While consumers are ready to sell used ornaments, jewellers say they don’t have the money, blaming non-availability of cash from banks. Normally, jewellers buy used ornaments and supply these to refineries for converting into pure gold, again supplied to jewellers for making ornaments.
Data from the World Gold Council (WGC) says 80.2 tonnes of gold, equivalent to nearly one per cent of India’s total import of 913.6 tonnes, was recovered in calendar year 2015 by melting jewellery at refineries. Between January and September 2016, gold recovery from scrapjewellery was estimated at 77 tonnes. However, the flow ofgold has plunged since the November 8 demonetisation of Rs 500 and Rs 1,000 currency notes –jewellers are offering cheque for scrap jewellery, while sellers want cash.
“While jewellery continues to come into the market for sale, jewellers do not have currency to buy it. Large organised stores with a system for RTGS payment continue to buy but not small jewellers, affecting the refineries,” said James Jose, vice-president, Association of Gold Refineries and Mints.
There are around 35 refineries across the country, in the business of melting used jewellery. In fact, the government’s decision to fix gold jewellery holding by individuals with 100 grams, 250 grams and 500 grams for unmarried men, women and married couple, have impact demand of gold jewellery in India.
“We used to get four-five kg of old jewellery for refining before demonetisation, which has come down to 1-1.5 kg today, due to non-availability of adequate scrap for jewellers,” said Satish Pratap, managing director of Kochi-based SPS Gold Refinery.
According to industry estimates, half the jewellery business was done in cash before demonetisation. Trade sources say falling gold prices have turned the market, with a discount to the import price of $5-6 an oz, making the business uneconomical for small refineries.
MMTC Pamp, the only primary refinery accredited to the London Bullion Market Association, continues to import dore for refining at its own plant. “Our refinery substantially runs on import of dore and has not been impacted at all. We never dealt in cash,” said Rajesh Khosla, managing director.
Standard gold at Zaveri Bazaar in this city closed unchanged at Rs 28,180 per 10g on Thursday. Over the past month, the price has fallen seven per cent or Rs 2,150 per 10g.