Gold jewellery. Image by Getty.
Pity the poor jewellers of this world. As the price of gold soars and investors hoard bullion, the price of one of the luxury industry’s prime raw materials goes through the roof; suddenly, what was the base metal of high-end adornment has become as precious as the sparklers it normally holds.
Speaking at the India International Jewellery show, a four-day B2B event in one of the world’s most important gold jewellery markets, David Lamb, managing director for jewellery at the World Gold Council, said the WGC expected gold increasingly to “be treated as a jewel in its own right.”
Indeed, one of the weirder results of the current gold price is that it has skewed the usual gems-to-metals ratio in many jewellery designs, wherein the stone was the star. Compared to gold, by comparison, gems are suddenly more affordable; as a result, jewellery has become more stone-focused. Marie-Helene de Taillac, a French jeweller with stores in Paris and Tokyo who works out of the Gem Palace in Jaipur, said last year that she had started working with less gold and more coloured gems in order to keep her prices at par; she has also embraced rock crystal and other alternative materials.
Even at Bulgari, recently bought by LVMH, CEO Francesco Trapani noted this year: “We are focusing more than in the past on the combination of different materials. This is an interesting way to introduce something more appealing, more exciting to the final client—a way of proposing things that can be less expensive”.
How will consumers react to this change? Will their idea of what gold jewellery represents (glamour, a special indulgence, an investment) catch up the reality of the gold price and mean that they see gold jewellery as an even better place to put their money? Or will they run from the record gold price? So far, reaction seems mixed, if reports from the IIJS are anything to go by.
The WGC’s Mr Lamb said he thought “rising demand levels for gold debunk the myth that consumption is falling in an higher price environment”. My guess is we will see further market divisions, with eastern consumers, who have always viewed gold jewellery as an investment, willing to continue buying, and western buyers looking for more creative solutions. Indeed, in a recent meeting with the Sotheby’s diamonds folk, I was told they could not keep up with demand for 10 carat stones. When I asked why (the number seemed sort of surprising) I was told “10 carats is investment grade.”
We seem to be reaching a crunch time. Diamonds or gold: which is the better long-term accessory investment?
Vanessa has been the FT’s fashion editor since 2003, and is based in New York, though she lived in London for 12 years.