Frankfurt - 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 - jewellery.
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 jewellers and watch retailers is forecasting sales of €5bn ($6.6bn) this year, matching last year's record despite the eurozone 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 eurozone 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 in a window on Frankfurt's exclusive Goethestrasse shopping street.
Interest rates in the eurozone are at an all-time low of 0.75%, 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 neighbours are tightening their belts, low unemployment and rising wages are also encouraging Germans, traditionally a nation of savers, to spend their cash.
Data from the Bundesbank shows the proportion of disposable income that Germans put into savings stood at 8.8% in the third quarter of this year, down sharply from 13.7% in the first quarter, and compared with 10.4% in 2011.
"Consumers are therefore tending to put their finances into purchases that will keep their value, instead of leaving them in banks," market research group GfK said.
The BVJ says gold, platinum and diamonds are seen as especially safe investments, and that while market prices of these metals have soared, that has not necessarily translated into sharply higher prices for jewellery.
Gold prices are up around 7% this year and set for a 12th consecutive annual rise, driven by low interest rates, concerns over the eurozone and diversification into bullion by central banks.
HSBC on Tuesday raised its forecast for platinum prices in 2013 and 2014.
A study by Ernst & Young shows that 26% of shoppers in Germany were planning to buy jewellery as gifts this year, up from 23% last year.
"No matter what happens to the piece of jewellery or to the economy, the material value of precious metals and stones will remain," the BVJ's Duenkelmann said.
German retailer Douglas may be battling stiff competition from online retailers like Amazon at its book stores, but says its Christ chain of 209 jewellery stores is a bright spot.
"Sales of diamond jewellery are currently on the up - whether as an investment or simply as a piece of beautiful jewellery," Chief Executive Henning Kreke told Reuters.
In the first nine months of its 2011/2012 business year, Douglas' jewellery arm saw a 10% rise in sales to €291m, with core profit up 7.6% to €34m.
Staff at high-end jewellers in Frankfurt reported good demand for classic rings, necklaces and watches, especially those with diamonds.
"People are looking for items that keep their value. We're definitely doing more business than last year," said a sales assistant at a jeweller who declined to be named because of company policy.
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