The rising price of gold has been a topic recently in many of the industries top journals.
Gold is at its highest in 25 years. Today's current per ounce price of gold is $700. In January, gold reached $580 per once, the highest since 1980, when it topped $800.
In the May 12th issue of the GIA Insider, the soaring price of gold sent shock waves through the Indian International Jewellery Show, May 4-8th in Mumbai. India is by far the world’s largest consumer of gold jewelry. Despite the country’s growing economy, business is down considerably from the year before. A local manufacture said, “Many retailers aren’t buying because they are worried the price may come down suddenly” and “consumers simply do not want to pay the higher price.”
JCK magazine polled jewelers nationwide to see how high prices have affected operations. According to the poll, 58.5 jewelers stated that their businesses were not impacted in the past year. Fewer than one in five cited negative effects on their business due to the increase of gold. The mild effect of price increases maybe due to the constant rise in prices annually for several years. What has been frustrating to some is that they were unable to change their retail prices fast enough, and found that catalog prices were no longer reliable.
Many jewelers have been able to use gold’s increasing price as a marketing tool. When selling an item that was bought more than a year ago, when prices were lower, they emphasize that the customer is getting a bargain, considering the jump in gold prices today.
With today’s 24/7 multimedia news culture, consumers are well informed of the metals market. Perceptive customers are asking more questions, such as why special orders are more expensive than the in-stock merchandise. My perception from reading the JCK article is that consumer reaction is varied. Some jewelers have found that their customers have “sticker shock” and delay jewelry purchases or by less expensive pieces. On the other hand, consumers are more aware of gold, and that translates into a sense of increased value, which has helped some sell in-stock merchandise at full price.
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