Posted on 10/27/2008 4:00:39 PM PDT by BlackVeil
Dubai: A massive rush at jewellery shops has led to a shortage of gold at some outlets, prompting some shopkeepers to overcharge customers, Gulf News has learnt.
Jewellers are seeing a huge rush of buyers as gold prices are currently at a two-year low.
Shopkeepers said the rush, a combined result of the Hindu festival of Diwali and lower prices. has resulted in a shortage of gold bars. But they denied any hoarding by outlets.
"There is enough gold available in the market and sales are at their peak over the last couple of days with the market falling drastically," jewellers said across the emirate.
Gulf News received complaints from readers who encountered jewellers charging more than the market price.
A buyer who asked not to be named said: "The price of gold prompted me to visit the Gold Souq in Sharjah. However, most retailers claimed they were sold out. Outlets where gold was available were openly overcharging. They said it was in short supply. The price of 24 carat stood at Dh88.75 but they were openly charging Dh92.50. This is clearly an unfair practice."
Shubash Golati, a buyer, said: "It is a tradition to buy gold during the four-day Indian festival of Diwali. I bought 22 carat jewellery worth Dh5,000. I wanted to buy a 100 gramme gold bar but was told that it is out of stock."
Shortage
H.R. Bafna, financial controller from Siroya Jewellers, said a physical shortage of gold is happening worldwide.
He said: "It is matter of physical delivery. It might take a day or two to replenish the stocks. But I am sure that there is no hoarding by jewellers because the market rate has dropped. This has resulted in a tremendous rush of buyers and so the gold bars are out of stock."
In reply to buyers' complaints that gold outlets are cashing in on the limited stocks and buyer rush, Bafna said: "There is a possibility, but I can't confirm this."
A counter salesman at the Joy Alukkas outlet in Bur Dubai said for the last couple of days there have been no fluctuations in gold prices.
He said: "From a customer's point of view this is an excellent time to buy."
He too denied any hoarding taking place. "If the demand for gold is high it is but obvious that some stocks will run out. Some retailers take advantage of this."
I predict it will get worse.
It could happen to us if we would DRILL FOR OUR OWN OIL.
I predict it will get worse.
Did you even read the article? Gold prices are AT A TWO YEAR LOW!
If the shortages were real and worldwide, the prices would be at all time highs instead of at lows.
Prices indicate there may be too much gold in circulation.
O’Bomber, like Roosevelt, would confiscate it.
You have to wonder when all the conspicuous construction that goes on in Dubai will end, and under what circumstances.
my friend pointed out:
The intense demand from the retail public in actual [gold] coins is a clear sign of a market top.
WRONG. There’s a strange phenomenon going on right now with quoted spot prices of commodities and the actual mechanics of supply and demand prices. Look at ebay or seekbullion.com for the true market price of an ouce of gold or silver. Meanwhile, COMEX has it at 730 and 9 respectively.
This silly ‘overcharging’ accusation in Dubai is simply the real world phenomenon of what happens when an item is scarce- price goes up.
November is a delivery month. I wonder if there’ll be a default on the delivery of physical metal.
This is not a shortage of gold, it is a shortage of gold jewelry. Diwali is the Hindu equivalent of Christmas, and their increasing wealth is causing shortages of jewelry, which are traditional gifts.
Prices for actual metallic gold, or prices for promises of gold?
Prices indicate there may be too much gold in circulation.
Too much gold, or too many promises?
I suspect that what is happening is that people who want to buy gold are far more interested in purchasing a physical object that they can see and take with them, and which they know actually exists, than in purchasing a promise that gold will be delivered.
From what I understand, the marketplace has generally regarded the counter-party risk associated with gold contracts as negligible, thus allowing the contracts to be traded interchangeably. I suspect that all the fraud in the CDS markets has awakened a lot of people to the concept of counter-party risk. The demand for gold isn't down, but the demand for promises of gold is.
Too little currency chasing to many goods - deflation.
How does a chart of 1-year gold futures imply that?
I don't think so. The price of paper is gold is down but not the physical gold. Tells me the paper gold does not match physical gold. Hummmmm.
The real question is, since only about 1% of contracts involve actual physical delivery, there is the question whether if 100% of contracts took physical delivery , there would actually be enough gold to satisfy it.
Looks like institutions that had been holding gold might have been forced to sell it to get some liquidity.
Somehow I doubt it. :)
The merchants do have a lot of time to bring in stocks and prepare for this festival - it is no surprise - and they appear to have a lot of gold on hand.
But they are not willing to sell for the current official price.
Well, I was taking a bit of license there, and tossed in some sarcasm for good measure. It only implies that there is greater supply of gold today relative to demand.
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