4 Minute Read
In the last several years, the value of gold has smashed previous records, hitting benchmark number after benchmark number. Every ceiling that experts predicted would halt the explosion of value has been utterly shattered.
Last year, we spoke with gems and jewelry sellers at the AGTA and GJX shows in Tucson, asking what changes they had to make to cope with gold costing so much.
Jewelry makers said that they have had to minimize the amount of gold used in their designs. This meant adjusting existing designs by thinning out the gold layers and eliminating some decorative gold features.
Many designers were choosing to pull raw material from their gold reserves purchased before the spike and were delaying buying more gold until prices dropped back down or, at least, stabilized. Their goal was to keep the value of jewelry as close as possible to previous years so that existing clientele could continue making regular purchases.
From a sales perspective, many reported that their stud earrings, in particular, were selling well because of the value in the gemstones, not the metal post and setting. Pearl merchants also reported good sales of their matched strands, which only require metal for their clasps.
This year, we went back to the shows and approached the issue from another angle, focusing specifically on loose gem sellers who offer matched stone suites. We expected to find that the average number of purchases for high-quality multi-gem suites had also dropped since multi-gem suites require more gold in their mountings. Interestingly, this was not the case at all. On the contrary, it appears that fine suites are moving along nicely.
The sellers we spoke with said that sales of high-quality gemstone suites do not follow the sales trends of other types of jewelry because the clients are fundamentally different; those who can afford to buy large, beautifully matched suites fall into a high economic tier.
Nandu Nichani, of Temple Trading Company, said it best - "The wealthy are wealthy. It is a different economy from other people. It is the mass market that got impacted by the gold prices." Nichani equated fine gem sales to high-end restaurants, saying that places that charge hundreds of dollars for a single meal attract only those customers who can comfortably pay that price.
Ronen Ijadi of Ijadi Gem, Inc. echoed Nichani's sentiment, saying that, when customers spend upwards of five or six figures on a suite of the finest gemstones, the cost of the gold for the setting becomes incidental.
Jacob Levian of Jacob Levian (IG jacoblevian) reflected that the highly exclusive pool of buyers for ultra-fine suites is the same clients who purchase individual "showstopper stones". They too are not worried about the cost of the mounting.
This, according to Michael Schofield of Neli Gems Corporation, is as it should be. He advises those shopping for gems and jewelry to prioritize the quality of gems over the mounting - "The metal is only the frame to the picture that is the gemstone. It makes sense to put your money into the center stone(s)."
While the wealthy are continuing to purchase the best gemstone suites, Gregg Fitzgerald of Fitzgerald Imports reflected that more modest sets with a price range of several thousand dollars, are also selling. Keeping settings simple where the cost of gold is kept in the range of several hundred dollars, he said, helps buyers stay within their budget.
Following this line of thought, Neelam Jamar of NRI Gems Inc. commented that people, regardless of their economic tier, still need to buy jewelry for special occasions, whether that be a birthday, anniversary, or graduation. Whatever the price of gold is, she said, these landmark events will still take place as usual, and people will continue to need jewelry to commemorate the moment. "Gold prices are not forever, and people will always have events. We have to continue making products for them."
Very recently, the discovery of a massive deposit of gold located in the Pingjiang county of Hunan province in China was announced. Three-dimensional modeling of the site indicates that there are dozens of gold veins reaching as deep as 9,800 feet. In terms of monetary value, that volume of gold equates to more than eighty billion dollars.
One would expect that the extra available material would cause prices to decrease. However, what we have learned from the last few years is that no one can predict future trends of gold values. Compounding the issue is that there are a number of complicated geopolitical issues facing the world right now. When mining activity matures in Pingjiang, who knows how it will be introduced to international trade networks?
What we can say for sure is that the world's wealthiest citizens continue to invest in fine gems and are not dissuaded by the costs associated with producing a mounting. Whatever the future holds in terms of gold values and jewelry prices, these top-level consumers are likely to remain unbothered. Those who are not part of the economy's most elite tier still have occasions that they want to mark with gifts of jewelry, even if it means that the mountings have less gold and designs are simplified.
