Has there been any studies done (or data released) about the effects of higher gold prices upon the retail market, especially in regards to hurting/helping jewelry stores?
I saw a Macy’s jewelry commercial last night for Christmas and noticed that the pieces were all labeled as either silver or 14K gold plate over silver. These were diamond and gemstone pieces that I’d normally associate with gold and, while there may have been no connection, it made me wonder. I know the big jewelry store chains (Jared, Kay’s, Helzberg, et al) will continue to tell me that a gold bracelet or ring is the best way to show my love but, when gold is costing 2x+ what it was in recent history, it seems to me that it would be hurting even worse than other luxury goods such as cars or furs that only need to weather the basic economy and not having their raw materials double in price.
So the price on the free market for gold may not be the same as the price jewelers pay, though they do orient by it.
First, a lot of jewelery is sold cheap. When I walk into a normal dept. store, there are tables full of dazzling jewelery in the basement, starting at 10 Euros. Sure it’s just thinly plated, but people buy it.
Those who buy expensive jewelery at jewelers for several hundred to thousand of Euros have enough spending money left over to afford it and thus aren’t really bothered by prices being raised. And jewelers always have the option of buying gold back from the public who is bringing grandmas old chains because the price of gold is so high now.
Jewelers will occasionally not quote you a price until they check the price of precious metals, but only for massive pieces. I saw one such piece in Mexico once, a gold crucified Jesus, about 4 feet tall, very realistic – the major wounds were masses of garnet crystals. The proprietor said the price depended on the price of gold.
Maybe it was in the movie Wolfen, when the hero grabs the box of silver bullets off the counter, and the occult store leader says, “Hey, I gotta call the bank to price those!” And the hero’s like – Yeah, yeah, bill me. cocks rifle while walking out
I suppose I was wondering more about the base cost of production being passed along to the consumer resulting in the price passing a point where sales would be affected. My take on the commercial I saw was that they were promoting less valuable metals perhaps because consumers wouldn’t be as willing to buy a ring in “real” 14K gold these days (due to increased cost) but would be willing to buy a 14K gold plate over silver.
Most people aren’t particular about jewelry as long as it’s shiny and the right color, more or less*. Which is a good thing since jewelry of any quality essentially has no resale value unless it is a rare or artistic piece. As long as the industry can keep rejiggering the metals to stay on their price point, they’ll be fine.
*Line average people up and get them to choose between pure silver, electrum, white gold, palladium and platinum by looks alone, and I bet maybe 1 in 1000 could actually do it. I would put down money that a sizable fraction could not distinguish well polished stainless steel from any of the jewelry metals if it was formed into a ring set with a stone.
Yes, this is a good point - if you don’t buy your jewelery for tens or hundreds of dollars in dept. stores, but in a jewelery shop for hundred/ thousands/ ten thousands of dollars, the metal value (precious stones) is just a part of the overall price. Similar to how a painting costs more than the price of the linen and the paint.