Mon, Nov 23, 2009 page10

• Soaring gold prices lead to innovation in India

  • AFP
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  For Indian brides buying jewelry, the bigger the better is the general rule, but record gold prices during this year’s wedding season are forcing many to compromise.

  India is the world’s biggest consumer of gold, so the rise of local prices to records above US$1,000 an ounce (28g) is keenly felt here — and nowhere more so than in the jewelry shops, an obligatory stop before any ceremony.

  While few women are prepared to trade down on the size of their purchases, some are turning to new designs that retain the bulk and glitz but use less of the precious metal.

  

  A model wears bridal clothing with gold decorations at a promotional event in Mumbai, India, on April 2. For Indian brides, the bigger the jewelry the better, but record gold prices during this year’s wedding season are forcing many to compromise.

  PHOTO: AFP

  Leading gold retailers in New Delhi and Mumbai say they are flooded with requests by clients for cheaper necklaces, rings, earrings, bangles or armbands.

  “Clients come, select the design and tell us to make it with less gold,” said a store manager at Mehrasons, a leading gold shop in New Delhi, who asked not to be named because he was not authorized to speak to the media.

  Gold has cultural and religious significance for Indians — considered auspicious and a sign of wealth and prosperity.

  Traditionally, daughters from the majority Hindu population are given gold ornaments at the time of their marriage.

  The gold is known as streedhan, or women’s wealth, and most families will spend as much as they can afford.

  “Big pieces of jewelry mean high gold content, but that is no longer affordable,” said Prabhu Thakkar, a gold trader based in Mumbai’s Jhaveri Bazaar, a wholesale market for gold and silver.

  “Indians are never happy with small, delicate designs. They need glossy, thick jewelry,” he said. “For Indians, big is beautiful.”

  One solution is to buy big pieces but designed differently with lower gold content.

  Some jewelry manufacturers are importing technology and alloys from Europe to make ornaments using hollowing techniques that help them reduce gold content by up to 50 percent.

  Using the modern techniques, goldsmiths are trained to flatten 22-carat gold and then stuff it with an alloy that is a mix of copper and silver to make the ornament heavy.

  “I have purchased Italian machinery and hired foreign designers to work on Indian designs using electroforming and hollow techniques,” said Ritesh Jain, of Aurogold, a manufacturing and retailer in Mumbai.

  “People in India are always keen to buy gold but they cannot afford huge quantities these days. We have found new methods to move our stock quickly,” Jain said.

  His company is investing more than US$100,000 to buy and install the new machinery.

  Calvin John, a brand manager of Tanisq, a gold retail chain owned by the Tata conglomerate, said the trend of using gold in smaller quantities picked up after 2004, when the price of the precious metal began rising.

  “We have to surprise people by showing them big pieces come with a low price tag,” he said.

  Local prices of gold, which have accelerated to highs in line with international prices, rose by 9 percent in the third quarter of this year, the World Gold Council said in a report released on Thursday.

  The report said that retail investment in India — investment in gold bars or coins — fell 67 percent over 12 months to 26 tonnes in the third quarter to September as high prices and a poor monsoon dented consumer sentiment.

  Jewelry demand fell 42 percent to 111.6 tonnes, while total demand, which comprises jewelry and retail investment demand, fell 49 percent to 137.6 tonnes.

  India usually imports between 700 tonnes and 800 tonnes of the metal every year and accounts for about 20 percent of global demand.

  In recent weeks, international gold prices have blazed a record-breaking trail on concerns about the declining strength of the dollar as the world’s reserve currency.

  For brides-to-be shopping during India’s ongoing wedding season, which runs from November to the end of January, the high prices are a headache.

  “We have to wear a lot of jewelry. The bride should always look special,” said Nupur Varshney, a 25-year-old teacher who will be tying the knot in January.
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