Gold prices hit a record high, but John Henne, owner of Henne Jewelers in Pittsburgh’s Shadyside neighborhood, said he does not feel worried about the jump impacting his family’s business.
“The customer is very resilient,” Henne said to TribLive on Tuesday.
He joined other local jewelers and gold buyers who say they are accustomed to the market’s fluctuation and are taking it in stride.
On Monday, gold prices were up 2%, topping more than $5,000 per troy ounce, while silver jumped 8.6% to around $110 per ounce. (A troy ounce, the standard unit of weight for precious metals, equals about 1.1 regular ounces.)
Founded in 1887, Henne Jewelers has “been around long enough to see big spikes” in fine metal prices, said Henne, a fourth-generation member of the family business.
The price increase does cause some customer surprise when they visit the store to buy more “regular” items, such as a gold chain or cross, Henne said. But if customers have a specific gift in mind, they will generally shift their budgets to accommodate the price of the item.
Samantha Skelton, who owns Skelton Jewelry located in Lawrenceville, said that as a small business selling custom designed pieces it is easier to adjust prices as the market fluctuates.
“Nothing gets mass produced so really the piece just gets priced based on the current cost of gold or silver,” Skelton said.
Skelton said that most customers understand that jewelry is not an inexpensive purchase and would rather pay for the more expensive metal – such as 14 karat gold – rather than silver.
Despite silver also having hit historic highs, it is still drastically less expensive compared to gold. However, neither Henne nor Skelton have noticed an increase in customers purchasing silver in place of gold.
“I think people see gold as something that will always increase in price,” Skelton said.
Jeremy Gugino is co-owner of Community Gold & Jewelry Buyers in New Kensington. He said the price change will impact people trying to sell gold bars and coins more than jewelry because it is priced on a dollar-to-dollar amount, which means that for every $1 of cost incurred the price is adjusted by exactly $1.
Skelton said that since customers are already committed to spending a large sum of money on jewelry, she does not believe the extra money deters customers.
“When you read that gold has gone up to $5,300 an ounce there is a lot of sticker shock there, but when you look at a ring … that might only be a $500 increase,” she said. “A little bit more in gold isn’t going to change someone’s mind.”
The last major surge in gold market prices happened in October, when a troy ounce of gold reached $4,000 for the first time.
During this time, TribLive reported the skyrocketing gold prices resulted from factors such as inflation, the federal debt and geopolitical instability.
James Maloy, who teaches economics at University of Pittsburgh, said the current price jump could stem from a multitude of factors, including a need for industrial metals such as bronze, gold and silver as well as concern about global currency issues.
Increased concern over currency leads people to purchase gold and silver as a way to protect against financial loss, which in turn drives up the market price, Maloy said.
Gold and silver are subject to both investment and industrial metal demand within global markets.
Gugino said the last rush to sell gold took place over the holidays, following a price surge. But he doesn’t anticipate the same reaction this time. He believes sellers are being cautious and might be holding out for an even higher price before selling, but does advise customers to capitalize on the market now.
“It is a gamble … this is a worldwide market,” Gugino said. “What goes up must go down.”
Historically platinum used to be the more expensive metal in comparison to 14 karat white gold– now Henne said purchasing the same item would cost roughly 10-15% more in 14 karat white gold than it would in platinum.
Despite prices jumping up on Monday, Henne said many of the gold and silver jewelry items in his cases are marked with tags from when they were last inventoried, meaning that buying jewelry pieces from current inventory rather than ordering new is a better value.
“Anything I order now has the current (metals) price,” Henne said.
If the price of gold and silver remains higher then over time jewelry stores’ inventory costs will begin to rise, he said.
Caesar Azzam, Caesar’s Designs in Shadyside, like Skelton, said he also prices items out as customers design them depending on the current market for much of his sales.
However, because it typically takes around eight weeks between the time a customer orders a piece and receives a quote to when the product is finished and sold, Azzam said the item ends up increasing in value and ends up being underquoted by the time it lands in the customer’s hands.
“That is eating into our margin,” Azzam said.
Despite this, Azzam said the market is too unpredictable to attempt quoting the price higher because then he risks losing the sale.
Because the price of gold has increased so drastically, Azzam is considering retagging some items from his inventory that have not been sold or updated in the last five to 10 years to reflect the current market price.
