Diamonds are a German's best friend this Christmas
By Victoria Bryan
FRANKFURT (Reuters) - With record low interest rates providing little incentive to open a bank account, canny Germans are choosing a more glamorous place to put their money this Christmas - jewelry.
Demand for diamond rings and gold watches is also being fuelled by an uncertain economic outlook, which is making shoppers in Europe's largest economy seek out gifts more likely to retain - and possibly increase - their value.
The BVJ German association of jewelers and watch retailers is forecasting sales of 5 billion euros ($6.6 billion) this year, matching last year's record despite the euro zone crisis, and with over a third of that to come over the Christmas season.
"If the trading we have seen in the last few days keeps up we may even improve slightly on last year," BVJ managing director Joachim Duenkelmann told Reuters.
The BVJ says Germans are looking for security against the backdrop of the euro zone debt crisis, political uncertainty in the Middle East and continuing low interest rates.
"People are investing in two things these days - diamonds and property," said one shopper admiring diamond rings and a single 2.1 carat diamond costing 63,000 euros in a window on Frankfurt's exclusive Goethestrasse shopping street.
Interest rates in the euro zone are at an all-time low of 0.75 percent, and many economists expect the European Central Bank to cut them further in early 2013 to try to revive the bloc's ailing economy.
While European neighbors are tightening their belts, low unemployment and rising wages are also encouraging Germans, traditionally a nation of savers, to spend their cash. Continued...