By http://www.jewellerynetasia.com
The price of gold along with the sluggish economy finally reached a level where it is having a detrimental impact on gold jewellery sales in the U.S.
Gold jewellery demand in the U.S. fell 8 percent, year-over-year, to 21.7 metric tons for the second quarter of 2011, the World Gold Council said in its quarterly Gold Demand Trends report. However, in value terms, demand strengthened by 15 percent to $1.1 billion, which mostly reflects a 26 percent increase in the price of gold during this period.
This followed a 10 percent decline in gold jewellery demand in the first quarter of the year, the WGC said. In 2010, demand for gold jewellery fell 14 percent. And all of these declines have been reported long before the price of gold surpassed $US 1,900 an ounce.
The London-based organization blames the usual circumstances that have been plaguing the U.S. economy since 2008.
“The combination of high unemployment, frail economic growth and stubborn inflation pressures produced an environment that was not favourable for gold jewellery demand,” the WGC said. “The quarter was characterized by continued thrifting among retailers in order to meet affordable price points and 10k items were encroaching 14k market share.”
The report also noted that gold jewellery was facing “stiff competition” from silver.
This incredible price increase for the precious metal coupled with the difficult economy is leading jewellery designers and manufacturers to look at using lower-karat gold, creating designs that use less gold and substituting the precious metal with less expensive metals. In some cases they are creating their own metals. Even platinum is trading at an even pace with gold and may seem like a value by comparison.
Jewellery retailers are now earning much of their money buying back gold from consumers. And consumers have gone from buying gold jewellery to trading in their old gold pieces for cash from these same retailers.
Some in the industry are facing unusual choices. For example, Thierry Chaunu, has been charged with re-launching Marina B, an extremely popular luxury jewellery brand in the 1980s. The company’s inventory includes vintage jewellery pieces, including large 18k gold jewellery pieces that were made at a time when gold was trading at about $300 an ounce. So taking the current price of gold into consideration you’re talking about a six-fold price increase in cost without even accounting for the design, craftsmanship and vintage appeal of each piece. They are basically priced out of the larger market and left for those who collect Marina B jewellery.
Chaunu has found a creative way to use this jewellery to benefit the brand and the new jewellery they are making. These big, gold items will be included in a touring exhibition at Neiman Marcus stores, a luxury retail department chain that recently began selling Marina B jewellery. Chaunu told me that the exhibition is a way to show consumers the heritage of the brand.
This is true and it is indeed smart marketing. But I’m sure he’d rather sell those pieces than display them.
