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Heavy metal

Soaring prices haven't dimmed the sheen of the yellow metal. ANAND SANKAR checks out the gold scene as Akshaya Tritiya approaches

BIGGEST MARKET Indians account for 25 per cent of the world's demand for gold Photo: Reuters

Gold, gold, gold — they just got to have that

Gold, gold, gold — they'll do anything for gold

Famous lines from "Old Turkey Buzzard", the song that opens the iconic 1969 western Mackenna's Gold. Lust for gold was the inspiration for the movie, and even today, gold is making big news. Over the last few weeks, the already precious yellow metal has become more precious, dominating headlines. In fact, prices have almost double compared to the same time last year. And if any place is going to feel the heat of rising prices, it is India, the world's largest consumer of gold.

Nothing more needs to be said about the role of gold in Indian society than is already known. We imported 760 tonnes of gold last year and account for more than 25 per cent of the world's demand. Gold buying in India has predominantly been driven by festive purchases, and more importantly, investment. Our forefathers have always preferred handing down their inheritances in gold and land rather than paper currency because the two were always known to appreciate with time. The trend still is the same, with today's generation adding its own twist to purchasing gold and jewellery.

Rashmi, 23, is an HR person with a leading software company. She recently shocked her mother when she said that she wanted to melt some of the family jewels. "I was handed down a couple of necklaces and an ornate odiyanam by my mother. But there is no way I can ever wear them without people thinking I have jumped out of an advertisement hoarding. I wanted something I could wear to office or an evening out. Something subtle. So I decided to get one of the necklaces remade into a diamond ring and a chain with a small ruby pendant."

Chic and trendy

Shreedevi Deshpande, a design consultant with jewellers Ganjam Nagappa and Sons, testifies to the trend saying that young people today prefer more chic jewellery to the chunky ones. "The young today go for light jewellery like Italian jewellery. Also they experiment with pink gold and white gold and use a lot of semi-precious stones. They also like to go for diamond jewellery, the kind made by Carbon. Basically they look out for something that can be worn every day. We cater to a cross section of buyers, though. We have our chunky heritage line that is 130 years old prized by collectors and also have our contemporary lines like Starburst."

Unlike their parents, today's youth experiment with fashion, buying other precious metals. According to Pratap Kamat, Managing Director, Abharan Jewellers, "The cost of platinum is today almost twice that of gold but its price along with diamonds and other semi-precious stones has remained relatively stable. There have been no sharp ups and downs."

Indians have always been wary of buying diamonds and semi-precious stones because they fetch less on resale. But Kamat says that jewellers are today offering buyers a lot of incentives to buy diamonds. "At our store we offer 100 per cent buy-back on gold and diamonds. To support this, De Beers has been doing a lot of advertising and giving incentives to jewellers."

Price no bar

Diamonds, rubies and platinum might be in, but they sure are not making an impact on gold purchases in spite of the high prices, says Sumesh Wadhera, Chief Editor of the magazine Art of Jewellery. He says gold purchases are actually increasing because of the approaching Akshaya Tritiya (which falls on April 30) and the fear that prices might rise further.

"Akshaya Tritiya is of course a big trigger. Advance bookings are in full swing to purchase during that day and some jewellers have even extended timings to cater to the demand. Also people who have weddings coming up are advancing their purchases because they feel it is better they buy now." Wadhera says though the traditional buyers will be the main consumers of gold, the demand in the lifestyle jewellery segment is set to grow in the coming years. "Italian jewellery is unique and it comes from a country which is the capital of design. Its look and feel is different. The size of this segment is very small now, but it will definitely grow. But the making charges in this segment is two to three times more than traditional jewellery."

The next big thing the jewellery industry is looking forward to are gold souks in major cities in India. The gold souk, a common feature in Gulf countries, is basically a mega shopping mall that sell only gold. One such recently opened in New Delhi and more are expected around the country.

"We (the jewellers association) went to Delhi recently to see the souk. It will take time for the concept to be accepted here as people are still attached to their family jewellers. It is basically the convenience that you get, like easy parking, which will attract people to souks," says Kamat.

Wadhera says that the souk will be to the advantage of the buyer. "Even traditional jewellers will eventually go there because they have to expand. Consumers will gain because they will get a wide choice under one roof."

The great divide

It is fascinating to see the difference in tastes in jewellery across India. In fact, Tanishq's collection for this season features two distinct lines — one designed for south India called Moham and another for the rest of the country called Colours of Royalty. Moham has rubies set in 18-karat gold, while Colours of Royalty has jewellery studded with diamonds and other stones.

"Generally in the south, people either like rubies in their jewellery or diamonds. They don't like the stones mixed. But elsewhere in the country people are open to experiments. Diamonds and semi-precious stones offer people a chance to buy on a budget. Young buyers especially prefer lower value but precious jewellery," Abhijit Achwal, Merchandising and Marketing Manager, Tanishq.

Investing in gold

You no longer need to buy jewellery or gold biscuits to invest in the precious metal. You can trade in gold electronically through the commodities index as the government has relaxed regulations. Whatever gold you purchase will be in your demat account. But experts advise caution. "This trend has picked up in the last one year. But a lot of people have burnt their fingers in it. It's an international trade and investors prefer it as safe hedge funds," says Pratap Kamat.

"Gold is very bullish at the moment. Because of the weak dollar and high oil prices, economies like China and Japan are hedging into gold. Though this trend is set to grow in India, it will not affect the retail buying of gold. People who invest in stocks or mutual funds will use it as an alternative," adds Sumesh Wadhera.

The big fest

The Karnataka Gold Festival 2006 is on and buyers can win up to five kilos of gold. On every purchase of Rs. 2,000 or its multiples, buyers get a lucky draw coupon. The festival is being organised by The Art of Jewellery magazine and the World Gold Council, and has over 250 jewellers participating all over Karnataka.

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