Ground Report | No panic in the gold jewellery market on Rs 2,000 note withdrawal
The withdrawal of Rs 2,000 currency notes has not triggered panic buying of gold jeweler using cash, as witnessed during the 2016 demonetization.
Jewelers in various cities told Resource that customers were not desperate to use their Rs 2,000 notes to buy jewelers. Although some jewelers initially demanded a premium for purchases using Rs 2,000 notes, customers weren’t willing to pay anything extra, contending that the bills were still valid.
The Reserve Bank of India said May 19 the Rs 2,000 notes, introduced after demonetization in November 2016, will be withdrawn from circulation. The RBI gave the public time till September 30 to exchange or deposit the notes in banks or designated RBI branches.
The notes will continue as legal tender, the central bank said. Banks will start accepting the Rs 2,000 notes from May 23.
The initial expectation was that people would rush to buy jewelers by using the Rs 2,000 notes. However, jewelers said the Rs 2,000 notes are still legal tender and so customers can pay the same rates.
The purchase of gold, silver, jewelers, or precious gems and stones below Rs 2 lakh does not require customers to declare their permanent account number (PAN). Any purchase of jewelers below Rs 50,000 does not need even the Aadhaar card as a mandatory KYC document.
“I got some reports that some jewelers tried to sell gold at Rs 63,000-65,000 per 10 grams, but rumours of Rs 70,000-75,000 are completely untrue,” said Singhal. Gold was quoted at Rs 61,560 on May 23 in New Delhi.
Also read: RBI’s Rs 2,000 note withdrawal to have little impact on economy
Business as usual
“If somebody is buying gold using these notes, there should not be any issue. There are no jewelers who are charging a premium while accepting Rs 2,000 notes. It is business as usual. All premium-related news are rumors – there is no truth to it,” said Surendra Mehta, national secretary of the India Bullion & Jeweler’s Association.
Sharad Aggarwal, owner of Pancreatin Diamonds in old Delhi, said jewelers are getting “lots of queries” from customers asking whether they are accepting Rs 2,000 notes.
“But those queries are not converting into sales. The rumors are that we are accepting premiums, but the reality is that there’s a fall in customers since gold prices are high,” said Aggarwal.
Another jeweler in Delhi agreed.
“We are expecting our sales to increase only when the price of gold falls below Rs 50,000,” the jeweler said.
Some jewelers shops didn’t even have regular footfalls in the days that followed the RBI’s announcement.
“The shop is in front of you. Are you seeing any customers here? There is no question of a premium,” said a shop owner in Connaught Place who didn’t wish to be identified, gesturing to his empty store.
