Billion-Toman Showcases

Besides the usual heads-up, businessmen used to give two special pieces of advice to anyone who either had insufficient capital or wanted to start working as a beginner, “If you’re looking for money, two things can make you prosperous in business: iron and gold.” Apart from many young unemployed individuals in Iran, there are some people who have either been financed by their fathers or been working for different employers since their early twenties and now want to set up their own businesses. Opening a jewelry store is definitely among the ideas that might attract any young individuals. Ramin is 44 years old. He works in a reputable jewelry store on the Karim Khan Blvd. — one of the well-known jewelry centers of Tehran. The store where he works and the jewelry belong to somebody else. I told him that I wanted to enter the business, so I sought his guidance. He suddenly interrupted me and asked, “How much are you going to start with?” Confidently, I said, “A hundred million tomans.” He smiled and said, “Having a hundred million tomans to start working in the gold market would be like going grocery shopping with a hundred thousand tomans.” He said something interesting about the initial capital, “In this business, you’re supposed to have at least a thousand 20-gram gold ingots at first.” I asked him the price a 20-gram ingot, and he gave me an estimate of 2,500,000 tomans. In other words, you would need three billion tomans, which includes the rent and a thousand ingots, to set up your business. I then asked, “Isn’t it possible to start with less money?” He replied, “Usually, those have less money work either outside stores or take their capital into a store as I did and gain the profit. In fact, I am a minor shareholder in this store without having any deeds. It is a matter of trust.” I asked him about those work outside stores. He pondered and said, “They usually work with goldsmith workshops and take the fabricated pieces of jewelry to different counties to sell. They should at least have a hundred million tomans or still work for a jeweler to earn commissions.” As usually, I asked him about his earnings, and he said, “If you’re smart enough to sell gold for at least 200 million tomans in counties per month, you can get something between three and five million tomans. Some of them sell gold by checks, so if you include the 5% monthly interest, you can even earn an extra five million tomans, which would amount to 10 million tomans. If you find partners in Tehran with this amount of capital, you can earn seven million tomans a month on average.” Deeply interested in the conversation, Ramin then went on giving sympathetic advice, “It depends on how many customers enter the store.” Right then, he pointed to a store across the street and said, “The owner of that store may not even earn a net profit of one million tomans per month with his two partners.” I quoted what the head of the Gold Syndicate told about the Mafia-like activities of some brokers in the gold market. Ramin went beyond his words and claimed, “It is not even possible to enter this business without the permission of this mafia. You must be recommended by someone.” I asked him for evidence, and he simply said, “I have no idea.” After a few moments of hesitation, he looked around and gave me an address to a friend of his in the Grand Bazaar. Confidently, he then ensured me, “He knows everything.” To change the atmosphere, I asked him about the average rent of the major jewelry stores on the Karim Khan Boulevard, and he said, “Between 100 and 500 million tomans a month based on the business done with counties.” He continued, “These billion-toman stores are actually the showcases of these jewelers. They mainly earn their incomes from goldsmith workshops by distributing jewelry to other stores in Tehran and counties.” After thanking Ramin, I headed for the Goldsmith Market in the Grand Bazaar, the beating heart of gold in Iran. Saeed is one of the small-time store owners who has been working as a jeweler across from Green Square (Sabzeh Meydan). I asked him about the gold mafia and how to set the gold price. He said, “There are three individuals in Tehran. They have been controlling Iran’s gold market for a long time. I don’t know any other big fish in the gold market.” He then explained how this mafia would set the gold price, “Some of these people have been in business since the Qajar Dynasty, and their descendants are now controlling the market. Like Mafia families, they don’t allow strangers to enter the market.” Saeed is unwilling to talk further. He suddenly pretended to be busy doing his work, implying that I should leave. After talking about this and that, I brought up the gold market again. Starting to break the ice, he then talked about how gold was distributed and priced in the market, “These three individuals have nearly 50 brokers who distribute the gold to their goldsmith workshops every morning. They also set the price.” I asked him, “The head of the Gold Syndicate said a while ago that the gold price would be based on the global ounce price and the dollar exchange rate.” He smiled and replied, “The mafia ignores the syndicate and acts autonomously. By the way, a member of the syndicate confirmed the existence of mafia in the gold market a while ago.” Excited, he then added, “Most probably, these people are famous in the global market for their long history, so they can smuggle gold. They don’t use the Central Bank reserves, so they can control the market.” His tone changed dramatically as if he was narrating an intriguing story, “From what I’ve heard, they live out of sight due to their billion-toman working capitals and the massive amounts of gold in their warehouses and workshops. They are rarely seen in the market. The son or nephew of one of them usually shows up in the market. An associate of his once said, ‘This mafia imports nearly three thousand billion tomans of gold into Iran.’” This sentence reminded me of the statistics published by the previous administration about the 90% import of gold through smuggling. To verify Ramin’s words, I then turned them into a question and asked, “Does anyone have to collaborate with this mafia to enter the gold market?” He replied, “You could not have provided gold for your goldsmith workshop until two years ago if you had not collaborated with this mafia because they would have placed you on the black list. We are all connected in the gold market. If nobody works with you or provides you with ingots for melting and production processes, you cannot literally work. But, since the past two years, some statesmen started to enter the market by providing ingots for goldsmiths. They’ve managed to break the monopoly, but the three guys are still the main players in the market.” He was then all smiles and said wat was on his mind, “To implement the value-added tax plan, the previous administration ordered the market activists to shut down their stores. The gold market was literally closed for a week. Finally, the state pulled back.” I asked him about the earnings of jewelers in the gold market, and he said, “If you work in the market or near Sabzeh Meydan and have a goldsmith workship, you can earn between 50 and 100 million tomans a month, but you will earn at least five million tomans a month if you are just a salesperson.” He then said something interesting about goldsmith workshops, “Most of the goldsmith workshops are located at Sirus Square and on Molavi Street, but they are all working under other titles for security. For example, we have put two underwear sewing machines below the entrance door at the goldsmith workshop in which I’m a partner. There is a backdoor where the goldsmith workshop is located.” In fact, many of these goldsmith workshops are underground places. He then said a few figures about the prices of jewelry stores at Sabzeh Meydan across from the market. I was surprised at what he said, “The stores are worth between 140 to 400 million tomans per square meter, and their rents are at least 40 million tomans a month.” There are other gold sales centers in the basement of Ghaem Mall in Tajrish and Milad-e Noor Mall in Shahrak-e Gharb. According to Saeed, most of the individuals who work there are salespeople and buy fabricated jewelry from the goldsmith workshops. I then visited the website of an individual that Saeed introduced as a mafia member. Earning billions and millions of tomans and owning golden possessions can be really tempting. Despite the necessary capital to set up this business being way beyond the roof and the fact that there is this strict mafia, many young Iranians are still tempted by the dream of entering the gold business. I wish the officials organize this market so that entering the business would not be so costly and would not need going through corrupt channels.

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