Jewelerama enters cash for gold trade
Published:Wednesday | May 19, 2010 | 12:00 AM
Avia Collinder, Business Writer
With the price of gold internationally at more than US$1,200 per ounce and the precious metal fetching between J$12,000 and J$14,000 per ounce on the local market, Steve Khemlani, the managing director of the Jewelerama and Khemlani group of companies, has entered the lucrative trade that is still cornered by dealers, many of whom are said to be unlicensed.
Khemlani appears to be among the first established jewellery firms to open its doors to heavy gold purchases.
The jeweller has been running daily media advertisements in an aggressive drive to elicit the business of Jamaicans, who are eager to cash in the gains from selling gold, the price of which has appreciated significantly over the last 18 months, and who may be wary of the many informal buyers who dominate the mushrooming trade.
The move to add the new income stream comes behind a downsizing of operations of the Khemlani group - comprising retail grocery, jewellery, clothing and furniture stores — which closed out some locations in response to recessionary pressures in 2009.
Since last year, the island has been gripped by 'cash for gold' fever, with the trade said to controlled largely by informal buyers, many of whom have been labelled by the police as shady characters.
More recently, the trade was said to be linked to the funding of criminal gangs.
While saying he was unable, at present, to estimate the size of the local market, Khemlani, whose bread and butter trade in the jewellery business centres on wedding bands, is depending on the company's name recognition as a well established player in the jewellery trade to leverage clients for its venture into precious metals.
"Jewelerama has been in business for almost four decades and is a household name that people know and trust," said Khemlani.
He is holding out hope that Jamaicans will want to convert their gold into cash before the price begins to fall as the global recession tapers off.
"The price of gold is quite high and it is always good to sell when the market is high," Khemlani said.
"Gold is very speculative and is related to the confidence that investors have. If the recession (ends), then at that time you will find that investors will move their money to the stock market and it is felt that gold could come back down."
The businessman said he was banking, too, on a perceived preference among Jamaicans to sell possessions to generate cash to meet expenses, rather than borrowing at current interest rates.
"You can always buy back when your finances permit it and when the price of gold drops," he said.
The jeweller is presenting a registered buyer such as Jewelerama as a better and safer sales option to the shadowy market.
"There is obviously a reason why some persons choose not to be registered and there is a big question mark if the proceeds from the sale of the metal to international sources could be used for illegal activities," he said.
"It is also safer for you to conduct your business in privacy so that you do not attract any unnecessary attention to yourself and become a crime statistic."
The price of gold varies depending on the karat or purity of the precious metal.