Hi Everyone,
With all the recent euphoria on the gold and silver price I thought I’d share a recent experience I’ve had. As some of you know, I’m in the jewelry industry and I speak with a lot of manufacturers.
I just returned from a major jewelry exhibition in Bangkok. There are two major industry shows this time of year, one is in Bangkok and the other is in Hong Kong. I went around to a lot of my usual suppliers and asked them about how they are faring with the bump up in price and ALL of them were very worried about our industry. A higher gold/silver price means higher cost prices BUT there is little consumer demand for jewelry right now. In other words, costs are going up but nobody is buying due to poor retail conditions. Many of these suppliers were selling their stock at break even prices just for the turnover. One guy I’ve been sourcing from for years was selling gold chains at $1950 (AUD) below spot because no one was buying them at spot. He said he manufactured the items when spot was around $1800, so he is technically making a profit but he can’t replace his inventory at that rate (let alone cover his manufacturing costs).
The other note is that everybody was keen for a lot of sales in the Bangkok show, because everyone had written of any good sales out of Hong Kong because of the political turmoil there right now, so they were incredibly depressed at their low sales.
This means that there will be a HUGE drop off in demand from the jewelry industry within around the next 6 months, unless there is a miracle growth spurt in retail demand - but no one is holding their breath.
Make of this observation what you will, but things are definitely different to the 2010-11 heyday when the industry went through high prices. Retail customers were still buying then and willing to pay higher prices. This is no longer the case.
Just thought I’d share this with you guys, but I see a huge demand side drop over the next few months.
Cheers,
Sammy
With all the recent euphoria on the gold and silver price I thought I’d share a recent experience I’ve had. As some of you know, I’m in the jewelry industry and I speak with a lot of manufacturers.
I just returned from a major jewelry exhibition in Bangkok. There are two major industry shows this time of year, one is in Bangkok and the other is in Hong Kong. I went around to a lot of my usual suppliers and asked them about how they are faring with the bump up in price and ALL of them were very worried about our industry. A higher gold/silver price means higher cost prices BUT there is little consumer demand for jewelry right now. In other words, costs are going up but nobody is buying due to poor retail conditions. Many of these suppliers were selling their stock at break even prices just for the turnover. One guy I’ve been sourcing from for years was selling gold chains at $1950 (AUD) below spot because no one was buying them at spot. He said he manufactured the items when spot was around $1800, so he is technically making a profit but he can’t replace his inventory at that rate (let alone cover his manufacturing costs).
The other note is that everybody was keen for a lot of sales in the Bangkok show, because everyone had written of any good sales out of Hong Kong because of the political turmoil there right now, so they were incredibly depressed at their low sales.
This means that there will be a HUGE drop off in demand from the jewelry industry within around the next 6 months, unless there is a miracle growth spurt in retail demand - but no one is holding their breath.
Make of this observation what you will, but things are definitely different to the 2010-11 heyday when the industry went through high prices. Retail customers were still buying then and willing to pay higher prices. This is no longer the case.
Just thought I’d share this with you guys, but I see a huge demand side drop over the next few months.
Cheers,
Sammy
