All That Shines

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As the traditional silver jewelry was gradually replaced by the trendier, more valuable gold ornaments, Kashmiri goldsmiths are forced to stay up dated. Saima Bhat takes a look how rupees 100 crore annual gold market reacts to the changes and challenges 

A jewelry shop  in Srinagar.

A jewelry shop in Srinagar.
Pic: Bilal Bahadur

In golden old days it was the silver that decorated brides in Kashmir. With poverty and conflict going hand in hand for centuries Kashmiris living within the mighty walls of Pir Panjal learned to live economically. And when things improved, both economically and politically, Kashmir became hub for silver ornaments. The delicate artistic hands carved magic out of the cheap metal to decorate women during festivities. Within no time, silver jewelry, became an indispensable part of a Kashmiri women’s life. But that was a long time ago!

With penetration of mass media (television and internet) in Kashmiri homes, the idea of fashion got completely transformed. And gold took over silver completely in last few decades. It was gold that became a new craze among women. Within a few decades time Kashmir became one of the major markets for gold ornaments in South Asia. According to some conservative estimates Kashmir consumes gold worth 100 crores annually. Kashmiri artisans who perfected themselves in crafting silver ornaments for decades had to reinvest their energies into gold and it’s designing. But unfortunately their imagination remained limited to designing silver jewelry only. Thus Kashmiris contented themselves with limited number of borrowed designs in gold. Unlike silver there was nothing like Kashmiri gold jewelry!

So with gold becoming a new rage among women need for innovation and intervention in designs was felt. The solution was simple. Bring artisans from outside Kashmir.

These outside artisans revolutionized the market by introducing new designs.

Bashir Ahmad Rather, president of All Kashmir Gold Dealers’ and Workers’ Association who has a shop at historic Hari Singh High (HSH) Street, Srinagar says that traditional Kashmiri designs are no more in vogue. “People come with requests to imitate designs worn by actors on famous television shows. That is what sells now,” says Rather.

Traditional designs like Mughal-e-Azam are no longer available in the market as artisans are non-locals. “Kashmiri designs are time consuming as compared to new designs.”

The intricacies of the gold trade have undoubtedly made a dent into the profits of the gold dealers of Kashmir. Diamonds could have been a cushion for the dealers; however unfortunately the diamond market in Kashmir remains limited to a certain class of the society.

Gold-Bazar-SrinagarDiamond jewellery is more profitable than gold. Its profit margin is estimated to be about 2.5 times higher than that of gold. But the client base in Kashmir is limited.

Market prices and the demand

Since the last few years gold prices have been soaring high. However that has not kept people from purchasing it. What actually has changed is the quantity of gold that people buy.

Abdul Rashid Bhat, a jeweler at HSH Street says the increasing gold prices means less worth, in terms of gold, for your money.

But the association’s president likes to differ, “since 2006, the gold market is continuously fluctuating and it has badly affected the dealers as well as customers.”

The gold market is ultimately controlled by US market and the fluctuations has paved way for Multi Commodity Exchange (MCX) in gold trading, which Rashid calls is equal to gambling.

In MCX retail investors can trade in commodity futures without having physical stocks. So anybody can become a trader or in that case a gold dealer.

Rather blames late Indira Gandhi for abolishing Gold Control Act of 1965. He says, “In HSH Street we were only 17 licensed shops and we had only 500 workers but today there are hundreds of gold shops, besides 150 in this area only. Now everybody has become a gold dealer. They don’t even know the basics of this trade.” He thinks abolishing of Gold Control Act was responsible for the mess.

He adds representing his association, he has held a number of meetings with the state and central governments but nothing ‘fruitful’ has happened for them. “I still remember how our business was touching skies till 2006 when the gold prices were around 550 per gram for 24 carats. The prices used to increase annually but now prices change every day and this year we were shattered by the prices,” says Rather.

