Why people prefer exchanging their old gold, instead of buying new jewellery
Soaring gold prices are increasingly prompting Indian women to rethink traditional buying habits. Many are exchanging old jewelry, opting for smaller purchases, or exploring gold savings plans to manage costs. While these plans offer a structured approach, experts caution about risks associated with jeweler trustworthiness and urge customers to also explore other digital alternatives to buying gold.
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Even as it is heartening for women to see their favourite shiny asset reward their faith, it is also making some rethink old ways. Gold prices at the retail level no longer offer the affordability to purchase high-value, finest-quality jewellery or coins. A 24-carat gold coin of 8 grams, which cost around Rs.55,000 on Akshaya Tritiya two years ago, is retailing at over Rs.83,000 now. Jewellery is even more expensive, with making charges adding 25-30% to the cost price. Women are no longer comfortable buying at this ticket size, prompting a shift in approach.Kavita Chacko, Research Head, India, World Gold Council, observes, 'There has been a shift in consumer behaviour in response to soaring prices, with more buyers opting to trade in old jewellery for new. Anecdotal reports suggest that 40-45% of purchases now involve some form of exchange.'Many women are waiting for prices to dip, even letting auspicious days like Akshay Tritiya go by without buying gold . 'Unlike earlier, women are not necessarily stepping out to buy gold on the auspicious day if prices are elevated,' observes Joshi. Others are more comfortable buying gold of a lower ticket size, even if it is of lesser caratage. Kothari notes, 'The current gold buying sentiment is more cautious. Many women are opting for smaller, alternative purchases, more light-weight jewellery.'Some are turning to gold savings plans of jewellers to build towards a target outlay for purchasing gold. These schemes usually allow customers to deposit a fixed sum of money every month for a predetermined period, usually 11 months. At the end of the tenure, the customer can use the accumulated savings, plus any bonus offered by the jeweller, to purchase jewellery from the brand. For example, if you save Rs.5,000 monthly, you'll have accumulated Rs.55,000 after 11 months.The jeweller adds another Rs.5,000 as the last instalment, giving you Rs.60,000 to spend in their store. Mathur has opted for a gold savings scheme with her trusted jeweller. 'Gold prices today do not allow the purchase of huge sets. With a gold savings scheme, I pay smaller amounts over time, and at the end I get a lump sum, add any differential, and buy the jewellery of my choice,' she says.However, Joshi flags risks in opting for such plans. 'Your money is at risk if the jeweller is not trustworthy,' he warns. Also, your money gets locked with the jeweller. Some jewellers have previously vanished with customers' savings or simply shut down. Besides, the bonus offered by the jeweller is just an illusion, as most jewellers mark up their making charges. Further, you are not protected from rising gold prices in these schemes, as your savings are in cash, not in gold.Joshi suggests a systematic investment plan (SIP) in a gold mutual fund as a better alternative. Every rupee you contribute is linked to actual gold prices. You can exit at any time and are assured of getting your money back.
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