Jewelry industry reactions to the recent big drop in the gold price fit into the following categories: 

We’ll believe it when we see it.

We just saw the sharpest two-day drop in the gold price in more than 30 years. That’s a milestone. But most people I spoke to fully expect gold to head up again—and, indeed, at press time, it had recovered a bit from its plunge.  

Certainly, a lot more market watchers have been bearish on the yellow metal lately, from analysts to the Australian government. And while forecasters spent last week hurriedly adjusting their price targets downward, at this point, it’s anyone guess where this is going to go. “It’s all a matter of whether you have faith in this economy,” one jeweler told me. (He didn’t seem to.) Others noted that the other big event of this week—the tragedy in Boston—proves again we live in a dangerous and unpredictable world. And that is generally good for gold.

A spokesman for the World Gold Council portrayed this week’s events as just a short-term drop in the face of strong fundamentals, noting increased demand from India, China, and central banks. Missing from that list are the psychological factors that you commonly hear as fueling gold’s recent rise, such as its reputation as a “store of value.” As one analyst put it, after this week, it will be hard to look at gold as a “store of value” in the same way. Gold may have recovered a bit the last few days, but it’s still down 16 percent since January, and 2013 may be the first year in over a decade that it won’t show a gain for the year.

(Caveat: Don’t take anything I say as investment advice. If I had all the answers, I’d be rich right now.)

What’s it going down so fast for?

Even those that were happy with the plunge expressed shock at its rapid descent, which devalues inventory and causes confusion.   

This won’t affect us in the short-term.

Obviously, it will take a while for this to affect prices of gold jewelry, not to mention the volume of trade-ins. Consumers, retailers say, rarely follow the price of gold as much as the industry does. 

Less expensive gold is a good thing!

Gold buying, fueled by the big price jumps of recent years, kept many jewelers alive during the darkest days of the recession. It’s hard to remember, but pre-2008, buying scrap was something “fine” jewelers didn’t do. So, for that matter, was selling silver, and that’s now one of the backbones of our business.

Still, even if gold trade-ins start to fall off—and they have already dipped significantly from their peak a few years back—most feel it will be better for the industry overall if gold jewelry became more affordable. In the end, jewelers are jewelers—and most would rather sell than buy.

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