Gold---Hari-Singh-High-StreetDuring August 2013, the gold touched it’s highest at Rs 34, 500 per 10 grams as the Indian rupee hit its historic low of 68.75 against US dollar. The increasing gold cost, since gold has come on the commodity market, there has been continuous fluctuations with the prices.  The fluctuating market has ultimately come upon its dealers and customers. Most of the dealers in famous gold market in HSH Street were seen sitting idle during their prime season this year. Only a few were seen doing business during wedding season.

Changing gold trends

Usually gold sales increase at the peak of marriage season but the business sees high turnout throughout the year. Exchange of the old designs and getting gold and paying back on installments is picking up.

“It was not possible for me to pay a jeweler in one go for the gold I got for my daughter’s marriage as I was a clerk in public sector. So I bought it from a known jeweler whom I used to pay on monthly basis,” says Mohammad Rafiq, a retired government official. Same things do happen today if one plans to buy jewelry from a known jeweler.

The annual turnover of the gold market in Kashmir for 2013 remained maximum Rs 100 crores, says Rather (He was not comfortable sharing the exact figures of the turnover). It is the business where only 1 per cent VAT is applicable, minimum tax. But this business has a parallel market as well – fake gold market.

Fake Gold

“I usually don’t buy jewelry when market is up as it increases the chances of getting duped. And, if it’s an emergency, I prefer our families trusted jeweler only,” says Hajira, a regular gold customer from Sopore.

Dealers say the customers from the districts like Baramulla, Sopore, Shopian and Islamabad are their regular customers besides their customer base in Srinagar.

But a local dealer in downtown area says, “It is not always that dealers are cheaters, some people come to us and asks for ornaments with lesser quantity of gold. If they don’t inform their families that is not our fault.”

He adds that once a customer, known to him, asked for a fake gold coin instead of a real one. “We exchanged it and I paid him. How am I responsible for the cheat now?”

In addition to the artificial gold, the famous Tanishq shop shows Kashmir Life reporter at least 10 artificial gold coins brought by customers. The manager of the shop says it is very difficult to differentiate between original and fake gold coins.  “That is why it is always important for a customer to ask for proper bills from gold dealers.”

But in Kashmir no bills are provided for the purchase of gold coins.

And for the purchase of other gold ornaments only a few dealers prefer to offer a proper bill otherwise they just give estimated vouchers. If the customer comes to resell or exchange the item, these vouchers, are accepted by their own dealers only.

Besides that the customer might have to bear the cost of wastages (Wat-e-Kasar) which means the traders deduct a particular amount in the buyback.

The problems in peripheral areas are much rampant as the locals allege the dealers there sell gold, as less as 17 carats on the cost of 22 carats. “I don’t trust the jeweller in my locality instead I prefer to get gold from Srinagar,” says Hajira.

She adds, “The irony is we don’t have any checking system set in place which can check the purity of gold.”

Respite

For the refuge of such customers the famous Saraf market of downtown bought a gold tunch machine of Rs 30 lakhs, to check the purity of gold to bring respite to the customers and dealers while the purchase but the happiness was short lived. It is the only machine in Kashmir to check purity of gold other than the one that is owned by Tanishq.

As soon as gold tunch machine was inaugurated the gold association of down town, in Saraf Kadal, gave their ruling that no customer other than gold dealers can come to check the purity of gold and moreover, the purity of gold in its melted form, Pase which means it is with 995 parts of gold in 1000 parts and not in ornament form will be checked, says Mohammad Iqbal, incharge general secretary of Kashmir Gold Association in Saraf Kadal.

But its owner, Jan Mohammad says the machine is costly but the same machines are available in every market outside state. He says that he decided to get the machine to help his co-workers in checking the purity of gold coming from outside state. He wants to get rid of tag ‘thieves’ from all gold dealers.

“And most importantly these days much sophisticated metals, which sometimes are not even detected by purity checking machines, are alloyed with gold entering our state. It is ultimately for the profit of a Kashmiri customer only,” says Jan.

He adds the association is struggling for incorporation of hallmarking in Kashmir so that the customers won’t get cheated and the gold will be sold for a particular amount with exactly the same percentage of gold the customer asks for, be it 18 carats or 24 carats.

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