Pune, India — With gold prices on the rise, this can have a major impact on not only on the gold market and the spot price of gold, but also on jewelry retailers like, Apples of Gold Jewelry, considering that approximately 38.83% of all gold demand is from the jewelry industry, according to statista.com. Demand is only higher from gold investors who trade it in their portfolio as well as those who hold and store the physical precious yellow metal.
Conversely, according to the World Gold Council, 90% of recycled gold comes from refined gold jewelry, whereas only 10% is new gold obtained from mining, adding to the supply and demand ratio of the metal as investment.
How the Spot Price Effects Gold Jewelry Prices
Jewelry prices are directly fixed to and effected by the spot price for gold as well as the amount of precious metal in each piece. Most jewelers use the 2nd Day London Fix PM, which can be found on precious metals tracking websites, like Kitco.com. As the spot price increase, the base price for jewelry naturally increases as well. Gold is evaluated based on its price per troy ounce (There are 31.1034768 grams per troy ounce) as well as how much precious metal content is in each piece using the gram as the common unit of measure. The gram weight is used because it measures smaller increments of weight. A jeweler, whether a wholesaler, retailer or manufacturer all use the same metric to determine the base price for their finished goods.
To use a simple example, for every $100 per ounce that the spot price of gold increases, the $1.875 to the base price of raw materials alone per gram. So a ring that weighs 10 grams will increase as its foundation by $18.75. The retailer who uses what’s referred to as keystone pricing (double markup) will then increase the price by $37.50 to the cost of the ring. When considering a heavier item such a chain or necklace, the impact will be felt more by the consumer on a heavy piece vs. a lighter piece such as rings or earrings. If the jewelry retailer is using triple-keystone pricing (a three times markup), then that price will increase even more by $56.25.
Jewelers, however, are not looking for gold prices to necessarily increase, because that also means a higher retail prices which can dampen demand for their products, even though they stand to make an increased profit to make up the difference. More than anything, what most retailers and wholesalers alike want are stable gold prices. A jewelry wholesaler, for example, who stocks gold at a higher price only to have it fall shortly later after a market correction can stand to lose a lot of money, since their products are like a market asset with daily changing prices. This becomes very important on the manufacturing side as well, as manufacturers will sometimes add a premium to their prices to cover losses due to changing gold market prices.
Author Full Name – Rahul Mehta
Phone Number- 9309494987