Given the announcement made by the government last night, there has been a surge in the prices of gold in the black market. Local jewellers have been selling gold at the rate of Rs 40,000-Rs 60,000 per 10 gm by showing back-dated entries in their book. Currently the metal has been trading at Rs 30,610 per 10 gm.
According to sources, people have been queuing up at jewellery shops to buy gold. But there is a limit up to which one can buy gold through cash. To curb unethical practices the government has made PAN card compulsory for gold purchase over Rs 2 lakh.
The jewellery industry has welcomed the government's decision to ban old Rs 500 and Rs 1,000 notes, saying gold demand will rise as people will have more faith in the precious metal than in currency notes.
India is the world's largest gold consumer and imports a sizeable chunk of its total annual consumption of around 900-1,000 tonnes.
"It will create havoc for a little while and the economy will also destablise. But overall, it is going to be good for the country. In fact, the jewellery industry will thrive as people will have more trust on jewellery than currency notes," Gitanjali Gems Chairman and Managing Director Mehul Choksi said.
(With inputs from PTI)