2012-09-18

What does the rising cost of silver mean for jewellery shopping on the high street?

Everyone wants a bargain these days particularly in troubled economic times. Jewellery hunters are no exception, so when news of a hike in the price of silver reach our ears, it is understandable when shoppers feel a little reticent before reaching for their credit cards. With Christmas on the horizon and nervous husbands/wives/partners looking for high quality but affordable jewellery as potential gift ideas, it is reasonable to assume that retail prices will go up. Is this always the case though?

The Stats

Being an informed shopper particularly when looking for jewellery is never a bad thing. Silver has seen a massive resurgence in the past several years. For investors the rapid rise in cost is wonderful news. For those of us on the consumer end however, the news is not as welcome. Bill Murphy, Chairman of Gold Anti Trust Action CMTE predicts the cost price of silver to rise above the $50 per ounce mark by the end of 2012. It is hard to argue with this forecast when you consider the last few year’s worth of figures he has to base this on coupled with current market trends.

Now compare this to 2012 figures (below) and you can see why a $50 per ounce prediction by the end of the year is not beyond the realm of possibility.

This rise is mostly due to the US dollar becoming more and more devalued but a report published by the BBC (itself sourced from the Silver Institute) reveals that silver’s rise is also due to its increased use in everyday electronic technology. With gold seen as a more lucrative investment by many buyers, silver has been allowed to rise steadily. But whilst this is all very fascinating to metal markets, what does it actually mean for the everyday consumer like you and me?

Don’t panic

The rise in cost of silver will lead many jewellers to look closely at their sales forecasts for the last quarter and with Christmas coming in some are bound to be nervous. Perversely this is great news for shoppers as it means we can afford to be a lot more picky about where we buy our silver jewellery from. Many online outlets can still afford to sell high quality silver at the same price simply because their overhead costs are immediately reduced from the benefit of not having a physical high street operation. Indeed some retailers have already gone on record by saying that they have no plans to raise their prices in spite of the rising purchase price of silver.

"At current levels we have no plans to pass on the increase in raw material costs to our customers." - Alistair Gray, Ortak.co.uk

Just because the cost price has gone up does not mean that every retailer will pass on the rise to the consumer. In fact it appears to be quite the reverse at the moment with jewellers like Ortak eager to remain defiant in the face of rising manufacturing costs. They know, (just as we do) that raising the retail price will do nothing to encourage customer loyalty in the long term.

So with competition high, it seems that in terms of jewellery purchasing, the consumer could win this Christmas.