With gold scarce, wedding buyers recycle jewellery

MUMBAI Fri Nov 29, 2013 5:40pm IST

1 of 2. Customers shop inside a gold jewellery showroom in Mumbai August 30, 2013.

Credit: Reuters/Danish Siddiqui/Files

Related Topics

Border Security Force (BSF) soldiers ride their camels as they rehearse for the "Beating the Retreat" ceremony in New Delhi January 27, 2015. REUTERS/Ahmad Masood

"Beating The Retreat" Rehearsals

Rehearsals are on for "Beating the Retreat" ceremony which symbolises retreat after a day on the battlefield, and marks the official end of the Republic Day celebrations.  Slideshow 

MUMBAI (Reuters) - Faced with high premiums to secure scarce supplies of gold, relatives and guests at Indian weddings are having their old heirlooms melted down to be reused as traditional presents.

Along the narrow lanes of Mumbai's historic Zaveri jewellery bazaar, many shops display placards saying "we buy old gold jewellery", tempting buyers who face a $125 an ounce premium over London prices as the government cracks down on surging imports.

"My brother is getting married next month, and we require jewellery for the bride," said 35-year-old Shazia Iqbal Ahmed, who brought in bulky bangles and a necklace to be recycled.

"The family thought it was better to make use of our old jewellery sets for the new bride. We will end up saving 50,000 rupees on just the premium. It's profitable for us at the end."

About 1 million couples are expected to marry in the current wedding season which has 71 auspicious wedding days and runs through to May. About 33,000 weddings took place on November 19 alone, the most of any day this year.

Gold is always in demand, with a typical gift of a pendant, earings or a ring, weighing 5-10 grams depending on financial circumstances. Parents of the bride generally give heavier items like a necklace or bangles weighing 50 grams or more.

But a government clampdown on runaway gold imports that fuelled a blow-out in the current account deficit has led to new rules imposing higher duties, limiting imports and making it hard for jewellers to source supplies.

Jewellers say the move could help mobilise more of an estimated 20,000 tonnes of gold stored in Indian households, some 35 times the Reserve Bank of India's official reserves.

"In this wedding season, since there is no gold available in the market, people have started coming with recycled gold. They have started exchanging the old gold for new and pay the labour charges," said Kumar Jain, who owns a retail gold shop in the Zaveri Bazaar.

Jain expects about 400 tonnes of recycled gold to enter the market this fiscal year to March 2014, compared with normal rates of about 130 tonnes, according to Thomson Reuters GFMS data.

"Overall sentiment is weak, the import policy is not favourable, which has resulted in high premiums. Most consumers are looking to exchange old for new," said Haresh Soni, chairman of All India Gems and Jewellery Federation, which groups more than 300,000 jewellers.

The Indian government will welcome the increased recycling of gold as it tries to rein in the current account deficit to an acceptable range of 3.6 percent to 3.8 percent of GDP, from 4.9 percent in the June quarter, and is unlikely reverse its recent measures any time soon.

"I think (gold) strictures will be there for at least the next six to twelve months," said Naina Lal Kidwai, president of the Federation of Indian Chambers of Commerce and Industry. (Reporting by Siddesh Mayenkar; Editing by Richard Pullin)

FILED UNDER:
Photo

After wave of QE, onus shifts to leaders to boost economy

DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.

Reuters Showcase

Telecom Sector

Telecom Sector

India postpones mobile airwave auction to March 4.  Full Article 

Business Strategy

Business Strategy

Uber scraps commissions for its New Delhi taxis.  Full Article 

Currencies

Currencies

China's yuan breaks into the world's top five as payment currency - SWIFT.  Full Article 

India’s Male Tenor

India’s Male Tenor

India’s lone male tenor wants to ‘Indianise’ opera  Full Article 

Job Cuts

Job Cuts

Sony to cut 1,000 jobs in smartphone business - sources.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage