Law of unintended consequences: Soaring gold prices prop up artificial jewellery industry

Many imitators are improving the quality of their product and exporting it.

FAISALABAD:

For Naheed Ali, 35, a middle class housewife from Faisalabad, soaring gold prices are no longer a concern.

As gold jewellery becomes increasing unaffordable, she has benefited from what appears to be a socially-acceptable shift towards artificial jewellery, a trend that has been a boon for the makers of that product, but have resulted in hard times for goldsmiths and their craftsmen.

Although international gold prices have climbed down from their record highs of over $1,900 per ounce, local gold prices – at Rs60,000 per tola (a unit of measure equalling 12.1 grams) – are still high enough to reduce business for most jewellery shops, forcing many to start carrying artificial jewellery.

“I still prefer gold and silver for special occasions like weddings,” said Naheed. “But artificial jewellery is a very affordable way to match clothes with accessories.” Customers, shopkeepers and industry experts all agree that the artificial jewellery business is doing well, though there is some dispute as to whether the causes of the shift towards artificial jewellery are more long term than simply high gold and silver prices.

As more and more women enter white-collar professions, for instance, they increasingly prefer functional accessories over the more elaborate and expensive variety.

“Working women and female entrepreneurs prefer to wear light-weight accessories,” said Mariam Ashraf, an urban professional based in Faisalabad, when explaining her preference for artificial jewellery.

Yet for many middle and lower middle class households, even weddings and engagements are no longer occasions where they can justify spending the exorbitant amounts on gold and silver jewellery, an example of how economic pressures cause shifts in cultural attitudes.

“Brides like the idea of getting artificial jewellery even on their weddings as these artificial items look as beautiful and attractive as gold articles,” said Jabeen Kamal, a housewife in Faisalabad. “Artificial jewellers have an eclectic variety of items.”

She admitted, however, that the shift was motivated by high prices. “Families that used to be able to give 10 tolas of gold can now only afford about half that amount,” she said.

Students also have a preference for the artificial product, for a reason put rather succinctly by Tahmina Ahmad, a university student in Faisalabad: “I can afford it with my pocket money.”

Regardless of the causes, the shift has hurt goldsmiths across the country. In Faisalabad alone, about 40,000 craftsmen have lost their jobs, estimates Shafaat Ali, a goldsmith in the third largest city in the country. These craftsmen are skilled in tasks such as polishing stones, operating machines and making the elaborate packaging that often goes with the jewellery.

Ali estimates that his own business has seen revenues decline by as much as 50%, forcing him and many others like him to contemplate adding an artificial jewellery line to their shops.

As more and more people buy their products, the artificial jewellery business has gotten better at imitating the real thing. Some jewellers use semi-precious stones with imitation gold and silver to enhance the appearance of their product. Many claim that their products cannot be differentiated from the real thing by any but the most skilled of observers.

Sohail Ahmed, a seller of artificial jewellery in Faisalabad, said that he has seen his business increase by about 35% this year, as gold prices continue to skyrocket.

Pakistan is currently amongst the largest producers of artificial jewellery in the world, according to industry experts. As the quality of their products improves, many of Pakistan’s artificial jewellers are even beginning to export their products. Faisalabad’s artificial jewellers, for instance, have begin selling their products to Iran and Afghanistan.

Published in The Express Tribune, October 3^rd, 2011.