Merry Christmas to all of our customers and thank you for your support during 2013. We are already looking forward to 2014 and wish everyone a prosperous and peaceful New Year.
Anyone connected with the wedding industry must be over the moon that earlier in the year, David Cameron announced that certain couples were to receive a tax benefit worth up to £200.00 per annum for getting married. Well, if that isn’t an incentive to get married what is?, I should imagine that jewelers up an down the country are licking their lips at the prospect of additional engagement ring sales purchased by happy couples looking forward to an extra £3.85 per week in their wage packets
In all seriousness though, the sale of engagement rings is a major source of income for jewellers and forms a significant part of the ten billon pound UK wedding Industry. What’s probably more at the forefront of couples’s minds, is the rapidly escalating cost of purchasing an item of jewellery and shall we buy a ring now before they possibly increase in cost again.
There are two main constituents of an engagement ring; a diamond and metal (mainly gold) For everything apart from the largest stones (in excess of 1ct in size) diamond prices have fallen since a peak in August 2011 and at the time of writing remain fairly static, will this trend continue?,we believe that supply and demand will see the cost of diamonds increase in the next few years to at least 2011 prices.
What is more volatile, is the major constituent of jewellery, gold.In recent times, the price of gold has reached stellar levels, although in 2013 it did drop quite significantly, this reduction in price hasn’t always filtered through to the cost of an item in the shops though. Gold as a raw material has many uses, not just in jewellery, for many investors for example it is used as a hedge against inflation. Physical gold is one of the few investments you can obtain that is actually a real asset and not just someone else’s liability or IOU. Physical gold is often purchased as a hedge to balance an investment portfolio, to counteract fears of inflation and equity market collapse. If the world economy takes a turn for the worse in 2014 then undoubtedly gold prices will start to rise again and eventually this will fitter through and be reflected in the cost of jewellery purchase.
In our opinion ,the price of gold in 2014 also comes down to supply and demand, the Indian market has accounted for high purchases of gold in recent times, particularly earlier this year when the price was at a low, however this appetite is now cooling. A bigger concern is the ability of miners to extract gold at an economically viable cost, we must take in the consideration the price of production of the raw material and if the gold price continues to drop in the next few months, we may see miners cut back on production and this may lead to a large spike in demand.
What ever gold does, you can bet the poor consumer will still be expected to shell out a small fortune for a ring, our advice, buy now as the cost is set to rise
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Merry Christmas to you all !