Abinash Bhargav, a recently married insurance professional, has gifted his wife platinum jewellery worth Rs 1.5 lakh. With its price coming closer to gold, platinum jewellery has gained momentum in the past two years.
Leading platinum jewellery manufacturers such as Orra have been targeting consumers in the 20-40 age group with high disposable income. Platinum jewellery items of various sizes, types and weight are available with almost with every mid-size jewellery maker and seller in Tier-I and Tier-II cities. Small jewellers can also supply chains, rings, earrings, etc, on order, even studded in diamonds.
Analysts estimate the demand for platinum may increase to 15 tonnes by the end of 2010-11 against 10 tonnes in 2008-09.
There are two basic reasons for a shift from the traditional gold to platinum jewellery, says Bhargav. One, the price of platinum, which was double that of gold, has slipped to match the yellow metal. Therefore, consumers who considered platinum a metal beyond reach can now dare to buy it. Two, the metal also offers re-sale value in tune with gold jewellery items and, hence, consumers feel it is a better investment.
In March 2008, platinum was sold in London at $2,285 an oz as against the price for gold at $985 an oz. But gradually, the gap narrowed due to gold’s treatment as a safe-haven investment at the time of the global economic crisis. By October 27, 2008, platinum slipped to $752 an oz, while gold fell to $880 an oz. Later in December 2008, platinum gradually recovered to $790 an oz, while gold fell amid fear of economic crisis to trade at $750 an oz. Today, platinum at $1,578 an oz is about one-and-a-half times higher than gold at $1,135 an oz.
Initially, platinum in jewellery form was popular only in Japan, the US and China. In India, the metal was considered mainly for industrial consumption, as an auto catalyst and in photography. But, the extensive effort in awareness about the metal’s potential for use in jewellery has generated big demand from urban India, said Vijay Jain, chief executive officer of Orra, 8 per cent of whose total turnover comes from platinum jewellery. The company is planning to increase this share to 13 per cent in a couple of years.
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An analyst felt that platinum’s consumption would rise in India if spot quotes and premiums are made available at least at each retail shop. Platinum jewellery markers charge hefty premiums, as spot prices are not easily available. Also, quality remains a major concern, as the three white metals — platinum, silver and aluminium — look almost alike.
In India, platinum demand is growing due to the expansion of the automobile sector. The catalytic converter in a vehicle reduces levels of carbon monoxide, hydrocarbons and oxides of nitrogen. Automakers worldwide account for more than 60 per cent of platinum demand.
According to estimates, world production of platinum is over 180 tonnes, around 7 per cent of gold production and just 1 per cent of silver.