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Customers shun Gujarat gold bazaar after riots
Wed Apr 17,10:00 PM ET
By Robin Elsham
AHMEDABAD (Reuters) - Two thick bundles of bank notes belie how hard the business has been hit.
Gold company clerk Mahindra Shah can barely grasp the stacks of 100-rupee notes as he carries them to a tiny back office. There the loot is put through a bank note counting machine.
The tally: 850,000 rupees ($17,380). Not bad for a half day's takings but not enough for a full day.
And by mid-afternoon business is halted by news, delivered in a nervous whisper by someone rushing to the office of Johnson Jewellers, that more rioting has broken out nearby.
This is Manek Chowk, the gold trading bazaar in the riot-ravaged Ahmedabad (news - web sites) -- the commercial heart of Gujarat where at least 800 people died in India's worst religious violence in a decade.
"The situation is very bad in Ahmedabad now," says Anil Soni, who along with brother Dhanesh runs Johnson Jewellers, named after a famous London bullion trading house, Johnson Mathews.
"Small goldsmiths from rural areas are afraid to come to Ahmedabad," he says.
Last year Indians bought 855.2 tonnes of gold -- more than twice the amount of the second-largest market, the United States.
Three Indian cities dominate the domestic trade -- Bombay, the ancient Silk Road trading centre of Jaipur, and deeply troubled Ahmedabad, a city of 4.5 million people.
Indians' passion for gold -- for jewellery worn lavishly by both men and women, and as a favourite way to squirrel away wealth -- usually keeps the note counter whirring away at Johnson Jewellers, the largest of the city's 25 gold dealers.
But since the violence erupted six weeks ago sales have slumped by half.
SURROUNDED BY VIOLENCE
On February 27, a Muslim mob set fire to a train carrying Hindu zealots in Godhra, killing 59 people. In reprisal attacks that followed, most of those killed were Muslims.
Though the gold traders are predominantly Hindu, the gold bazaar sits inside the mainly Muslim old walled city on the east bank of the Sabarmati River, a dry ravine at this time of year when daytime temperatures soar to over 40 degrees Celsius.
The old city, founded in 1411 by Sultan Ahmed Shah, is a labyrinth of alleys usually choked with traffic -- motor rickshaws spewing blue smoke, overloaded lorries, bullock carts hauling sugarcane to sidewalk juice vendors and thousands of motorcycles.
But half the time over the past 40 days the district has been eerily quiet as curfews are imposed to quell riots.
To the east is Gomtipur, scene of some of the worst violence, and to the south is the city's largest refugee camp, the Shah Alam mosque where 10,000 traumatised Muslims are sheltering.
To the north lies Naroda Pattia, another area where families were incinerated in their homes and bands of knife and sword carrying youths roamed the streets at the height of the carnage.
And though Manek Chowk itself remained a relative island of tranquility -- protected by its predominantly Hindu status -- the rioting all around it has caused business to wither.
GOLDSMITHS AFRAID
Johnson Jewellers had 2001 sales of six billion rupees ($123 million). Gold accounted for 88 percent and silver the rest.
But now the company's fire-proof drill-proof vault, entered through a 20 cm (8-inch) thick cast iron door, contains no silver and just a single tray of the wafer-sized gold bars called tolas.
Tolas, a name derived from the Sanskrit word "tula" for scale or balance, are the gold-standard of India. They weigh just 116.64 grammes (3.75 oz), a size dictated by circumstances.
"The size of the 10 tola bar enables it to be easily concealed -- specially designed smugglers' vests hold around 100 bars in 20 or more pockets," the trade magazine Gold, published by the World Gold Council, said in a recent article.
It has "smooth, rounded edges so that it can be inserted inside a smuggler's body -- up to eight bars in the rectum."
"Another important feature is that the bar has no serial number, unlike almost all other cast bars available on the international market," the magazine noted.
That made the ten-tola bar the gold currency of choice, especially from 1947-1992 when India strictly regulated gold imports, giving rise to a massive black market.
WEDDING SEASON
There's a seasonality to the Indian gold market which has so far limited the impact of the rioting on the international gold market and the city's traders.
March is normally the slowest month as Hindus, with an eye on the stars and planets, view certain days as an inauspicious time to get married or start anything new.
All the gold jewellery showered on an Indian bride, traditionally given as insurance against future catastrophes, mean that almost half of Johnson Jewellers' sales occur from November to February when the most weddings are held.
Gold sales spike again from April to June, a second wedding season, before dropping as the monsoon arrives in July.
The impact of the rioting also has been lessened by the fact most sales are to Hindus, who have suffered less.
"Muslims don't deal in bullion," says Soni, who comes from a caste of the same name which dominates the local gold trade.
Muslims wear jewellery. Hindus cloak themselves in it.
Hindu women drape themselves in gold and silver on festive occasions, slipping countless gold bracelets on both wrists, accompanied by gold necklaces, nose rings, earrings, skull chains and anklets.
But in Ahmedabad, which was already losing business to Jaipur and Bombay because of tax differences, the gold dealers fear that this lucrative trade will slip further out of their hands as religious tensions drive customers away.
(US$1=48.9 Indian rupees)
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