As gold prices, jewelry stores must decided whether to keep pace
Scripps Howard News Service, DC
By THUY-DOAN LE
Sacramento Bee
20-JUN-06
SACRAMENTO, Calif. — It will cost you a little more ka-ching for your bling-bling.
With the price of gold hovering around $700 an ounce, jewelry lovers out shopping for gifts are likely to see higher prices in some stores in the days ahead as merchants are forced to pay more for the precious metal.
But not all jewelry retailers are planning to push prices up to reflect the new cost of everything gold and glittery.
Some say they plan to ride out the recent upswing in prices, which is blamed on a weak dollar, fear of oil shortages and turmoil in the Middle East. Customers, shop owners say, shouldn’t have to pay more for a gold necklace or ring purchased by the shop when prices weren’t so high. What’s more, they said shoppers would be reluctant to pay for an item whose price seems to change daily.
But other jewelers believe they must raise prices to match the market. If they didn’t, they say, they wouldn’t be able to afford to restock the shelves with gold jewelry purchased at today’s higher rates.
Dan Parisi, owner of Arden Jewelers in Arden, Calif., said all jewelers are faced with one key question right now: Should you charge what you paid for it _ or what it would cost to replace it?
“Every shop has to make that decision,” he said. “There’s a level of pain and cringe.”
In the current market, he said he can get more money by turning some of his pieces into scrap gold than if he sold them at the old price tag. He sells them to companies that melt and refine the gold.
“The margins are squeezed tight for business owners, but people still want to pay lower prices,” he said. “Gold is going higher than inflation.”
In fact, the price of gold has tripled in the past seven years.
Parisi said rising prices do mean one thing: Anyone who has had gold jewelry appraised in the past few years probably should do it again.
“People with broken jewelry could probably sell the gold for more than they bought it,” he said.
Parisi makes some of his own pieces by buying “shots” of pure gold, which resemble BB pellets. He melts them down and combines them with a mixture of metal alloys. Gold often is sold by its state of purity: 24 karats is pure gold, 18 karats is 75 percent and 14 karats is 58 percent.
A typical ring for a woman weighs about 3 to 8 grams; a man’s ring weighs about 6 to 25 grams.
American jewelers don’t generally encourage the view that jewelry is an investment, said Peggy Jo Donahue, director of public affairs for New York-based Jewelers of America.
But when an ounce of gold becomes news, “consumers tend to view their gold jewelry through a different lens,” she said.
Donahue said many retail jewelers do their main shopping at summer trade shows in Las Vegas and New York. That means it’s more likely that any rise in prices will be felt in the fall.
“After years of fairly stable gold prices, it would be a shock to consumers to see prices going up too rapidly on their gold jewelry purchases,” she said. “So retailers are likely to be judicious in repricing.”
Mark Synarksi, owner of Monk’s Place Jewelry in Sacramento, Calif., said the prices in his printed catalog are out of date. He does a lot of custom work and said it’s difficult for him to tell customers that the $700 piece they see listed is actually $900.
“I’m paying more for it, but customers aren’t likely to buy if it’s too expensive,” he said. “The cost of gold has gone up so much.”
Brian Carl, manager of Dalin Jewelers in Elk Grove, Calif., said he won’t raise the price on gold the store already has purchased.
“It’s a long-term decision,” he said. “We will leave the prices because it’s not fair to our customers. If we readjusted the price every day, it would confuse the customer and us.”
For Trang Thai, whose family owns Kim Thanh Jewelry in Sacramento, price fluctuations are the norm.
The price of her merchandise is based on the value of the gold that day, said Thai, whose store’s name means “golden success” in Vietnamese. Armed with a calculator and the latest gold values on the market, she can compute the cost of her jewelry.
But she worries that customers will turn away if prices continue to float higher.
“If the prices are too high, people will wait because they do not need it,” she said. “Gold is not like gas.”
Some jewelers, however, think rising prices are an incentive for customers to buy.
“Customers don’t have to worry it will plunge on them,” said Mark Tran, whose family owns Kim Hoa Jewelry in Sacramento. “I show them the chart with the prices increasing, and if they hesitate, the price may go up the next day.”
But Tran said his family is paying close attention to rising prices. To keep business steady, he said, they are selecting merchandise that moves quickly and staying away from jewelry that takes time to sell.
(E-mail Thuy-Doan Le at tdle(at)sacbee.com.)
(Distributed by Scripps Howard News Service, www.shns.com.)
