Why Indians Interested In diamonds?

Indians have long been the world’s biggest buyers of gold - so much so that changes in their consumption tip the scales of global demand. Recently, those scales have tipped down.

According to the World Gold Council, largely because by the end of the second quarter, gold jewelry demand in India had dropped 30% year-over-year.

Why?
Because wealthy Indians have discovered diamonds

Persistently high gold prices over the past year have been coupled with a depreciation of the rupee against the dollar. In fact, the rupee has lost 25% of its value against the dollar over the same period. This exacerbated the price of gold for Indians, because gold is priced in dollars.

 At the same time, diamonds became cheaper. By the end of the second quarter of this year, the average asking price for 1-carat diamonds dropped about 18% year-over-year, according to the Rapaport Diamond Trade Index.

Yet varying cuts and qualities make the value of all diamonds difficult to assess. Diamond exchanges do not have official rates, and unlike gold, are not quoted on a daily basis.

 

Gold bullion’s price moves aren’t the only factor in India’s new affinity for diamonds. In the past few years, diamond marketing campaigns have targeted India’s wedding market-which has opened its bejeweled arms.

Over the last five years, Lussier adds that DeBeers’ marketing investment has been rewarded with over 20 to 30 percent sales growth “year in and year out.”

In affluent families, the mother and father of the bride give custom-made jewelry sets as a ceremonial gift to their daughter. The importance of this gift, Bhardwaj explained, is essentially based in traditional Hindu theology, which holds that the bride is being sent to the groom’s family.

Depending on the family wealth, traditional gifts can consist of gold only, but the trend among the affluent has turned to diamonds.  [ Via ]

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