Jewelery News

Gold rush: Rs 2,000 note withdrawal triggers panic buying of jewelery

The Reserve Bank of India’s decision to withdraw Rs 2,000 currency note has triggered panic buying of gold jewelery in many cities including Delhi, Mumbai, and Surat. The decision was announced on Friday and a day after, many retail outlets in the national capital witnessed a constant flow of customers with Rs 2,000 notes to buy gold.

Mehul Shah, a chartered accountant, said shops were selling gold at a premium in the Surat market. “Even if you have accounted cash in hand, they will still sell Gold at a 10 per cent premium. Proves that Pink Note has become Black on Day 1 itself in the eyes of people. Thanks to the Govt,” he said.

Mihir Modi, who is also a chartered accountant, responded to him saying only those who buy gold with a premium have unaccounted cash. “If I’ve Rs. 2000 notes and is rightly accounted for in my books, why would I buy gold with premium,” he asked. “I’ll simply deposit it in the bank, pay for gold through the banking channel. Only those who r buying gold with a premium who have unaccounted cash.”

Mohandas, a Twitter user, said Rs 2,000 currency hoarders were buying gold all over it seemed. “…Gold price is in upswing yesterday onwards, but this 2K withdrawal by the RBI, no way bothered Aam Aadmi,” he said.

Mayank Patel, an accountant, shared an advertisement from a store in Ahmedabad. The store offered to accept Rs 2,000 notes for gold without any extra charge. “Here Ahmedabad this type advertise also and specifically mention without any extra charge,” he wrote.

Similar scenes played out in Delhi and Mumbai. In Delhi, a customer at a leading jewelery chain booked gold bangles for over Rs 5 lakh and paid in cash – in Rs 2,000 notes, The Times of India reported on Sunday. This happened at many stores, including prominent jewelery chains.

Shop assistants were busy counting the notes on machines or by hand, the report said, adding that a salesman at a prominent retail chain in Noida said that this pink note had created havoc since morning.

In Mumbai’s gold bazaar, some jewelers were charging a premium on the yellow metal for accepting the currency note, another report said.

The RBI on Friday said that it had withdrawn Rs 2,000 currency notes but the note would remain a legal tender. It has asked people to deposit/exchange the currency till September 30, 2023. The central bank has asked people to deposit Rs 2,000 bank notes into their bank accounts and/or exchange them at any bank branch. However, the exchange can be made up to a limit of Rs 20,000 at a time at any bank. The central bank said this was done to ensure operational convenience and to avoid disruption of the regular activities of bank branches.

However, this condition has deterred many with high volumes of cash in Rs 2,000 notes. A person who has Rs 5 lakh in Rs 2,000 notes will have to visit the bank 25 times. This may also be the reason behind the rush to buy jewelery instead of visiting bank branches.

On Saturday, gold’s official rate was Rs 63,800 (including GST). However, it was sold for around Rs 67,000 (per 10 grams) when paid for with Rs 2,000 notes.

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