"What goes up -- must come down." How many times have you heard that? I think everyone in the jewelry business is questioning the accuracy of that cliché when it comes to the price of gold. I don't think anyone would have thought it would have reached the heights of where it is today.
It just points to the uncertainty in the world: the U.S. political situation, the downgrade in our debt, European sovereign debt crisis, the major daily fluctuations in the U.S. stock market, Japan trying to get back on its feet -- the list keeps going.
People are looking for a safe haven to invest their money. Historically, with global uncertainty, people look to a tangible asset. Gold is the money standard. When the economy falls, gold tends to rise because it isn't unstable like the money it backs.
In May 2005 -- gold was $ 425/ounce
In May 2008 -- gold was $875/ounce
In May 2009 -- gold was $905/ounce
In May 2010 -- gold was $1165/ounce
In May 2011 -- gold traded at $1500/ounce
Now -- just 3 months later -- gold is $1782/ounce
Some people are speculating that gold will keep going up, up, and up. I hope they're wrong. It's hurting the jewelry business not only at the retail level, but the whole creative process is faltering. As a designer, I may think I have a fabulous idea for an amazing piece of fine jewelry -- however; the first thing I think about is how much gold the piece will take. A very creative, one-of-a-kind piece of jewelry with a lot of gold would be beyond exorbitant at retail in today's market.
Obviously there are huge problems in the world. The difficulty that jewelry designers are having with the price of gold is not one of them. I hope the price of gold goes down only because it would be a clear indication that things in the world are taking a turn for the better. I think we could all use that.