Firoz.T.Totanawala The Bangalore Metro Reporter JEWELLERY MARKET FRAUD- THE INSIDE STORY OF JEWELLERY FRAUD IT IS TIME CONSUMER ACTIVISTS TAKE SOME PROTECTIVE MEASURES TO PREVENT THE CHEATING OF THE GULLIBLE PEOPLE…

FIROZ.T.TOTANAWALA

THE BANGALORE METRO REPORTER 

JEWELLERY MARKET FRAUD 

 THE INSIDE STORY OF JEWELLERY FRAUD IT IS TIME CONSUMER ACTIVISTS TAKE SOME PROTECTIVE MEASURES TO PREVENT THE CHEATING OF THE GULLIBLE PEOPLE… 

Yet another event has gone by in the name of Akshaya Tritiya, which was celebrated all over the country with much needed sprit and enthusiasm. And it's the auspicious time for buying the Gold. Buying Gold and Silver in various shapes and sizes especially on this occasion brings prosperity and multiplies the already acquired wealth by many folds such is the belief. People rush to the already prospered jewellery seller and make a beeline to purchase the ornaments made of Gold and Silver, and making him further prosper in his wealth and trade, irrespective of whether the purchaser prospers from the deal or not. The lucrative offers how much true? 

On a glance of any daily, one would come across innumerable number of advertisements in various colourful dimensions carrying messages pertaining to the credentials of the jewellery trader, about the types of the articles, ornaments and wares he sells and the rates at which all these wares are sold. One always claims to be more sincere, established, service oriented and sells his wares for minimal or no profit, and yet grows by many folds and achieves growth in his trade. How would this be possible? 

A leading exporter and importer of the bullion has been inserting pages of advertisements announcing his entry into the retail business. He claims that buying the jewellery from him would result in saving from 10 to 20 per cent, when compared to the purchases made elsewhere. The advertisements claim that he intends to sell the gold at the 'real rate per Gram' and this offer is done for the first time in the world. His claims of this kind could be interpreted as to the jewellery sold by other traders is at the unreal and inflated rates or the rates which include the hidden costs, which means that the purchasers were fooled by the traders all these years and the jewellery, which is in their possession, is either not real or not worth the market value. 

The annual quantum of import of Gold exceeds over 800 tonnes and the amount of Gold traded in one year exceeds double the quantity of import. A quantum of about 200-300 tonnes of Gold is sold during the festivals such as Akshaya Tritiya, Diwali, etc. The rate of 22ct of Gold sold locally varies on a day-to-day basis, which again is based on the rate of Gold traded in the international market. While the current quoted rate of Gold (22ct) is above Rs.1700 per gram, the traders vying with each other publish their selling rate, which is always lesser than the one quoted officially. 

The trade secret 

Irrespective of the quoted current rate of the Gold, the traders always announce their offers discounting from Rs. 50 to 100 per gram. For example, if the quoted current rate is Rs. 1700 per gram of Gold, then the selling rate is anything between Rs. 1550 and Rs.1650, and some claim that the discounted rate is applicable on the rates sold at Chennai, Mumbai, etc., Is practically possible to sell a commodity at a rate much lesser than its prevailing market rate of availability? Going by the principles of trading it is definitely not possible to offer a commodity at a rate much lesser than what it costs. But the Gold is an exception, because it's always sold at such a discounted rate. If that's the case, then how do the traders flourish year after year and survive to cater to the needs of their customers? Because, there's always a catch embedded into their sale. 

Firstly, the pure form of Gold, which is never purer at 100 per cent is always referred to as 99.999 per cent pure, which is fragile at its purest form and therefore is not fit and suitable for making jewellery and ornaments that are worn. Blending the purest form of Gold (24ct) with other metals such as pure copper needs to be done in order to strengthen and making it suitable for jewellery. This is where the traders play their role more cleverly, cunningly and efficiently, because no ordinary man would understand from the very look of the Gold and make out about the percentage of copper that went into its blending. A slightest increase in the percentage of copper would tend to bring down the quantum of Gold content and thus the price of the blended Gold thereto. 

The purest form Gold is equivalent to 24 carats or 100 per cent an imaginary figure and therefore each carat is equivalent to 4.1666 per cent, multiplying this figure by 22ct we get 91.667 or 91.67. It's therefore the 22ct is termed as 91.6 or 916. Similarly, 18ct is equivalent to 75 and 14ct is 58.3. Jewellery made of 18ct is much sought after ones and is consumed more in the western countries, whereas, we, the Indians prefer ornaments made of 22ct and more. 

The components such as wastages incurred in the process of making jewellery, which varies depending upon the designs made - from simple to the sophisticated ones hand or machine made, use of metals for bonding, such as Zinc-Oxide or KDM constitute more in determining the final price structure of the product than the actual rate of Gold, and this is where the traders make their killing in the profit. The final rate offered by the customers, in every transaction carried out, would invariably exceed and camouflage the discounted rates announced and offered by the traders. 

The cost of the bonding metals that go into the augmentation of weight of the final product is negligible. The metal KDM costs nothing more than Rs. 1000 per kg and the traders claim to have incurred wastages ranging from 8 to 14 per cent of the weight of the final product, thereby gaining the profit ranging from Rs. 136 to Rs. 238, when the market rate of the Gold is at Rs. 1700 per gram. Imagine the amount gained by the businessman in case an ornament weighing a just 10 grams was traded, which would be not less than Rs. 2000 to the minimum, whereas his declared discount is in the range of Rs. 500-750 per 10 gram of Gold. 

Common man - the looser 

In general, the components of the price structure would be comparatively less when the price of Gold is on its high and more when it's less, that is, it remains always in versely proportionate to the rate of the Gold. It's how the traders collect the actual market rate of the Gold from the customers, without their knowledge and it's a fact that the customers always end up paying much more than the quoted and prevailing rate of Gold to the trader at the end of every transaction. 

Only time will tell us as to whether the new entrant, who has thrown himself into the retail market trading ring as a competitor to the already established traditional jewellers, would adhere and remain committed to his true offers announced in the media forever. If he does it then, his genuine intention of offering the jewellery at the 'real rate per Gram' would not only benefit the common man, but also create a new saga of dimension in the 'jewellery business' and redefine the chemistry of Gold held by every household in India, leading the purchaser to get the 'real value for money'.