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In the last several years, the value of gold has smashed previous records, hitting benchmark number after benchmark number. Every ceiling that experts predicted would halt the explosion of value has been utterly shattered.
Last year, we spoke with gems and jewelry sellers at the AGTA and GJX shows in Tucson, asking what changes they had to make to cope with gold costing so much.
Jewelry makers said that they have had to minimize the amount of gold used in their designs. This meant adjusting existing designs by thinning out the gold layers and eliminating some decorative gold features.
Many designers were choosing to pull raw material from their gold reserves purchased before the spike and were delaying buying more gold until prices dropped back down or, at least, stabilized. Their goal was to keep the value of jewelry as close as possible to previous years so that existing clientele could continue making regular purchases.
From a sales perspective, many reported that their stud earrings, in particular, were selling well because of the value in the gemstones, not the metal post and setting. Pearl merchants also reported good sales of their matched strands, which only require metal for their clasps.
This year, we went back to the shows and approached the issue from another angle, focusing specifically on loose gem sellers who offer matched stone suites. We expected to find that the average number of purchases for high-quality multi-gem suites had also dropped since multi-gem suites require more gold in their mountings. Interestingly, this was not the case at all. On the contrary, it appears that fine suites are moving along nicely.
The sellers we spoke with said that sales of high-quality gemstone suites do not follow the sales trends of other types of jewelry because the clients are fundamentally different; those who can afford to buy large, beautifully matched suites fall into a high economic tier.
Nandu Nichani, of Temple Trading Company, said it best - "The wealthy are wealthy. It is a different economy from other people. It is the mass market that got impacted by the gold prices." Nichani equated fine gem sales to high-end restaurants, saying that places that charge hundreds of dollars for a single meal attract only those customers who can comfortably pay that price.
Ronen Ijadi of Ijadi Gem, Inc. echoed Nichani's sentiment, saying that, when customers spend upwards of five or six figures on a suite of the finest gemstones, the cost of the gold for the setting becomes incidental.
Jacob Levian of Jacob Levian (IG jacoblevian) reflected that the highly exclusive pool of buyers for ultra-fine suites is the same clients who purchase individual "showstopper stones". They too are not worried about the cost of the mounting.
This, according to Michael Schofield of Neli Gems Corporation, is as it should be. He advises those shopping for gems and jewelry to prioritize the quality of gems over the mounting - "The metal is only the frame to the picture that is the gemstone. It makes sense to put your money into the center stone(s)."
While the wealthy are continuing to purchase the best gemstone suites, Gregg Fitzgerald of Fitzgerald Imports reflected that more modest sets with a price range of several thousand dollars, are also selling. Keeping settings simple where the cost of gold is kept in the range of several hundred dollars, he said, helps buyers stay within their budget.
Following this line of thought, Neelam Jamar of NRI Gems Inc. commented that people, regardless of their economic tier, still need to buy jewelry for special occasions, whether that be a birthday, anniversary, or graduation. Whatever the price of gold is, she said, these landmark events will still take place as usual, and people will continue to need jewelry to commemorate the moment. "Gold prices are not forever, and people will always have events. We have to continue making products for them."
Very recently, the discovery of a massive deposit of gold located in the Pingjiang county of Hunan province in China was announced. Three-dimensional modeling of the site indicates that there are dozens of gold veins reaching as deep as 9,800 feet. In terms of monetary value, that volume of gold equates to more than eighty billion dollars.
One would expect that the extra available material would cause prices to decrease. However, what we have learned from the last few years is that no one can predict future trends of gold values. Compounding the issue is that there are a number of complicated geopolitical issues facing the world right now. When mining activity matures in Pingjiang, who knows how it will be introduced to international trade networks?
What we can say for sure is that the world's wealthiest citizens continue to invest in fine gems and are not dissuaded by the costs associated with producing a mounting. Whatever the future holds in terms of gold values and jewelry prices, these top-level consumers are likely to remain unbothered. Those who are not part of the economy's most elite tier still have occasions that they want to mark with gifts of jewelry, even if it means that the mountings have less gold and designs are simplified.
