The price of gold is plunging, but the price of jewelry may not be dropping this Christmas.
The price of gold has fallen nearly $500 per ounce, or more than 25 percent, since Christmas 2012. It fell another 1 percent on Tuesday, to $1,230 per ounce.
For jewelers, that could be good or bad, depending on how well they manage their inventory and competition.
The good part for jewelers comes from being able to drop prices while keeping margins the same or higher. And lower prices, theoretically, drive higher sales.
The bad part for jewelers comes from owning gold items they bought six or 12 months ago at higher prices.
Amanda Gizzi, spokeswoman for the trade group Jewelers of America, said it is important to note that there is a lag before falling gold prices are reflected in retail jewelry prices.
“It’s not like the price at the pump,” she said. “The retailer will mark it at the price they need to recoup what they spent.”
The falling price of gold will most sharply affect high-gold-content, high-turnover, easy-to-compare products – such as gold charm bracelets.
Some stores pay particular attention to not holding a lot of inventory.
“We do a fast turn,” said Pete Brier, owner of Jewelry Savers. “We don’t have a bunch of stuff that we bought at $1,800 (an ounce).”
Local jewelers said they carry lower-price gold chains but that they’ve learned not to hold too much gold. It’s expensive – and risky. They prefer to order such items.
“I don’t carry the heavy chains,” said Carolyn Sayre, owner of Carolyn Sayre’s Fine Jewelry. “I know better than that.”
The price drop will have less effect on higher-priced jewelry and more unusual items, especially if they are designed by jewelers themselves, because of the cost of the gems and workmanship.
Many experts expect gold to continue to drop in price in the short to medium term, as the world economy continues to improve and the U.S. Federal Reserve starts winding down its quantitative easing program.
Randy Cooper, owner of Randy Cooper Fine Jewelry, said that while the cost of gold doesn’t affect her much, it does affect her customers’ comfort level with buying some items.
“Whether it’s at $1,700 or $1,200, they like stability,” she said. “And if (the price) comes down, it also makes them feel better about their economic future.”