Gold rush down ‘Hetti Weediya (Sea Street)’
When gold prices were believed to have crashed some three weeks, consumers stormed Colombo’s Sea Street (Hetti Weediya) considered Sri Lanka’s gold marketplace and jewellery stores had a tough time coping with buyers. Long queues formed outside shops as people rushed in to purchase gold.
“Easy come … easy go” is what jewellers are talking about as times have changed now as gold prices are stabilising.
This is what the Business Times discovered during a tour of Sea Street this week to assess the general situation of the gold market here. One jeweller pithily described the near-stampede-like rush for gold, three weeks back as “the ‘Gold Rush’ down Hetti Weediya”.
Another jeweller said that people rushed in not realising that the information was incorrect and mere rumours that gold prices had fallen to Rs 30,000 a sovereign against the average of Rs 40,000 to 42,000 per sovereign.
Another store owner, who like others didn’t want to be quoted, said that gold jewellery sales have gone up considerably when the prices came down but said that some of them have made losses because they have been selling old stocks which they have purchased at Rs. 56,000 to 58,000.
Susantha Perera, Branch Manager, Sea Street, Swarna Mahal Jewellers told the Business Times that three weeks ago the price per gold sovereign was stuck at Rs 42,000. “We have to sell at whatever the market price, because we are a big company and the customer service, the trust and confidence that have built on us is important to us,” he said.
This store’s profit margin was around 15 per cent before the prices fell and due to the low prices, margins have come to between 5 to 7 per cent. However in the past two weeks, gold prices have gone up to Rs 48,000 per sovereign and sales have picked up but not that high as earlier. Due to the price appreciation their margin went up to 10 to 12 per cent, he said.
Mr. Perera noted that sales have also risen by around 25 to 30 per cent. Since they are market leaders in the gold business, he said that generally other gold business shops contact them to find out as to at what price Swarna Mahal would be selling. He said “We get around 75 to 80 calls in the mornings”.
There are around 400 jewellery shops in and around Sea Street where Mr. Perera believes around Rs 50 million worth of gold business is done per day.
Though there is a certain risk of robbery as gold is a high value product, some Sri Lankans are now realising that gold is also a form of liquid cash. This view increased when gold prices came down and led many to cash on buying and stockpiling to sell when it goes up.
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