|Gold imports have plunged post-RBI restriction to re-export 20% of the imported gold. Banks and bullion dealers are seen insisting for premiums for gold purchase to the tune of 3%-5% above the landed cost. The supply has literally dried up. In this context, the All India Gems and Jewellery Trade Federation (GJF) have directed all its members to boost scrap gold sales by offering better prices.
The jewelers in a desperate attempt to keep the supplies are seen offering lower wastage charge for old scrap gold. According to jewelers at Zaveri Bazaar in south Mumbai, the number of people selling old jewelry has considerably increased since then. People who had purchased gold decades before at cheap rates are now willing to sell with gold prices now recovering from their lowest levels.
In accordance with estimates provided by Bombay Bullion Association (BBA), which tracks scrap gold sales in the country, nearly 120 tons of old jewelry are sold in the country every year. The city of Mumbai alone accounts for almost 20 kilograms of old gold sale every day. According to BBA, the sale of scrap jewelry has increased significantly in Mumbai and many other parts of the country.
According to GJF, incentivizing old jewelry sales may bring in some supply and thereby reduce pressure on prices. The members of the Federation also resolved to launch promo-ads to boost scrap gold sales in a bid to ensure sufficient supplies before the forthcoming festive season.