US Coins

US demand for precious metals jewelry remains strong

The following text was pulled from Valcambi Suisse's Feb. 10 installment of its previous metals weekly, Metals Focus.

A research trip to the U.S. last week confirmed the strength of retail jewellery sales in 2014. It also underlined the relatively upbeat prospects for this year, which could see U.S. consumption of gold, silver and platinum jewellery each achieve further gains.

One feature of the U.S. retail jewellery trade, that stood out last year, was the “cleaning out” of merchandise. Showcase space, previously set aside for plated and bonded products, was typically restocked with higher quality carat gold, sterling silver or, in some cases, platinum jewellery.

The reason for the plated merchandise being introduced in the first place had been to enable retailers to offer products at key price points, against a backdrop of rising gold prices. However, with gold having weakened from its 2011 high, retail margins have improved noticeably. This in turn has encouraged the trade to shift back to better quality precious metals.

In terms of the gold market, this explains much of the 6% rise in U.S. gold jewellery imports (in value terms) in 2014. Factoring in a 10% drop for gold prices suggests that wholesale jewellery purchases in volume terms rose by around 16%. This is in tune with information that a number of major retailers rebuilt their karat jewelery inventories, or in some cases re-introduced karat gold, having largely moved out of this category by 2011.

One negative implication of this restocking is that retail demand achieved a smaller rate of growth last year, but 2014 still marked the third consecutive year of gains, after a decade of weak gold jewellery consumption.

Another important feature last year, which also bodes well for 2015, is that karat gold did not grow at the expense of high-end sterling silver or platinum, both of which also saw improved retail sales in 2014.

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