As gold reacquaints itself with its old high, I can't help recalling my shock during the early days of my apprenticeship when I learned that gold had at one point hit $861 an ounce. Mind you, gold was $340/ounce at this point, and would fall further to $286 when I went into business for myself. I asked my boss how he had dealt with this unbelievable high, expecting stories akin to those we hear from the great depression: I imagined him boarding up the windows, selling off little bits of inventory to keep his family alive, and waiting out the storm as best he could. Instead, he answered me with a shrug. "It was pretty much business as usual - in fact, I think business was actually up!"
It was hard for me to believe these soaring gold prices hadn’t caused some upset in the jewelry industry, and I hoped it would never happen during my time. But here we are – gold reached its all time high of $868 on last week, and with the falling stock market and declining value of the dollar, most agree it will continue its upward trend.
In 2006 gold inched its way towards $600/ounce, and last year, gold shuffled along from the mid $600’s to the mid $700’s, finally making its way to $800 in November. I suffered my fair share of panic, fear, and indecision. Do I raise prices or do I lower my profit margins to maintain my business? Eventually the decision was made for me – gold rose so far we had to elevate prices, and after an understandably rocky transition, the dust settled and it was…business as usual. In fact, business was up!
I would be lying if I said these last two very successful years hardened me to the ups and downs of the gold market. The economic forecast is gloomy, and it would be foolhardy to think we are completely immune to the market. However, I would like to leave you with a little perspective:
Firstly, our product is a luxury item and many of our customers have unprecedented wealth. The upper class is as far removed from the ups and downs of the economy as it ever has been, and the amount of disposable income they possess is vast.
And for those without bloated bank accounts? You might find it interesting to note that the price of gold at its height in 1980, $861, adjusted for inflation, is almost $2000. Calculated backward, gold’s high of $861 in 1980 was only $337 by today’s standards. What does this mean? That it is very possible for 2008 to be a strong and profitable year for all of us – manufacturers, retailers, the super wealthy and the average, hard working, jewelry-appreciating customer alike!
Post script: Today we adjusted our prices, to keep up with the current cost of gold. Price changes are laborious and cumbersome for all involved, and it is common for manufacturers to set their prices to a higher gold price, in anticipation of further cost increases. We have decided not to do this. We have priced our jewelry in line with the current market, and if gold continues to change we will adjust our prices accordingly (up OR down!), as needed. Please call for current pricing on all special orders.
