MUMBAI, India — The price of gold rose to its all-time high dollar value on Wednesday — more than $1,240 an ounce — which is more than triple what it was in 2001 when it started its climb.
What is India, the world's largest importer of the metal, to do?
India accounts for 20 percent of global demand. But skittish global investors throughout the recession have flocked to the metal as a safe asset when real estate and stocks tottered. Now, they are taking to it again on inflationary fears stoked by Europe's debt crisis, driving up the price.
Still clinging to the bling, Indians are turning to fake gold.
Take the Indian bride, arguably the original queen of bling. With a long gold tikka in her hair, a quarter-sized nose ring, necklaces, earrings, bangles, rings, a studded sari and maybe a waistband and anklets, a bride can expect to wear about 15 kilograms (33 pounds) extra on her wedding day. Even on less auspicious occasions, she'll don a nose stud, beaded necklace and a wrist full of bangles for a 7-rupee (15-cent) train ride across the city.
A bride could easily spend 500,000 rupees (about $11,100) on her wedding jewelry set, depending on how many grams of gold it has, said Mohan Iyer, as he paced barefoot around his cozy imitation jewelry stall at the 10-story Imitation Jewellery Manufacturers International Marketing Arcade (IJMIMA).
Iyer's solution to the bride's problem is a basic gold-and-red boxed bridal set for 1,400 rupees (about $31).
|A boxed imitation jewelry set on sale at the Imitation Jewellery Manufacturers International Marketing Arcade in Mumbai for 1,400 rupees (about $31).
Sales of the real jewelry by weight fell 42 percent in the third quarter of 2009 compared to a year beforehand, according to the World Gold Council (WGC), when the global recession sank in and the metal climbed toward its December prices.
The imitation jewelry market, on the other hand, has grown up to 400 percent over the past 10 years, and Reddy predicts 15 to 20 percent annual growth for the fake wear. It's simple, said IJMIMA President P.V. Sreeram Reddy: "For less amount, they can wear more jewelry."
"The gold prices will go up. ... Limited gold is there in the mines," he added, speaking from his Mumbai office.
IJMIMA finished construction on its high-rise in the up-and-coming Malad district of Mumbai in 2007, making it the first of its kind in India — all 400-plus of its stalls are for imitation jewelers.
The half-dozen women piecing together handmade jewelry in the attic above Mohan Iyer's shop use brass, copper, lead, plastic stones, crystals and sometimes nickel to make the jewelry shiny. Iyer himself wears a handful of (real) gold rings and a (fake) gold watch.
Young people "want more designs, so they go for imitation," Iyer said, adding that the imitation industry can be more creative since its costs are lower. He shows a set of two delicate fake gold bangles for 83 rupees (about $1.85). "And this lasts for six to eight months," he said to their credit. After that, he added, the lady can buy a new one and get a different style.
Though Iyer said that "people who can afford gold go for gold," he and other fake gold jewelers also say trends are shifting. More news reports of robbers tearing jewelry off women during the recession has made them afraid to wear real gold in public, they say, and women want to wear fashion jewelry both in their homes and to their service and desk jobs.
But imitation just isn't the same, says Madhumita Dutta, a spokesperson for the WGC in Mumbai, in an email. "The relevance and need of gold jewellery [sic] amongst Indian consumers are deep rooted emotionally and culturally and cannot be replaced."
India purchased about 100 tons less — a 19 percent drop — of real gold jewelery in 2009 compared to 2008, but the WGC also says that demand has picked up throughout 2009 and in the beginning of 2010.
"Nothing can take the luster away from gold, especially in the domain of Indian festivals and weddings. Historically and mythologically too gold is interlinked with Indian culture. Gold is sacred," she said.
But making the final selections for her May 15 wedding, Chaitali Thakker says it wasn't cost or value of the jewelry that brought her to the 10th-floor glassy showroom of the IJMIMA complex. She says it's about the style. "Not the price. ... I am a person who likes to wear something different than others," said the Hindu bride-to-be in bubblegum pink leggings and gold sandals.
"Day by day [the imitation market] is growing. ... Now you will be seeing lavish showrooms with imitation," said Pankaj Shah, manager of the glassy Alex International Jewellery World showroom, where a low-hanging chandelier greets guests and oxford-clad assistants help Thakker and a friend look at studded rings.
The quiet and polite Shah says his growing business exports to the Gulf and Western countries, and that his trade rests on something more solid than the whims of global investors. "As far as ladies are there, this line will never be closed."