Surging gold bring cheers, but tears too

Gold may be a glitteringinvestment opportunity on account of a sustained upward spiral in prices, butthe meteoric ascent has brought tears to many families in Kerala, where giftingornaments to brides for their marriage is a common practice.

Despite the surge in prices, market figures show there has been no let-up in retail buying , asgold is an integral part of marriage, cutting across caste and communitydivides in Kerala.

According to market leaders, an average of 60-70 tonnes ofgold is sold annually in the state, contributing around Rs 200 crore to thestate exchequer in tax.

"The rich people, to a certain extent, are aware of theupsurge in gold price and will make advance buying plans to meet their presentor future requirements. But what will the lower middle class or working classpeople do if the trend continues?" Josco Jewellers Executive Sales HeadJoy George said.

"We see many touching scenes these days like parents ofprospective brides breaking into tears at jewel shops finding their plans andcalculations going awry," George said.

On the other hand, market statistics show that the soaringprices 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 safeinvestment option is increasing," he said.

The investors prefer coins, 24-carat biscuits and pure goldbars 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 inthree years.

All-Kerala Gold Silver Merchants Association President BGirirajan said the recent surge in prices has strengthened the gold market inthe state.

"The demand for gold coins and bars is at an all-timehigh in the Kerala market. This shows the number of people considering gold asa better investment option has gone up. As the demand for coins and barsincreased, the sale of ornaments had suffered some dip very recently. It isjust a minor dip and not a big fall," he said.

Traders have come out with strategies to ensure that theincreasing prices do not dent demand. Major jewellers in the state havelaunched schemes like "advance booking", which offer delivery of goldat 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'sgold demand in the present year has exceeded 450 tonnes in the first six monthsitself. Of the total demand, 45 per cent comes from southern states and Keralais the leading gold purchasing state among them," he said.

The recent developments in the US economy and problems in the eurozone are the major reasons for the spurt in gold prices, he said.

The trend, however, is being viewed with concern by socialactivists and women's rights outfits.

Kerala Women's Commission Chairperson Justice D Sreedevisaid the price increase was a good thing to a certain extent, if it dampenedKeralites' craze for the precious metal.

"I wish the gold price would scale more greater heightsin the coming days. There is no other way to stop Keralites' insatiableappetite for the precious metal," she said.

According to Sreedevi, in many cases, gold is given as dowryduring marriages. The KWC has been getting many complaints of grooms andrelatives taking the ornaments away from the bride or making use of themwithout the girl's consent, she said.

Cases of parents becoming bankrupt and even being driven tosuicide after running into an inextricable debt trap have also been reported.

"I fear the present gold price hike will add to thewoes of the parents of girl children in the state," she said.