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Can’t afford gold jewellery? This jeweller may have an alternative

Fractional ownership might just become an option to buy gold jewellery. Nishit Nanda, executive director at Khimji Jewels, says jewellers may soon start co-ownership schemes to make gold jewellery more affordable

May 11, 2022 / 11:43 AM IST

How does one buy gold when prices have shot up? One way, says Nishit Nanda, chief executive officer of youlry.com and an executive director at Khimji Jewels, is co-ownership of jewellery.

This works like a mutual fund, where shares are purchased by pooling in investors’ money, or a real-estate investment trust, where funds are pooled in to buy land and property. Or it could even be even fractional ownership, as offered by some platforms for stocks of overseas companies.

Although there isn't a specific launch date zeroed in yet, Nanda told Moneycontrol in an interview that jewellers are exploring co-ownership of jewellery and schemes that could also allow buyers to exchange jewellery after a few years.

Nanda says such plans may be appealing to the current era of social media, where buyers are looking for a change every few years. Edited excerpts:

Have you seen consumer interest in co-owning jewellery?

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Yes. Since gold jewellery is a luxury segment, several consumers have expressed interest in the co-ownership model. This is an intelligent way of buying jewellery that you can’t normally afford. Additionally, it builds a community of like-minded jewellery lovers.

We are considering opening up the direct-to-consumer jewellery segment to co-ownership. However, the idea is still in the pipeline. It is something that fascinates us immensely.

We are yet to figure out the logistics of how gold jewellery can be handed from one person to another among the group of buyers, who buy the same jewellery set.

What is the minimum investment to buy jewellery through a co-ownership model?

We are still working out the modalities for our high-end pieces. I don’t foresee any higher limit being fixed. But each buyer in a group should be willing to shell out at least Rs 5 lakh. That would, most likely, be the minimum investment.

Also read: Gold prices have fallen. Should you buy more gold now?

How many people would be able to co-own a particular piece of jewellery?

Since high-end gold jewellery often counts as an investment piece, the utilisation factor is often low and therefore it is better to have a share in the piece without making the full investment. It is reasonable to foresee that around three people would be allowed to participate in a group buying together, who among them, would be able to buy one to three pieces of jewellery.

Once the three consumers within a particular group pool in their money to buy their chosen jewellery, the piece would then change hands between them so that each of them gets a chance to wear them and use them.

We will also include a buyback option for the original amount invested in case the customer wants to relinquish their share.

Can the jewellery co-owners hold on to the piece forever? Or does the scheme come with a limited timeframe?

At the moment, we are thinking of various alternatives. Let’s say the scheme could be a 12-month scheme, with each of the three buyers getting to own (and wear and use) the jewellery piece for a few weeks, turn by turn. After 12 months, they return this piece of jewellery and get some money back.

To make the group harmonious and ensure that like-minded people enter the group, we are also considering allowing co-ownership between either close family members or friends. All the stakeholders must ideally be known to one another to ensure that sharing happens smoothly.

We want to be able to automate the ownership process to make it easier for us as co-owners and mediators.

Still, there are challenges when more than one person gets to own the same piece of jewellery.

That is true. If I own a piece of jewellery entirely, then I can wear it for as long as I like, for as many days, months and years as I like. But if my jewellery piece is owned by others, it has to be shared. On paper, that looks possible. But during, say, the wedding season, who gets to decide who will own it, physically? The dates for which co-owners might require to wear that same piece of jewellery might clash as the wedding season is usually finite. What if you are travelling at the time when I need to wear the same piece?

These are some of the teething troubles that we foresee and we will have to work out a solution for it as and when we launch the scheme.

Would you await regulations for co-ownership of jewellery?

Co-ownership could be like a contractual agreement between individuals. We have been working with our legal teams to make sure that such products, as and when they are rolled out, allow for a smooth co-ownership and good customer experience.

Gold is a risky market and insurance only works when the company is also a co-owner in this particular model. Hence, jewellers like us would most probably be the co-owners for every group of individuals that walk into our store to co-own some jewellery.



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Khyati Dharamsi is covering personal finance for the past 15 years. Taxation, insurance, mutual funds and gold are her areas of focus.
first published: May 11, 2022 11:43 am
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