rs 20,000 for 10 grams (24 carat) on Tuesday.
“The price of gold was at the Rs 20,000 mark a few days back and has again returned to that level. In the West, people do not look at gold jewellery as an investment. Gold jewellery is strictly a fashion accessory, and when prices go up, Westerners just don’t buy,” said Pankaj Parekh, the chairman (eastern region) of the Gem and Jewellery Export Promotion Council.
The trend is the same in West Asia, the main importer of gold jewellery from eastern India. “The economy in West Asia is heavily dependent on the West. When there is turmoil in the West, the effect is felt in West Asia too,” said Parekh.
Also, Dubai acts as an important distribution point for jewellery imported from India. If the demand drops in the rest of the world, the Dubai market dries up automatically.
The combined effect of a weak economy and a weak dollar jacking up gold prices has left Indian jewellers without overseas buyers.
“Gold jewellery from Calcutta is intricate and very refined and hence, the most expensive. Which is why our exports have suffered more than in the rest of India,” added Parekh.
“A buyer in Turkey recently told me that he was scared of buying gold jewellery because he was not confident of finding customers at such high prices,” said Prakash Pincha of Jewel India.
The export numbers have remained a worry for some time now. “Gold prices started marching up about two years back. The volume of my exports has dropped by 70 per cent since then,” said Pincha.
Subir Sen of B.C. Sen Jewellers agreed: “There has been a 15 to 20 per cent drop in business over the past year. The price of gold started fluctuating during the downturn and people stopped buying, expecting the figure to steady. But the demand has not picked up.”
The past few months have been the worst. “The gold price has gone up by 17.5 per cent in the past two-and-a-half months, and exports have dropped by 40 per cent. Sales usually increase by 10 per cent in the festive months but that didn’t happen,” said Parekh.
Jewellers do not foresee better times soon. “I think the dollar will weaken further, which will translate into higher gold price. If that happens, our business will be hit again,” said Pincha.
The drop in the value of the dollar has made things difficult in more ways than one. “International trade is mainly transacted in dollars and the currency has been steadily weakening. Hence, Indian exporters have earned less,” said Parekh.