Partha Sinha, The Times of India
In Mumba Naveen Nayar, a media professional, has been buying one gram of gold 4-5 times a year as a long-term investment for his twin daughters for the last three years. However, now with the gold prices going through the roof, combined with the rising inflation, Nayar (name changed) has been forced to re-strategize on gold investment.
Consider this.. In the last one year, gold prices in Mumbai have jumped from about Rs 19,000 per 10 grams to nearly Rs 27,000, a rise of 42%. Quite naturally those who were buying one or two grams of gold occasionally — which used to cost about Rs 2,000 or Rs 4,000 then—now have to shell out nearly Rs 3,000 to Rs 6,000. Since the salaries have not jumped by as much, these investors now find it tough to stick to their plan of buying gold even in the smallest of denominations available in the market. Innovations in the bullion market are coming to address this loss of affordability.
Wholesale bullion traders in Mumbai have come out with half-a-gram gold coins and some even with pieces of gold leaf that weigh as light as 100 miligram, that is 1/10th of a gram. In addition, to give buyers the guarantee of genuineness of the yellow metal, traders are also selling these in tamper-proof packages. While half-a-gram gold coin could now come for about Rs 1,400, a piece of gold leaf of 100 miligram would cost about Rs 300. And if the investor wants to sell them, the traders buy them back at the prevailing market rate but minus the packaging and labour charges, said a top trader in Mumbai’s Zaveri Bazar.
It is possible to make gold coins of half-a-gram weight from gold bars of one kilogram, the usual weight in which it is imported. The precious metal is hammered into extremely thin sheets— wafer-thin 100 miligram resembles a leaf. Nakoda Bullion, one of the leading bullion traders in Mumbai, has started offering gold coins of half-a-gram keeping in mind the investors who buy gold as part of their long-term wealth creation plan, taking the systematic investment plan (SIP) route.
Launched six months ago, Nakoda is selling about 2,000 pieces every month now, but expects this to rise to around 20,000 pieces during the coming festive season, especially before Diwali.”The idea has been borrowed from FMCG companies selling premium soaps in small packets in rural areas to meet the rising aspirations of the people,” said Chetan Rathod of Nakoda Bullion. Riddhisiddhi Bullion, one of the leading bullion traders and importers in India, launched gold leaf of 100 miligram in February as a pilot initiative. These pieces are now being used as gifts but Samir Shah of Riddhisiddhi Bullion says very soon investors would start buying them.