NAGPUR: Amid concerns over Covid hitting the demand for
gold
this Dhanteras, rates of the yellow metal in the grey market are at par with its prices in the official channel.
This indicates likelihood of a higher demand for unaccounted gold as against its supply in the grey market. Traders say that Covid too has a role to play in it. There are limited means of public transport these days. In such dealings, cash and gold is physically delivered through unofficial couriers. As transport remains a hassle, the premium charged due to it has increased the grey market rates also. On the other hand, there is no hassle in getting gold or making payments through the official channel, said traders requesting anonymity.
Unaccounted sales in cash are an open secret in the gold and jewellery markets across the country. Even in normal course, customers are quoted two rates known as kaccha and pucca bhav (grey market and official rates) in the local jargon. As TOI made enquiries at the local markets, two different rates were quoted.
The grey market rates are at Rs52,500 a tola (per 10 grams). In the official channels, payment can be made through bank transfer of Rs51,000 and 3% goods and services tax (GST). This takes even the official rates to Rs52,530 a tola which hardly makes any difference.
During the normal course, the rates in grey market are around Rs500 to Rs1000 less than the official rates. This is because no taxes are involved in cash dealings.
There are a number reasons for the phenomenon. There is a likelihood that the demand is higher than the supply in grey market. As compared to the official channel, the supply restricted in the grey market is rather inelastic. Trade sources admit that it cannot be ruled out that a higher demand of gold due to Dhanteras through the unofficial channel may have kept its rates high.
Nilesh Rathi of SMS Bhav, a bullion analysis agency, said that it also happens that when there is a sharp fall in the prices, sellers prefer to hold on the stock in the cash market. This could be one of the reasons for higher rates.
Nitin Khandelwal, a wholesaler and former chairman of All India Gems and Jewellery Domestic Council, said this shows that it is always better to buy through the official channel. Even the associations have been advocating this.
Sources say that custom duty of 12% has also prompted smuggling of the metal which is sold via the unofficial channel. Though despite no taxation the rates are high this Dhanteras.
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