A friend’s driver, let’s call him Mahesh, was thinking seriously about how to invest his limited monthly savings wisely. Among the options he was considering were fixed deposits in banks, savings deposits in banks, a local chit fund, an insurance policy, and like all Indians, purchase of gold. He was quite firm that at least a part of his savings, if not most of it, would go into buying gold each year; he had a young daughter and was already thinking ahead to her marriage and the jewelry required, plus he knew that gold prices only went up over time and it was a good safeguard against inflation. His parents, his neighbours, his friends, all said so, and community wisdom accumulated over several years couldn’t be wrong.
As Dhanteras was approaching, he’d started thinking seriously of purchasing some gold this year. He had some concerns about buying gold though, primary among these the fear of being cheated on the promised gold quality by the shop he bought it from. For this reason, his wife and he had both spoken to neighbours and family members that had bought jewelry over the last few years to find out which jewelry shops could be trusted.
Secondly, he didn’t want to buy jewelry that would be out of fashion when his precious daughter grew up and have to be melted down and remade with all the attendant tension of low quality gold – or worse still, copper – being added to it. To add to these, gold necklaces were not cheap and he wasn’t sure that even his annual savings would add up to one. Most of the jewelry shops that allowed a customer to pay for jewelry in monthly installments offered schemes of 3-6 months, wherein the monthly EMI would be Rs. 1000-Rs. 1500 for just simple earrings, even this was too much for him to bear.
Stuck in a quandary, he decided to discuss this matter with his employers – perhaps he was even hoping for a small loan in addition to their advice. His employers felt that the chit fund option was the worst among those that he was considering and wanted to ensure that he stayed away from that; they understood his hunger for gold and all it represented – a hedge against inflation, a signifier of status, prosperity etc. They were against giving him a loan too often; finally they mentioned to him the option of buying gold coins; he could buy a coin of whatever weight suited his budget, 2gm, 5 gm, 10 gm etc. If he bought ones with the BIS stamp on them, he could be assured of quality. And they’d appreciate in price like gold jewelry, could be sold or pawned in emergencies if need be, and could be melted down to make jewelry for his daughter when the appropriate time came. They were quite sure that this would be a good solution to his dilemma. But little did they know the intricacies of human behavior and all the attitudes, beliefs, and environmental factors – often tangential ones – that influence it.
Though this seemed a solution to his problems, he baulked at the idea.
“I will buy gold coins once I’ve bought enough jewelry; kuchh pehenne ke liye bhi hona chahiye naa (there should be something to wear too)”
To him the utility of gold coins was much lower than that of gold jewelry, as jewelry could be worn by his wife and daughter at various social functions over the years and hence had a utility value – in terms of adornment as well as signaling status – and an investment value. And he couldn’t think of what to do with the gold coins until it was time to sell them or melt them and remake into jewelry ? And wasn’t the latter a huge headache that was better avoided ?
How did his employers help him find a solution to his problems ? And they did find a really neat solution – one that addressed all his concerns and was affordable. We’ll reveal their solution to you next week; until then, do let us know if you have any thoughts or ideas that we could pass on to Mahesh.
- Zenobia Driver