Gold traders who were always benefiting from the increasing prices of gold demonstrated their anti-business attitudes by closing their outlets after bullion prices dropped significantly in the global market, making the precious yellow metal cheaper.[break]
On the back of tight policies adopted by the government on gold imports, Nepali traders had been pressing for an Open General License (OGL) that allows anyone to import the desired quantity of goods. They are so engrossed with the motive of profit that loss for even couple of days in gold trading was not acceptable to them.
Showing their irresponsibility toward the customers, they closed their shops on Tuesday and Wednesday so that they wouldn’t have to face crowds of customers who were rushing to the markets to buy gold at cheaper prices.
During the two trading days -- Monday and Tuesday, gold lost its value by Rs 6,300 per tola (11.664 grams) with the sharp drop in the prices in the global bullion markets. In reflection to the plunge in prices, the Nepal market saw gold prices drop to Rs 52,500 and Rs 49,500 per tola on Monday and Tuesday respectively before being stable on Wednesday and Thursday.
Though prices remained constant on Wednesday, to the relief to the gold dealers, buyers had to go shop searching for gold bar and jewelries as traders who had opened the shops were reluctant to sell the gold at highly declined prices. They are floating a hollow argument that they were compelled to close their shops as banks failed to supply the agreed quantity of gold to distribute in the market. Around two dozen banks are designated to import 15 kg of gold per day in turn-basis.
Consumer rights activists say the shutdown of shops by traders when prices dropped is against the business norm.
“The closure of shops by the bullion traders when the prices dropped is against normal business norms in which traders should be ready to suffer
losses and earn profit. But Nepali gold traders, who have been enjoying profits with continued rise in gold prices, demonstrated irresponsible behavior
shutting down their shops to avoid loss,” Jyoti Baniya, general secretary of the Forum for Protection of Consumer Rights-Nepal (FPCRN) says.
Most of the customers who are planning to tie the knot this wedding season or who visited the shops to buy gold had to return empty-handed as gold bar or coins were not available in the market. Even the customers who wished to buy jewelries were disappointed as many shops were closed and those open were also taking orders from their regular customers only.
“I did not return my regular customers empty-handed only to maintain relations with them though I am suffering a loss in gold trading,” said Uttam Shakya, proprietor of Surya Bahadur and Sons Jewelry Shop at Wotu.
Shakya said traders like him were forced to discriminate against their customers citing gold shortage in the market. However, dealers had kept their shutters up even during acute scarcity when gold prices were soaring in the market.
“It is ridiculous to hear the argument of gold dealers who blamed the crunch of gold for the closure of their shops. If so, why did they open their shops when the price was increasing amid shortage of gold in the past?” said Baniya.
Customers also complained that the traders never stop selling gold citing shortage when the price swelled.
“It is nothing more than their business tactics to pull down their shutters as price tumble” says Bhumika Khadka, a customer from Sano Thimi, Bhaktapur.
Leaders of the gold traders’ group were at the forefront in challenging fair market practices. Most of the shops run by the leaders of Federation of Gold and Silver Dealers’ Association were closed on Tuesday and Wednesday.
Traders blame the quota system imposed by the government for creating the shortage in the market. They say the government-set import quota of 15 kg of gold per day is insufficient to cater to the demand that is hovering at around 30 kg per day even during normal times.
“This mismatch between the supply and demand has created the shortage of gold in the market,” says Mani Ratna Shakya, president of the federation, adding that the situation will remain the same unless the government increases the quota or allows traders to import gold themselves.
Baniya, on the other hand, blamed the traders for creating artificial shortage by hoarding gold with the objective of earning more profit when the price goes up.
“The government needs to monitor the market strictly or else the problem will continue. If the government monitors the market, we are ready to help bring out the gold hidden by traders,” said Baniya.
Officials at the Department of Commerce and Supply Management (DoCSM) who are some time quick to pounce on small shop owners for flouting market rules, are also showing their indifference toward the anti-market activities in the domestic gold market.
They said the process of collecting information from Nepal Rastra Bank (NRB) about the supply situation of gold is on going, so that needs to be completed before carrying out market monitoring.
“We will soon be conducting market monitoring after we get the necessary information from NRB about the supply and stock of gold in the market,” says Narayan Prasad Bidari, director general of DoCSM, adding that the department will take strict action against those found to have been hoarding and practicing black marketeering.
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