Jewelers applauded the recent fall in the price of gold, saying they hope it will eventually lower the price of gold jewelry.
Most stressed that they didn’t know if the lower prices—the result of a huge two-day plunge—would continue, and some expected the price to head up again. And indeed, gold was staging something of a comeback at press time on April 16, hitting $1,374 an ounce, up for the day.
“I would much rather see gold at $1,200 than at $1,800,” says Jeff Sullivan, owner of Sullivan Jewelers, Brookfield, Wis. “It’s much better for my business. The [gold buying] is more short-term.”
He notes that he has been seeing less trade-ins for the last few years, so he is not sure that the recent price drop will really matter.
“In 2008 or 2009, when the economy was really bad, we were buying a lot more gold,” he says. “What is coming in now is a lot more sporadic.”
Jonathan Green, co-proprietor of AAA Gold & Jewelry in Plant City, Fla., agrees a lower price would be good in the long-run.
“More jewelry will be affordable to the average person,” he says.
But he adds: “As of right now [the fall] makes a lot of inventory lose value, and depending on what was paid for it could mean a small loss in profit. On the 14k level it’s roughly only $6 per gram, but depending on how much you have on hand that can add up.”
Marshall Schwartz, owner of Rochelle Jewelers, in Danbury, Conn., feels that gold will have to sink to $800 to really make a difference in the cost of jewelry.
The rise of gold “ruined the jewelry industry,” he says. “No one is selling men’s bracelets and heavy chains. People don’t want to spend $150 on a gold chain that used to cost 75 bucks.”
He says he now mostly buys gold rather than sells it, but most customers don’t pay much attention to the day-to-day movement in the gold price.
“The drop in gold wasn’t on the six o’clock news,” he says. “You had to search a little. It got more notice when it skyrocketed. When it was $1,900, people were running around like crazy.”
Robert Higginbotham, owner of Payson Jewelers in Payson Ariz., feels that if gold remains at this level or goes lower, it will help sales.
“The question is: will it stay?” he says. “We don’t expect it to.”
He says that despite a mixed year for gold in general, “business has been brisk” in trade-ins. “Most consumers don’t really follow the gold price,” he says.
Michael Oistacher, vice president of New York City refiner Manhattan Gold and Silver, says he has definitely seen his volume cool off lately.
“The lower the gold price, the less people come in,” he says. “But when you see big drops, people get a little rattled. Yesterday, we were actually pretty busy.”
Still, he says his business hit a highpoint when gold first hit $1,000. “People couldn’t sell it fast enough,” he says. “Now it’s pretty tame.”
All in all, if this continues, he says, “instead of buying gold, hopefully at some point, people will be selling more.”
For all this, the World Gold Council tells JCK it views the metal’s recent plummet as “a short-term movement.”
“Putting this in perspective, we have had three occasions over the last 12 years when the price of gold dropped 20 percent or more and then recovered,” says spokesman David Schraeder. “Our view is that demand for gold remains robust, when you look at India, China, and the central banks.”
Another WGC spokesperson, Sally Morrison, says she doesn’t think the price drop will have any immediate impact on jewelry.
“Collections have already been built,” she says. “I don’t think the price is tied that closely to the market. I haven’t heard of anyone dropping their price. It’s a bit of a wait and see at the moment.”