Chennai's pawn market panics as gold shines less in jewellery

CHENNAI: As gold prices are heading north, it has created a new villain for Chennai’s pawn brokers and goldsmiths (aachary’s) based in commercial hubs like Sowcarpet and T Nagar, with several of them getting nightmares of fake gold jewellery almost impossible to trace.

The number of retail buyers in T Nagar and Sowcarpet, too, has dwindled by a whopping 40 to 50 per cent since January.

Though the pawn brokers association has formed Whatsapp groups to protect their business by sharing the designs and models that are suspicious in nature, fraudsters always seem a step ahead. The concentration of gold in fake jewellery is so low that it is in single digits, with silver and copper making most of the matter. However, what is intriguing pawn brokers is that these fakes are hard to detect even with the usual scraping method.

According to informed industry sources in Edapalayam (Sowcarpet) where melting of gold and ornament making is the prime business, the number of fake jewellery mortgaged has witnessed a sharp increase in areas like Ayanavaram, Sowcarpet, Otteri and Chintadripet. There have also been stray cases of gold theft by staff, and most of these cases are off the police radar and are now a matter of serious discussions within the pawn broking community.

Gold testing labs in Sowcarpet are also witnessing an increase in fake jewellery. “Even seasoned pawn brokers are foxed by miscreants and we are increasing gold testing samples to prevent the mortgage of fake items, but most customers do not agree to testing. When a ring we got broke into two, we were aghast to see white metal inside it,” said D Kothari, a pawn broker in Sowcarpet.

“Fake jewellery fraud is as old as the gold industry, but the trends are disturbing. There are active suspicious groups working to make a quick buck through adulterated gold,” said C Shankar, a goldsmith based in Edapalayam.

Theft by staff and dealers is another headache. Retail sales have dipped by more than 40 pc due to increase in gold price and about 30,000 goldsmith members are adversely affected without business.

Shankar said though the Vishwakarma association and Jain association are aware of the situation, they feel the gold industry should be regulated by state and central agencies. Gold will be in the news for wrong reasons, and banks issuing gold loans will also come under pressure, if gold valuations and purity are not monitored, he said.

“The margin of interest for gold worth one lakh over a period of six months will be around Rs 6000, but if it is a fake bangle or ring, they will not return to get back the mortgaged jewel. We have been warned by our seniors not to entertain new customers since last month and thaali saradu, chain and ring are the ones with fake hall marks and carat ratings,” said Akshay Jain, a pawnbroker and a trader based in Choolai.

Last week, the officials of a nationalised bank in Manamadurai, Sivanganga, filed a complaint saying there were gold jewellery being mortgaged and close to 50 per cent of gold was found to be adulterated. There are cases coming from different parts of the state as well, Akshay added.