Gold loses charm amid insecurity, price rise

Wearing gold jewelry might be considered of utmost necessity during cultural and social functions, but dealers of the precious metal say that sales in this western city have dropped sharply amid growing insecurity and rising price.

Because of the fragile security situation, the practice of wearing heavy jewelry has also gradually disappeared in the city. Rather, people have switch to cheaper gold-plated ornaments, and this has hit the gold business, says Durga Man Buddhacharya, president of Pokhara Gold and Silver Dealers Association (PGSDA).

“Lower growth in income compared to the price rise is the main factor behind poor sales,” he says, elaborating that the fast-growing duplicate and gold-plated business has also pushed gold to the sidelines.

These developments have affected some 150 gold and silver dealers operating in Pokhara. Owing to sharp rise in prices, dealers these days need to make a huge investment to start a business, but because of the decline in sales, they face a tough time recouping their money.

Pritam Man Buddhacharya of United Gold Mart said that people have started to refrain from wearing even a simple gold necklace, ring, ear rings or a mangalsutra, items considered regular wear in the past, following the rising instances of looting in broad daylight in the city.

“After all who like to risk their life over pieces of metal,” he said.

The situation, however, has brought lean days for Buddhacharya, who recently opened five showrooms of branded gold and silver ornaments.

Apart from insecurity reasons, gold has lost its charm also because it has become too expensive for the general public.

Owing to the international price rise, gold in the domestic market has soared by about 35 percent over the last few years. For instance, gold was priced at Rs 20,000 per tola (11.664 grams) about two years ago, whereas this year it went on to touch around Rs 30,000 per tola.

“The precious metal has continued to become expensive, whereas people´s purchasing power has not grown to that extent,” said Buddhacharya. “Who will run after gold when people are finding it tough coping with the soaring prices of essential goods?”

According to PGSDA data, sales of gold go as high as Rs 30 million a day during the marriage and festive seasons. In other periods, it drops to a range of Rs 5 million to Rs 10 million a day.
Source: Republica