BaKhabar, November 2010, Page-6

better light a candle than curse the darkness

BaKhabar, Vol 3, Issue 11, November 2010

Gold as an option for investment and an advice to launch Gold Share
(Used Jewellery Exchange)

(By a female member of Bihar Anjuman’s online Forum)

Maybe most of us would agree that Muslims are facing a bad time all over the world today. However, by the grace of Allah, the fallout of these events can be seen as positive, in the sense that it has led to an awakening among the community and the desire for self-empowerment.

Since all our efforts are towards tapping the resources of the community, we should also take care to avoid wasting it. One thing that i have often seen as a total waste (and women of almost all households do it, without their husbands knowing or bothering about it) is selling and buying gold from jewellery shops.

Given the sharp rise in the price of gold today (which is likely to double soon, even by modest estimates) gold is not only an ornament, but also a store of value. From personal experience, all the gold jewellery that I bought six months back has not only recovered its making charge, but is well over earning me profit today. Similarly, an acquaintance who converted his bank balance of Rs 6 lakhs to gold, just two months back, has already earned a profit of Rs 65,000/- on that. These are exact figures, and anybody can do the calculations to confirm. Even the best of banks/bonds/mutual funds would not have given him this much interest in 'one whole year' let alone two months. Besides, since 'interest' is haraam anyways and just gets thrown away or distributed, isn't gold a far superior store to keep one's cash in? Unless, of course, one is investing in 'real estate' which is the king of all investments.

However, while the 'buying' of gold is always a profitable proposition, what we aim to discuss here is how to profit from the 'selling' of gold, especially gold jewellery.

Usually when somebody, let's say Mrs. X, wants to sell her used gold jewellery to the local baniya (read jeweller), she stands to lose quite heavily. Generally, he deducts much unwarranted money from it under the pretext of various heads which are:
1. The making charge she had given at the time of buying the piece of jewellery
2. He further deducts some percentage by way of 'taanki'
3. Then he usually deducts 10% straightaway even if the jewellery was bought at his own shop (which is pure cheating).

Since most of us are not fast/ adept enough in mathematical calculations to do so right there sitting in the jewellery shop, the jeweller has a whale of a time cheating us.

My appeal to Muslim sisters is that please don't sell your used gold jewellery at gold shops. They are not only cheating you in evaluating it but also making huge profits on it by polishing it as new and selling it again to other customers. Instead, first ask your near relatives or friends if they want to buy it at the price of gold in the market. This way you will get much more money for it than you would have got from selling it to the cheat jeweller. And your friend/relative who buys it will also profit because she will get a piece of gold jewellery on which she saves wasting thousands as making charge alone.

In simpler terms, if you bought a necklace at Rs. 50,000 today from say, jeweller J&J, the total gold you have got is just worth Rs 40,000 (since 10,000 is the making charge that he has taken on it). Further, if you plan to sell it back today itself to the same jeweller J&J, he will not give you Rs 40,000 for it (as he should). Instead, he would deduct around Rs 6000 - 12000 (depending on how 'big' a cheat he is) under various pretexts. So, all you would get for your 50,000 item is Rs 28,000 to 34,000. If you sold it to a 'friend' instead, you would not only get the total price of gold i.e. Rs 40,000 but your friend will also save Rs 10,000 on making charges.

It would be a win-win situation for both the parties and avoid wasting the money of our already impoverished community.

However, since many niceties are involved in any monetary transactions, especially among relatives, it would be best if we could have some neutral forum for it (and maybe Bihar Anjuman can take the lead in providing it) named GoldSharing etc. The forum would just be a meeting point for the buyer and seller of used gold jewellery. And the basic criteria they should meet, (to prevent any hassles) is the following:
1. The buyer and seller are in the same city (so that the buyer gets a chance to examine the jewellery herself).
2. The seller hands over the item with the original receipt of purchase.

I have too often heard women complaining about how cheated they feel after changing/or selling used gold at the local jewellers. My question to them is that why don't they sell it to some acquaintance instead? And the answer probably is, because they would not know how to. Hopefully, once a forum like GoldSharing is available, these sisters would know where to head with their precious jewellery.

Note of caution from BaKhabar team: any investment is always subject to market risk (except that which is made in the way of Allah), therefore, the author’s advice should be considered accordingly.