I, for one, will be THRILLED! I know a lot of you out there will be devastated, maybe even driven out of business if gold tanks, so let’s talk about it.
In 1978, I was a 17 year old junior in high school and stumbled into a job at Best Products in Dallas, TX working in their jewelry warehouse. That was 35 years ago. I’m not an economist, I’m not a market analyst, and I’m no expert on money (just ask my banker), but I have been around this gold and silver thing for the better part of 5 different decades so here are my observations.
For starters, I’ve always wished that we could somehow separate the gold and silver we use in the jewelry industry from the gold and silver that doomsday preppers use to hedge their bets against an “all out global economic meltdown.” The old “nothing beats gold when the system breaks down and anarchy rules” state-of-mind has been alive and well in the world for the last 5 or 6 years. And, if you were a financial advisor in 2008 watching the stock markets crashing, and the gold markets soaring, you’d have been a fool not to jump on the bandwagon… even though it practically wrecked the jewelry industry.
Simple case in point: 14K solder was $13 a pennyweight for the better part of 30 years. When I was making a parts order, and I needed solder, I’d order an extra one or two just to have in stock. Okay, it was really because I misplace that stuff all the time and I didn’t want to spend an hour looking for it. I could just grab a new one until I stumbled across the old one.
Well guess what, I haven’t ordered an extra dwt of solder in several years. I’ve only ordered what I actually need. What used to cost $26 (2 dwts of solder) now costs $116. I’d rather spend my time looking for the one I lost than spend my money on something I don’t really need at $1,700 an ounce. And, if you’re in the business of selling solder, this sucks!
Somewhere around the late ‘70s and the early ‘80s gold spiked to close to $1,000 an ounce, but it was really short lived. I was 19 years old at the time and don’t really remember what the fallout was for those that were sitting on tons of expensive gold when it dropped back to pre-spike prices. But, this is the year 2013 and gold has already dropped more per ounce this year than it cost per ounce the last 30 years. That being said, look out, something’s about to bounce – and I think it’s gold, bouncing down.
Back in 2008, when gold shot up to $1,000 an ounce, I interviewed several store owners about how they were handling the spike. I thought I’d call those people again and get their take on the current gold situation.
Bill Sites, at Ward-Potts Jewelers had this to say: “I’m not really doing anything different. I don’t feel that gold is ever going to go back to $500 an ounce. My customers know that gold is very expensive right now, and the fluctuations in the market are just that, fluctuations.”
I asked Bill how he was planning his future inventory purchases: “Vendors and suppliers used to offer us the option of locking in the price at order placement or order shipment. I think that is probably going to come back around as a viable business practice in the near future.”
Huh. I’d completely forgotten about that.
Lisa Morehead, of Masman Jewelers had this to say: “We buy a lot of gold off the street and I have several customers that have been holding out on selling large quantities. I’m calling those customers now and telling them that this might be the time to get rid of it.”
Lisa did say that several of them have asked, “Are you still willing to give me what you quoted me last year?”
Uh……NO!
When asked about buying inventory, Lisa said that she is not purchasing heavily right now, just mostly filling in because she feels that gold is going to continue to trend down.
Scott Isaacs of Belle Meade Jewelry thinks that this is just a temporary low in the gold market. “Honestly, I’m enjoying the discount at the moment,” he told me. He thinks that gold is going to go back up.
Allison Cianciulli, of Selig’s Jewelers, pointed out to me that her store has been leaning heavily towards higher end sterling silver jewelry lines over gold jewelry lines. Allison also pointed out that the few times she’s had customers request heavy gold byzantine or woven style necklaces or bracelets, her suppliers are no longer carrying these items in their inventory.
I guess the suppliers don’t want to get caught holding the bag either.
Wayne Clark of EJ Sain Jewelers had this to say: “It’s just not something that we think about anymore. I think it’s going to go below $1,000, eventually, but not anytime soon, so we just don’t let it factor in to our decisions. We’ve got our jeweler back there making jewelry every day, and when he needs gold, we buy him gold.”
I called my trusty coin dealer down the street and asked him if a Joe Blow comes in off the street wanting to buy gold coins, what would he do? Without hesitation, he said, “I’d tell him I was out of them. If it was a long time good customer, I might sell them one or two coins, but I wouldn’t let them clean me out. I want them taking up space in my vault right now.”
So kids, what have we learned today? I’ll tell you what we learned…. nothing. But, if you’ve been reading my column long enough, you’ve probably come to expect that, haven’t you?
Honestly though, what it boils down to is this – gold is going to do what gold is going to do, and there’s not a damned thing we can do about it. I talked to a lot of jewelry store owners and all of them had an opinion about what the future holds, and every opinion was different.
Personally, I’m on the “gold is gonna drop like a hot potato so I’m only going to hold on to what I need to get by” bandwagon.
Who thinks I’m wrong? Feel free to write me and let me know what you think the future holds.
Chuck is the owner of Anthony Jewelers in Nashville, TN. Chuck also owns CMK Co., a wholesale trade shop that specializes in custom jewelry and repair services to the jewelry industry nationwide.
If you would like to contact Chuck or need a speaker or instructor for your next conference/event he can be reached at 615-354-6361, www.CMKcompany.com or send e-mail to info@southernjewelrynews.com.
