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Gold hit its all-time high dollar value on Wednesday, but Indians still cling to the bling.
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.