Anticipating a dip in gold sales in volume terms, precious metal and jewellery retailers have come out with exciting offers for Akshaya Tritiya, the most auspicious day to invest in the world’s safest avenue as a hedge against inflation.
Average gold sales during the last three years were between 40 and 42 tonnes. But this year, sales are likely to decline marginally due to a dramatic price spurt and a weakening consumer sentiment. However, the decline in volume will be nullified by the price appreciation, and overall sales will be up by 10 per cent.
“The three days prior to Akshaya Tritiya, falling on April 24, would see a marginal decline in sales on high prices. But overall sales in value term would certainly remain up,” said Ashok Minawala, an industry veteran and ex-chairman of the All Indian Gems & Jewellery Trade Federation.
Gold prices have increased by 32.07 per cent since last Akshaya Tritiya on May 6, 2011. Hence, consumers consider gold a safe investment avenue for higher and secured returns against all other asset classes. Standard gold price hit Rs 28,640 per 10 gm on Saturday, compared to Rs 21,685 on May 6 last year. Prices of silver were at Rs 57,120 a kg, compared to Rs 54,305.
While there’s been a visible surge in physical gold purchase on Akshaya Tritiya over the years, consumers’ interest in purchasing non-physical gold on this day has also increased significantly over the last couple of years. On Akshaya Tritiya in 2011, investors rushed to trade in gold ETFs, with the turnover exceeding Rs 500 crore on the two bourses of the National Stock Exchange and the Bombay Stock Exchange, more than double the volumes of 2010.
This year is expected to be no different and volumes in both physical and non-physical formats are expected to top last year, according to a report by Religare Securities.
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Meanwhile, retailers of precious metals have introduced luring offers for this occasion. Targeting a 30 per cent rise in sales, Orra, one of the leading jewellery brands, offers up to 25 per cent discounts on the entire value of diamond jewellery and up to 50 per cent on making charges of 22kt BIS-hallmarked gold jewellery.
Gitanjali Gems offers around half the volume of silver coin on the purchase of every gold coin. For example, a consumer can get 30 gm of silver coins free by purchasing 50 gm of gold coins under the “Swarna Mudrika” scheme.
Through a tie-up with India Post, the World Gold Council (WGC) is also offering discounts on this day. India Post has announced it’ll offer a six per cent special discount on gold coins. Available in all denominations, the offer is valid between April 19 and June 30.
Ajay Mitra, managing director, India and Middle East, WGC, said: “Gold and gold jewellery bought and worn on this important day signifies never-diminishing good fortune. The traditional and cultural appeal of gold, combined with its strong fundamentals, means the precious metal remains central to Indian households’ long-term investment strategies, and never more so than during the festival of Akshaya Tritiya.”
This year, online gold retailers are also offering discounts. Financial Technologies-promoted National Spot Exchange Ltd has waived transaction and conversion charges pertaining to e-gold, e-silver and e-platinum to boost sales. The offer is valid between April 20 and 24 on the online spot exchange.
Gold coins, bars and ETFs were the main drivers of gold demand last year. Annual demand for gold bars and coins in India rose by five per cent to a record 366 tonnes. India remained the largest single investment market in 2011, accounting for 25 per cent of the total bar and coin demand. Some banks witnessed a 50 per cent jump in sales of gold coins and bars last year.
Fund managers expect huge investments in gold ETFs this year, too. They are expecting a 200 per cent rise in sales, surpassing the 145 per cent growth in 2011. AUM in gold ETFs stood at Rs 9,516 core at the end of March, a 153 per cent increase over Rs 3,765 crore in March 2011, according to data from the National Stock Exchange.