Beauty & fashion

India and the fascination for Gold jewelry

If you see gold prices going up everyday and reaching new highs then you can blame India for that. And yes China Too. The reason is not hard to fathom. Everyone in India and China wants to buy gold. and that is not a new phenomenon. Traditionally in India the only jewelry that the people used to wear was gold jewelry.

However the gold was also a way to save for the rainy day. Which still holds true ? Countries nowadays conserve gold and also use it as a pledge against the currency risks. Remember India dd it in 1991 to tide over the financial crisis.

Now with the growing economy the middle class which has now access to good incomes has started buying gold in a variety of forms like gold fashion jewellery, gold coins and gold biscuits. In fact now coins as a form of investment has started growing much more rapidly as opposed to jewelry as form of investment.

The whole new affluent class i buying more and the supply is less and hence the imbalace. The prices are rising everyday and it is coupled with the fact that the mortgage crisis and the currency risks have prompted a lot of countries governments to have gold in their portfolio. The very affluent class may go in for something different say emerald rings or other forms of jewelry like cubic zirconia rings but the average Indian will still go for gold.

Another reason being that Indians generally prefer the 22k gold as opposed to other countries who use the 14k or the 18k gold. This means more pure gold and no additions of other metals. So more consumption of the raw gold as opposed to other countries.

The silver lining in all this is that as the middle class population gets exposed to international way of doing things the diamond jewelry is also picking up and subsequently the demand for gold will not be too high. It will take some years before we can see the real effect. Till then gold prices will be high and the fascination for gold will be higher.