Over the past five years, gold prices increased more than 2.5 times and are likely to continue going up, despite the temporary fluctuations observed in February. This year, 75% of Americans will reduce their spending because of higher taxes, which started to eat up their incomes. What are the prospects on the backdrop of gold crawling up in value and thus directly affecting gold jewelry prices, while the population’s income getting leaner? Jewelers will experiment with a more economical alternative to gold to offer customers a more affordable kind of luxury. Just like diamonds in silver.
According to a study published by the U.S. National Retail Federation (NRF), seven out of ten Americans (73.3%) will be forced to rethink their spending in response to recent changes in federal legislation. From January 2013, the social security tax levied on workers’ wages went up 2%. In other words, now the take-home pay of many Americans will thin down by 2%.
According to Reuters, the increase will cost the average worker from $700 to $1,000 a year. In total, the payroll tax hike could suck $125 billion from American households.
“A smaller paycheck … higher gas prices, low consumer confidence and ongoing uncertainty about our nation’s fiscal health is negatively impacting consumers and businesses across the country,” said NRF President and CEO Matthew Shay.
The jewelry industry bears the brunt, because people tend to first cut their expenses for goods and services that are not essential, including luxuries. If the wedding jewelry business segment may still rely on that Americans continue to marry and buy diamond rings, the high-end jewelry segment may find it ever harder luring buyers.
In 2012, the jewelry manufacturers witnessed a growing demand for goods made from metals other than gold. According to IDEX Online, silver jewelry set with diamonds is now a major new force in the Indian jewelry market and consumers are increasingly looking at alternates.
Jewelry sales of sterling silver showed good growth during the past holiday season in 2012, as evidenced by retail sales surveys and personal observations. In a separate report, Liz Chatelain, President of MVI Marketing, said, “The silver with diamond category has now grown into a full-blown category to which every major retailer is committing shelf space and marketing budgets.”
In 2012, silver prices ranged around $ 27 - $ 32 per ounce, while gold prices were close to $ 1,800 per ounce, up from $ 1,600 per ounce.
"Silver fits a very big market," believes Michael DiRienzo, executive director of the Washington, D.C.-based Silver Institute. "It's apparent that consumers enjoy silver and are drawn to the exquisite work some of the best designers are producing."
Michael Barlerin, Director of Silver Promotion Service, told the National Jeweler that silver jewelry graced with diamonds was a trend that cropped up during the holiday season and will continue into this year. “It’s one of the trends that’s here to stay,” he said.
The idea of marrying silver to diamonds is actually not so new. Silver set with natural diamonds is often found in antique engagement rings of the Georgian period (1714-1830). This was largely due to high prices for gold at the time.
In our time, there are examples of both successful and bitter experience with diamonds in silver setting. Several years ago, Hot Diamonds, a British company specialized in silver jewelry with natural diamonds entered the U.S. market. Although the company's products enjoyed good demand in the UK, it failed to find its niche in the United States. So, Hot Diamonds gradually withdrew from the United States. Asked by Rough&Polished about the future of silver jewelry with diamonds the company gave no response.
The most successful example of experiments involving the combination of expensive diamonds and other precious stones with more "mundane" metals was produced by David Yurman, a U.S. jewelry designer and innovator. His first bracelet in silver and gold inlaid with precious gemstones was made in 1983. Today, his designs can be seen in the most prestigious jewelry stores in the United States.
The progress of modern technology also contributed to bringing silver jewelry to a new level. If previously silver was apt to quickly turn black and lose its noble shine or be easily scratched, now rhodium electroplated silver jewelry pieces look as good as white gold and do not fade.
Let's not forget that this is the time when the Generation Y - people born between 1980 and 1995 – is emerging on the scene being in their prime and having financial capacity. They reject the old rules about what the jewelry should be, on which finger to wear what ring and other accepted patterns. According to a survey conducted by the Professional Jeweler, their reaction was positive, when they were asked about the compatibility of diamonds and silver: "If I like jewelry, then why not?"
Of course, diamonds in silver have their future and now there is the best environment for this kind of jewelry to be successful. In our view, demand for these goods will be on the rise in 2013. Jewelry lines backed by strong brands and fresh, innovative designs may have particularly attractive prospects.
Olga Patseva, Editor in Chief of the American Bureau, Rough&Polished
