Gold retailers beat increasing price with discounts

January 29, 2009

Commodity Online
MUMBAI: Price fluctuations should not deter a potential buyer from entering a market especially when there is huge interest in buying.

This seems to be the mantra of gold traders as sales plummeted on account of a price rise in global markets. But never mind, here we offer a discount, most of the gold traders – from New Delhi to Cochin – are offering to those who are really interested to take a peep into gold.

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The discounts range from 2 to 5 per cent. Some are offering freebies while jewellery makers are giving away prices worth millions on purchase of gold. Now how do the sellers cover this discount? They enter into conversion of dollar game and also the discount offered to them. Building inventories will not help and so volume business helps.

India, even without a discount, is the largest consumer of gold in the world. All gold suppliers have only one destination and therefore any marketing gimmicks will be borne by the suppliers.

Anticipation in fall of prices is another factor that keeps the retail investors away. “The aim of these discounts is to woo them. They get a good deal and we get a good volume. It is a win-win situation,” said one of the jewelers in Mumbai.

He also admitted that the inventories with almost all the stockists were purchased at a lower rate. “Therefore the dent will only be on the margins which are palatable,” he added.

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