A Glittering Playground

“There’s been a change in the way people buy jewellery these days. The young work force have the purchasing power to invest in gold,” says Krishan Sharma,a manager at Tanishq’s store in Connaught Place,New Delhi.

Tanishq,a leading jeweller has been the prime mover to cash in on this shift. The company,a Tata brand,has two instalment schemes. The earliest,launched in 2002,allows a client to buy gold or diamond jewellery by making a deposit for 12,18 or 24 months.

“The schemes are aimed at parents who are planning for their children’s wedding,which is why the duration is not more than two years. A good number of youngsters invest in these schemes too,” says Sharma,adding that the ratio of parents to youngsters is about 60:40. So,for every three couples planning their daughters’ wedding,there are two women below 35 who are also saving to buy gold jewellery.

There are other jewellers too,who are quick to lure the new buyer. P C Jewellers,a Delhi-based group with a presence across north and central India,launched a deposit scheme two years ago where the company pays the last two instalments. “A high proportion of our monthly deposits fall in the Rs 5,000 range. We get enquiries from,at least,12-15 people every day,who are under 35,” says GD Jain,manager of the showroom in South Extension,New Delhi.

Gitanjali Gems,the country’s largest branded jewellery maker too has launched price protection schemes,where a few grams of gold can be purchased over one or two years. Gitanjali’s strategy is to woo the young buyer with lower price points. It has introduced a new diamond jewellery range called Amore that starts at Rs 2,500.

“Young investors are not usually savvy with equities and so they look at parking money in gold,which is seen as a safe investment and something they would always like to hold in their portfolio,” says Hemant Beniwal,a Jaipur-based financial planner.

Gold has delivered some astonishing returns over the last year. The average returns on gold have been in the range of 20-22 per cent while equity returns have dipped in the negative. “After the 2008 global crisis,there have been reports on the returns that gold has given and that too has drawn the attention of the retail investor,” says Beniwal.

Could gold be the next bubble in the making? “At some point,gold will be a bubble… but that day is 10-15 years away,” says N Shanmughanathan,who runs a strategic consulting firm in Chennai,“gold would be the best investment in the current decade easily outperforming stocks and bonds by multiples of three to 10 or even more.” The rationale behind the hypothesis is that gold is grossly undervalued and the increasing inflation dictated by the US Federal Reserve and exported across the world,would see market forces shifting their holdings from paper currency to real money,meaning gold,in the years ahead. “Gold will easily touch $20,000 (approximately Rs 10 lakh) an ounce if not more,” says Shanmughanathan.

Simply put,gold prices will remain high in the foreseeable future until that bubble hopefully bursts,which is why anxious fathers would get some relief with some initiative on the part of their resourceful daughters. “Has she left anything at all for me to do?” asks the father,in the advertisement. Pat comes the mother’s reply,“You find the groom.”