Hallmarking figures, brands and suppliers all agree that demand for gold is increasing, but how can this be sustained for long-term growth when the gold price is prone to fluctuation? Professional Jeweller considers consumer attitudes to the precious metal, the rising interest in Fairtrade gold and the styles that are attracting the most attention in this month’s special report.
According to the World Gold Council, the gold mining industry directly and indirectly contributed around $171 billion (£122bn) to the worldwide global economy in 2013 — a figure that’s so unimaginably vast it’s hard to put into context.
Bringing things back down to a more manageable level, global gold demand for jewellery fell by 3% in Q1 2015, with markets in Turkey, Russia and China taking particular knocks. Fortunately, the UK market held steady with a 4% growth in demand.
In terms of UK hallmarking figures, the number of 18ct gold items assayed in Q1 2015 rose by 12.4% compared to the same period in 2014, with 9ct also up 0.7%. In May 2015, gold hallmarking rose by 1.6% to 360,930 items, with 14ct seeing an increase of 20.4% compared to the same period last year.
So far we’ve got evidence of slightly higher demand and slightly raised hallmarking figures — certainly nothing that suggests a consumer rush to purchase the precious metal. However, industry experts, brands and suppliers are seeing a revived interest in gold, perhaps spurred by market optimism and the increasing interest in yellow gold jewellery in general across the fashion market.
Stella Layton, assay master and chief executive of Assay Office Birmingham, notes: “There is a move towards more yellow gold. It also takes a while for consumers to get the fact that commodity prices for precious metals have dropped, making items for affordable now than they were. Also the retail price analysis shows that there is a drop overall in high street prices year-on-year as the competition becomes fiercer. I don’t think this is about investment pieces, but a return to fashionable precious metal jewellery being more affordable.”
To demonstrate this Layton points to the plethora of rose and yellow gold-plated products in the market – encouraging consumers to see both the colour and metal as synonymous with fashion-forward jewellery. This can only be beneficial, especially among consumers whose gold reference points are the old-fashioned yellow pieces their parents or grandparents own.
Layton adds: “The fashion content of the products is helping. Lighter weight pieces and the fact that yellow is a fashionable colour could be taking some volumes from silver.”
Sheffield Assay Office chief executive and assay master, Ashley Carson, agrees that there is greater financial confidence among consumers in 2015, leading to an increase in consumer spending in luxury areas.
He explains: “Silver has been a fantastic metal in recent years to produce some great trends and also the fashion of beads and bracelets. We’re still seeing tens of thousands of beads being produced and now there is an increase in gold beads and carriers.”
“I do believe that there was so much old gold jewellery melted down in recent years that people now want to replace this with new items.”
Perhaps as a result of the cash-forgold boom, Carson admits he’s noticed a “return to classic gold items,” with chains and bracelets on the increase. However, he agrees with Layton that it is the light-weight pieces that are excelling. “We have not seen the large, heavy gold chains yet,” he adds.
At supplier Cooksongold there’s been an increase in demand across all alloys in its key bullion, findings and chain ranges. Cooksongold commercial manager, Adam Hunter, says: “Gold does seem to be having a resurgence and we’ve seen demand increase from different customer segments, be they large manufacturers, goldsmiths or the designer-maker community.”
Of course, demand has been directed by the end consumer, with Hunter concurring with both Layton and Carson. “I think the economy is helping, along with a stable and lower gold price. Plus trends are again showing gold to be more popular. There’s a combination of a growing 9ct market plus resurgence in high quality, unique 18ct gold pieces.”
As noted in Professional Jeweller’s May issue silver feature, the increasing popularity of gold has done little to dampen the spirit of its cheaper precious metal cousin. “Silver has shown no signs of slowing, with demand as buoyant as it has ever been,” Hunter remarks.
He continues: “Gold is still a considered purchase whether you’re buying components, working on a finished piece or indeed the end customer. Gold doesn’t have the accessibility of silver, but for that unique piece or special gift I think some of the sparkle has definitely retuned to gold.
