Akshaya Tritiya is one of the most auspicious days in the Hindu calendar. The word “Akshaya” means imperishable and eternal prosperity that which never diminishes, so new ventures made and valuables purchased on this day would be fruitful and believed to bring luck and success. Traditionally, in India, on this day most people invest into gold which is the symbol of wealth, prosperity and fortune. This year it will be celebrated on 6th May, 2011.
Reliance Jewels, a fine jewelry specialty format of Mukesh Ambani owned Reliance Retail Limited-a subsidiary of Reliance Industries Limited (RIL) had announced on 26th Apr, 2011 the launch of ‘Akshaya Tritiya pre-booking offer.’ In this scheme Reliance Jewels had offered ‘Double Gold Rate Protection’ to its customers, who pre-book jewellery for Akshay Tritiya before 1st May, 2011 and fix their gold rate to protect against price increase. If the prices of gold rate on Akshay Tritiya i.e 6th May 2011 is lower than the booking rate the customer would be able to recover the difference in rates. In addition, the company is also giving its customers a discount of Rs. 100 a gram on gold jewelry.
This scheme by Reliance Jewels management team is in order to give its customers (investors) reliefs from rising gold prices also improve their own sales. Now, let’s analyze the trend of gold price from 2006 to 2010 in one month period before Akshaya Tritiya day. This day was celebrated on given dates between years 2006 to 2010; 30th Apr 2006, 20th Apr 2007, 7th May 2008, 27th Apr 2009 and 16th May 2010.
Analyzing, the above table it can be concluded that gold prices have seen upside movement 2 times out of 5 years which we considered. There was global slowdown between 2007 and 2009 due to which there was not much movement in gold prices during the month prior to Akshaya Tritiya day.
Now, let’s analyze the performance of gold price in month of Apr, 2011 and post announcement of offer i.e 26th Apr, 2011 till 30th Apr, 2011. Then, find out whether the investors taking the advantage of Reliance Jewels scheme to buy gold ornaments, bars, etc. are at advantage?
Gold Price during month of April, 2011
Gold Price post announcement of Reliance Jewels scheme
The above table portraits that investor seems to be at advantage by pre-booking the gold investments with Reliance Jewels for auspicious day of Akshaya Tritiya under the scheme ‘Double Gold Rate Protection’. The investment into this scheme has closed on 1st May, 2011. Now, let’s see the gold prices on 6th May, 2011 which seems moving upside.
In future, it’s expected this company and competitors will churn out similar kind of schemes on other festivals like Dussera, Dhanteras, Deepavali, etc. to attract customers and improve their own sales margin. The customers shall be updated and knowledgeable with such attractive schemes to avoid any disappointments later.
This analysis would have given some dope of upside movement for gold price (per kg) during festival periods. The customers are recommended to take an advantage of such schemes after understanding pros and cons whenever it’s rolled out in future before investing in gold jewelry, bars, etc .
By: Hiral Thanawala, CFPCM
Errata: The prices mentioned in the tables above are on Rs per 10 gm basis