The gold price fell again in early trading Monday following its biggest slump in more than a decade, while silver swung sharply after a dramatic pullback from record highs on Friday.
According to Bloomberg, spot gold fell as much as 6.3% Monday, while silver dropped to about $75 an ounce after earlier climbing as much as 3.2%. On Friday, the white metal recorded its largest intraday loss, falling more than 30%.
The sharp downswing wasn’t entirely unexpected after precious metals — including platinum and palladium as well as silver and gold — surged to stratospheric highs in January. But it left jewelers rattled and uncertain about what’s next.
“Oh, who the hell knows. At this point, it’s like saying, ‘All indications are that the coin toss will land heads.’ Gold is like a meme stock at this point,” said Gretchen Schaffner, owner of Eytan’s Designs in Sherman Oaks, California.
If there is a consensus among jewelers surveyed in our Brain Squad readers group over the weekend, it is that the gold price will probably edge lower but remain elevated in the near to midterm.
“I feel the price of gold will continue to fluctuate over the next six months, but will not sustain an increase. There is no end in sight to the world’s unrest,” said Lee Krombholz, owner of Krombholz Vintage Jewelry in Montgomery, Ohio.
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“I expect a bumpy ride with the price drifting lower over the year,” added Bill Elliott of Ross Elliott Jewelers in Terre Haute, Indiana.
Other jewelers expect further gains given ongoing global uncertainty. “I don’t think we have seen the top. Foreign governments are still accumulating gold, and the dollar is still in a weakened state. This is a pullback to prices from a couple of weeks ago. With a move like this, people and institutions will take profits,” said Laurie Langdon-Gerber, owner of Elisa Ilana Jewelry in Omaha, Nebraska.
Regardless of expectations, jewelers are becoming more prudent about managing trade and custom orders.
“We have a new policy: all quotes are only good for 24 hours because the market is too volatile,” said Elizabeth Saba, owner of Presley Co. Fine Jewelers in San Diego, California.
Refiners also are tightening buying policies, with some saying they will pay according to the spot rate on the settlement date, which could be weeks after the gold is shipped. Members of the Jewelers Helping Jewelers Facebook page have advocated offering a buying price 30% below spot to cover volatility.
Even for jewelers who don’t trade gold and silver, the surge has caused chaos in operations, forcing constant repricing and retagging of inventory.
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“Many of our pre-owned pieces are simply unsellable at this point and will be melted, which is a relief in some cases but feels pretty cruddy in others. Anything heavy and well-made is suddenly worth more as a commodity than as jewelry,” Schaffner said. “Thoughts of retirement loom large, as do thoughts of tax ramifications.”
There has been a silver lining, she added. “We’ve made a lot of people very happy. They hear it’s a good time to sell all that crappy gold jewelry they never wear or inherited; most of the time, they are blown away and overjoyed with how much we can pay them. That makes us feel good.”
