Gold rush after RBI’s Rs 2000 notes withdrawal announcement: What jewellers have to say

Jewellers say that people are trying to find ways to get rid of their Rs 2000 notes, and jewellery is the best investment to do this

Jewellers are receiving increasing inquiries for gold and silver purchases, with a noticeable rise of approximately 15-20% compared to previous periods, after the Reserve Bank of India’s announcement to withdraw Rs 2,000 notes from circulation. Unlike the situation observed in 2016 during the demonetisation, jewellers have reported that there was no panic buying of precious jewellery.

“After the withdrawal of the Rs 2,000 notes, we have observed a notable increase in inquiries for gold and silver jewellery. However, what is particularly striking is that people are not panicking as they did during the previous demonetisation period. This time, there seems to be a more measured response, with individuals actively seeking out alternative investment options and taking proactive steps to secure their wealth.” said Pawan Gupta, Director, PP Jewellers by Pawan Gupta.

“The withdrawal of Rs 2,000 notes has reportedly led to a 5-6% increase in customer footfall at jewellery stores. This indicates that the currency withdrawal has had a positive impact on the jewellery sector, attracting more customers to make purchases. Additionally, the withdrawal of high-denomination Rs 2,000 notes has likely influenced the mode of transactions in the jewellery sector. There is a growing emphasis on reducing the usage of high-value cash, prompting a shift towards lower denomination notes, digital payment methods, and credit card transactions. By promoting digital payment methods, the jewellery sector can enhance convenience, security, and transparency. It also reflects the changing consumer preferences and the growing adoption of digital financial services. However, the transition towards digital transactions in the jewellery sector will depend on infrastructure, consumer awareness, and accessibility to digital payment options,” Rohan Sharma, Managing Director, RK Jewellers South Extension-2 said.

Jewellers agree that people are trying to find ways to get rid of their Rs 2000 notes, and jewellery is the best investment to do this. The tight Know Your Customer (KYC) regulations have kept gold purchases over the past two days lower in return for 2,000 rupee notes. However, reports claim some jewellers started adding a 5–10% premium, bringing gold prices to 66,000 per 10 grammes.

“Gold and silver have historically been regarded as haven investments during uncertain times, and individuals now recognise their potential as a reliable store of value. We have provided valuable information and guidance to customers, assisting them in making informed investment decisions,” Gupta added.

“Cash transactions have sharply risen, and we are witnessing some rush situations in the market. The phasing out of 2000-rupee notes has created a sense of urgency among the people to safeguard their monetary value by investing in jewellery. People will aim to sidestep the need to exchange or deposit Rs 2,000 notes at banks and will come forward to spend on luxury items such as diamond jewellery. Hence, we believe that there will be a short-term increase in demand as people try to offload their Rs 2,000 notes, and we expect a 20-30 per cent increase in sales soon. It will also help grow because consumption is expected to increase. However, we will maintain strict KYC norms,” said Eshwar Surana, Managing Director, Raj Diamonds, Bangalore.

“Since the circulation of Rs 2000 notes will be stopped, the walk-ins have increased this month. Compared to last year, our work has seen a 30% growth as people want to get their Rs 2000 notes changed somehow. Since they are billing their purchases, we are accepting cash payments. Apart from this, the people who owed us money and were not paying us back for 2-3 months, those amounts also got cleared since we were accepting Rs 2000 notes. This decision has proven positive for us regarding footfall and clearance of payments,” said MP Singh, Director, New Light Jewellers, Rajasthan.

“As an association, we welcome the decision about Rs 2000 notes by the Government and see it as an opportunity. We being a responsible organization, welcome this move. Even today housewives keep Rs 2000 notes as savings and can use them as an investment in gold to get good value. The jewellers will trade this without any premium charge, and the customers will be given jewellery in exchange for the notes, within the ambit of KYC as per RBI rules. The business has seen a growth of 10% ever since the exchange rule for Rs 2000 notes was introduced by the RBI,” said Rajesh Rokde, GJC vice chairman and founder, Rokde Jewellers.

While some jewellers are facing a surge in business, many claim that there is hardly any difference.

“There is not much difference in sales as it is the off-season time, and consumers have just started to come out. I have not noticed much panic in my consumers regarding the discontinuation of the 2000 rupee notes. Only people who have Rs 2000 notes that amount in lakhs are coming to the store to buy jewellery, but there is nothing wrong in the matter as they are providing proper identification proof such as their aadhaar card, pan card, and are billing their purchases”, said Raghav Dhir, Director, Dhirsons Jewellers, Lajpat Nagar.

By Bushra Satkhed with inputs from Janhavi Ganguly

Retail Jeweller India Exclusive