Buying gold jewellery - Does it multiply money?

I had to visit a gold store located in the busy business district of Chennai last weekend. After reading some pink paper reports about  'diminishing' interest of retail demand in gold, I expected the shop to be crowd free.

The reality was much different. I felt like, I was entering a crowded vegetable market ( The building was real big with 5 floors and some roughly some 3000/4000 sqft on each floor). As we had to got to the third floor, me and my wife  went towards the lift lobby area. There were around 50 people waiting for the lift and we  got to grab some  foot space on the lift after 15 minutes of waiting.

Third floor , our shopping destination, was crowded as well (with 80% space occupied on the floor by the fairer sex cutting across all economic classes from middle class to the uber rich ).  It took us a  few  minutes to spot the counter where we could find the range of  jewellery that we wanted.

The counter was busy with around 10 customers busily shopping for jewellery. We got the attention from the salesman after waiting for around 20 minutes. The shopping was done fairly in around 5 minutes. When the item was billed, it looked something like this

Item xx 20 gm
22 ct gold rate 2805
20 * 2805 = 56100
Wastage+ making charge + vat was around  6000 . So, the total amount of the bill was around 62,100.

As per the custom of the shop!, we showed our  proforma bill to one of  the guys roaming around the floor in white shirt. He gave us a discount of Rs 500. ( only god knows, what the basis of discount was and what happens to those folks who are ignorant of this custom!).

When we paid and packed out bags, my wife told me that 'gold' (read ' jewellery ' in between :-)) is indeed a great investment ( sarcastically pointing out to my equity portfolio). I also was reminded that the jewel we got last year @ 2640 per gram in the same shop was worth  2805 per gram! now. ( 165 per gm profit!!! yahooooo)

But when I made a back of the paper calculation to show that we have lost some money from last year's purchase and some real interest worth a few more thousand, my wife agreed . ( For those who need explanation, if we had bought 20 gms last year the bill would have been 57800 =52800 (20*2640) + 5000 ( 5000 for wastage+ making charge+vat- custom discount. The jeweller would buy back the 20 gm jewel now for 56100 only ( 2805*20). So, the real loss is    57800 - 56100 + interest lost on the original amount).

Now, coming back to the question of the post "Buying gold jewellery - Does it multiply money?" . The answer is definitely YES . It multiplies the gold jewellers money multi fold. That too when the shop is crowded like a vegetable market, no doubt about that. :-)

If you ask me whether it makes the buyer rich, I have no answers. The maximum I can say is 'It depends :-)'

Note:- The aforesaid jeweller has been  opening up branches aggressively across cities with oodles of  money made by selling gold jewellery!.

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