Gold and silver prices have been increasing rapidly in recent days. At Milina London, we have been following these daily and wanted to give our insight to our discerning clients on why gold and silver prices are rising and how this may impact jewellery prices.

Why are gold and silver prices rising so fast?

Predicting gold and silver price movements on a day-to-day basis or in the very near term is best left to speculators. However, we can sum up the recent surge in precious metal prices and attribute it to general economic uncertainty brought on by the pandemic, the very large level of money printing by all central banks and, finally, a dearth of any interest income earned on our money saved at banks, making precious metals attractive.

The ever-increasing money printing puts more Pounds, Dollars and Euros in our pockets and, at present, it seems to be at no cost to the exchequer. However, something always gives in the end and there will inevitably be a rise in inflation. Investors also believe precious metals provide a hedge against these inflation expectations, and have therefore decided to take refuge in age-old “Safe Haven” assets.

Source: https://www.ft.com/content/728eab35-4771-4b4f-9597-a25c6c863ef5

  

What will this rise mean for gold and silver jewellery prices?

Inevitably, such large price increases will have an impact on the cost of making jewellery. The cost of jewellery does not reflect only precious metal prices. There are other costs, such as different materials (like gemstones), craftsmanship, designing, marketing, logistics and packaging.

 

Source: https://silverprice.org/

When you add it all up, depending on whether it is gold or silver and what level of purity you have (viz. 9k or 18k Gold, 925 Silver), the precious metal content will approximately range between 5-20% of the overall price you pay at checkout. These are simply broad ranges and will differ between brands. Very simply speaking, you can expect around a 2.5% to 10.0% increase in jewellery prices if silver has gone up by ~50% (approximately $16 to $24/oz in recent days) and notwithstanding other factors, such as foreign exchange movements and general cost price inflation. We would expect gold and silver jewellery prices to rise as a result.

Will gold and silver jewellery prices rise straight away?

Sudden and persistent precious metal price moves tend to impact the craftsmen and artisans almost immediately. The proportion of precious metal cost is much higher at the handcrafting or manufacturing stage than at the retail price level. It is for this reason, as a jeweller, we have to immediately make good any price rises to our artisans at the manufacturing stage (typically, silver or gold is purchased just before handcrafting the piece of jewellery).

Furthermore, there is a lead time, generally anywhere from a few weeks to a couple of months before the jewellery range is handcrafted and shipped to us for sale to you online or at our offline venues.

Should I buy gold and silver jewellery now before prices rise?

Typically, orders for Autumn and Winter collections would be made in Summer. Prevailing precious metal pricing around that time indicates where jewellery prices may be heading later in the year, especially when you get started thinking about Christmas Gifts. It is therefore very likely that prices will rise for your favourite jewellery pieces going into the later months of this year. So yes, it may not be a bad idea to start Christmas shopping early this year!

Can I reuse my old gold to remodel into new jewellery?

During times such as these, when precious metal prices have increased rapidly in a very short period, it may be a great idea to rummage around and see if there is a family heirloom or old piece of gold jewellery that can be remodelled into something fashionable. 

We offer a complete bespoke service and can help you remodel old gold into a new and on-trend piece of jewellery without incurring the cost of buying new metal at much higher prices. This allows you to re-use and save on costs. Feel free to get in touch for more details.

Related blog: Reusing Old Gold to Make New Jewellery

We hope this blog on why gold and silver prices are rising and how this impacts the world of jewellery has been informative and interesting. If you have any further questions, you’re always welcome to get in touch.