Jewelry retailers already hurting from a slumping economy are being hit from yet another direction. Soaring prices for the precious metals that go into jewelry, including gold and platinum, have pushed up prices at store counters.
“We’re caught in a tough place,” said Jim Sweaney, co-owner of Mardon Jewelers at the Mission Inn in Riverside, CA. “The prices for the materials are going up, and people are buying less often because of the economy.” Gold and platinum prices have risen more than 200% since 2001 and are hitting historic highs this year.
On Thursday, according to US commodities exchange figures, gold closed at $973.90 an ounce, while platinum closed at $2,161 an ounce. Rhodium, a silvery-white precious metal used as a coloring agent in platinum jewelry, costs more than $9,300 an ounce. The price of gold itself accounts for slightly more than one-quarter of the price of a jewelry item, but the global impact has nonetheless been significant. Sweaney said a pair of gold Italian earrings that his store was selling for $960 a year ago is now priced at $1,120. “It’s a real squeeze,” he said, adding that metal prices and the general Inland economy contributed to a 20% drop in his 2007 sales volume compared with that of the previous year.
John Calnon, US managing director for the World Gold Council in New York, said gold price jumps have caused retail prices for gold jewelry to roughly double since 2005. However, he said, higher-end items -- priced at $1,000 and more -- are generally holding up well in sales. That’s in part because some buyers are now seeing jewelry as an investment as well as an adornment. “We’re getting into pricing territory where the intrinsic value is in play,” Calnon said.
Insurance experts say consumers may want to revisit their insurance coverage on high-end jewelry purchased before metal prices skyrocketed. “Checking with your insurance agent might be a good idea,” said Michael Barry, a vice president with the Insurance Information Institute in New York. Most homeowners’ insurance policies cover the value of jewelry to as much as $2,000, but some policyholders may want to get pieces reappraised if there’s a possibility that the metal content has caused their value to rise significantly. Barry said some insurance carriers offer “floaters” or addendums to homeowner policies to cover specific valuables such as high-end jewelry. Tim Beld, an agent with the Riverside Insurance Agency, said he hasn’t seen a rush of people looking to amend policies. Most clients don’t have amounts of jewelry that would not be covered in existing policies, which account for the items’ purchase prices, but coverage can be updated, he said.
Despite rises in gold prices, Calnon said the average US retail price of gold jewelry, sold across a variety of weight and quality levels, remains around $84 per item. “Gold is a very democratic metal,” he said. US jewelry sales generally held up well for most of 2007. According to the US Commerce Department, sales for the full year totaled about $64.8 billion in 2007, up 4.3% from the previous year. Before the national housing market downturn caused consumers to cut back on spending late in the year, high-end items such as jewelry stayed in demand largely because wealthier buyers were less affected by rising costs for food and gasoline. “If the local economy were in better shape, I think people would be buying even at the higher prices,” said Sweaney, the Mardon Jewelers co-owner. Luxury retailers of all types have seen sales slow in the early months of 2008. National jewelry chains, such as Zale Corp. and Friedman’s Jewelers have recently been cutting staff and closing stores in response. (The Press Enterprise, Riverside))