Since its earliest recorded use in decorative objects in 4,000 BCE, gold has never lost its allure. It remains popular even with the price per ounce hovering close to $1,930, as of press time — a significant rise from a decade ago, when gold sold for just under $1,400 an ounce, according to the World Gold Council (WGC).
The consensus among retailers is that gold prices have not negatively affected their overall jewelry sales.
“Consumers react to price changes, but once a price has stabilized, they become accustomed to it and expect to pay that amount,” says Debbie Fox, owner of Fox Fine Jewelry in Ventura, California. “Since there hasn’t been a significant change in the price of gold recently, the impact has been minimal.”
The one market segment that she’s seen exhibit a stronger reaction is her older clientele. “When they come in to purchase, replace or repair items, they are shocked because they have not been shopping in many years.”
Randy Mitchum’s business has also been immune to the rising gold prices. “Whether gold is $1,890,
$1,900, $1,920 or $,1950, it has not affected any portion of our retail business up to this point,” reports the owner of Mitchum Jewelers in Ozark, Missouri. “We don’t dwell on it, and [we] try to keep our team energized on the positive things happening in our industry and in our store.”
Consumers react to price changes, but once a price has stabilized, they become accustomed to it.
The heavy side
That said, both Fox and Mitchum identify heavy gold jewelry as a category closely tied to the price of the metal. Mitchum admits that prices for this segment “might increase or fluctuate more than others.”
For Fox, the situation has prompted a change in strategy. When it comes to heavy gold chains, she’ll stock fewer than she expects to sell so she won’t be stuck with expensive inventory she can’t move. She will accommodate her more dedicated customers, or those who prefer to buy the jewelry in person rather than online, by ordering the chains on memo and returning the ones that don’t sell.
Suppliers are also reluctant to stock these pieces because of the price, she adds, and as a result, she occasionally has difficulty obtaining them. Online availability is another factor in the equation, Fox notes: It’s made pricing more transparent, resulting in lower profit margins for jewelers who want to be competitive. These issues are a change from 10 years ago, when “it was a lot easier to get a heavy gold chain. It’s like a double whammy now.”
Mitchum, too, cites the need to take suppliers into account. “The one thing we pay a little closer attention to is our buying from specific vendors whose pricing changes based on the current daily gold market,” he says. “Some vendors have pretty set pricing, and we’re notified of any major price increases, while some vendors’ costs change based on the current gold price of the day. So if the price of gold is high today, or the week of, we may hold off on placing any larger reorders until the price reduces slightly.”
A boon for the pre-owned market
Things are different in the estate market, where higher gold prices make selling jewelry more attractive.
“Gold is your friend,” says Tobina Kahn, president of House of Kahn Estate Jewelers, which has stores in Chicago, Illinois, and Palm Beach, Florida.
“We’ve been very busy with people coming in and selling their gold jewelry — whether it’s inherited [never] worn, or even broken. It’s like found money.” Kahn points to the “economic uncertainty and volatile environment” driving clients to sell their items. On May 3, the price of gold opened at $2,042 and closed at $2,081 — a strong incentive for sellers.
“Gold represents new ways of creating revenue,” she explains. Looking at a jewelry box full of items they don’t wear, owners might start wondering how much they could get for them. In some cases, it can be more profitable to sell a gold piece than to repair it.
Of course, the price of gold is just one factor in determining the value of pre-owned jewels, Kahn acknowledges. A piece’s provenance, gemstones, designer, or rarity could “throw the mathematical formula out the window.” Craftsmanship, too, can enhance an item’s worth.
Her goal is for “every client who walks through the door to find value. Our business is a win-win.”
Main image: From left: Tobina Kahn; Michael M Tetra Foundation earrings in 14-karat gold. (House of Kahn Estate Jewelers; Mitchum Jewelers)
This article is from the September-October 2023 issue of Rapaport Magazine. View other articles here.