“It may be an odd comparison, but it was great to see Apple produce the iWatch in gold — it demonstrated that gold still has a lot to offer and that it can add a little extra luxury and desirability that perhaps other metals can’t.”
H&T Pawnbrokers head of retail and disposition, Sarah Buck, has also witnessed the increasing demand for gold first-hand. “Gold purchasing is no longer in decline,” she explains. “In fact, over the last few months we have seen an increase in the number of gold jewel- lery items we have sold in our Est1897 Discount Secondhand Jewellery stores and online.”
Although fashion plays a role, Buck admits that customers visiting Est1897 stores are more interested in affordable silver or investment gold. She explains: “There are some who want silver as they are looking for a fashion item at a great price, and there are others who are happy to spend a bit more as they recognise the value of investing in gold jewellery.”
From a pawnbroking perspective Buck admits that a growing number of people are “starting to understand more about how and where to sell their gold and feel more confident in doing so”. She continues: “Recently, we have started to see an increase in people selling their gold to buy a different piece of jewellery, trading it in for another item which is more suitable for them or using it in part payment for something more expensive.”
So, what are consumers actually buying when it comes to gold jewellery? According to Amore Oro founder Barry Mislin diamond dress rings are the fastest growing category, especially as the lower gold price results in better value for money.
“We have certainly seen an increase and particularly last year we saw a real move to yellow gold with our retail stockists reinvesting back into diamond and gemstone jewellery and rings,” Mislin comments.
However, Mislin is proceeding with caution and isn’t ready to believe in a customer base that truly values the investment potential of gold jewellery. He says: “It is a slow process, but I believe the sales are definitely coming back for fine jewellery and especially for yellow gold as the customer wants to see that the purchase they have made looks like a real piece of jewellery.”
Jewellery brand Mark Milton has also seen growth in its gold jewellery demand in recent months. To support this, the brand introduced its new 9ct Midas collection in June, incorporating fashion-focused 1980s style gold chains and bracelets, coupled with drop earrings with a variety of textured finishes.
Founder Mark Milton comments: “We’ve been busy adding to our gold ranges this year to answer the huge leap in demand for bold yellow gold jewellery. Our much-loved classic designs are always great sellers — and sales of these have been increasing all year. All of our simple hoops and stud earrings, pendants and bracelets are in big demand. They have a low price entry pint and they’re a great way for shops to start stocking gold again if they haven’t already.”
It’s true that with the boom in branded silver jewellery in the last 10 years, some retailers have swung away from unbranded and branded fine jewellery in favour of more guaranteed sales. Now, it seems this mood is changing, with retailers returning to their roots as jewellers — something which buying groups have been stressing in the last two years.
“There is definitely a shift from fashion jewellery to ‘real’ fine jewellery,” Milton adds. “I think this is down to a combination of gold making a comeback on every level and because precious jewellery with some intrinsic value will always be desirable.”
Similarly, Suzanne Adams, creative director at London Road Jewellery, has seen an “upturn in yellow gold sales”. She comments: “Customers are getting braver. They are looking for something that is distinctive – they’re thinking more in terms of something lasting with a style that will go on – definitely not fashion pieces.”
In agreement is Hannah Trickett, head of design at Elements Gold, who says: “Elements gold is performing very well for us. Last Christmas our gold sales were thriving, and we experienced a big rise, especially in the weeks running up to the end of the year, as our customers and end consumers bought into the range in a big way. After a good Christmas selling season for many retailers, we saw their confidence increasing in gold. This trend continued into 2015, which saw our sales for the spring launch of new Elements gold lines increase by over 25%.”
She adds: “We are also seeing that pieces with mixed plating of white and yellow gold, and the firm favourite of rose gold with pearls and diamonds continuing to be bestsellers. However, our Signature collection with all the many designs in plain 9ct gold is still the best performing area.”
With all of this positivity in the marketplace, it is little wonder that Fairtrade gold has also been enjoying a period of growth, with Fairtrade jeweller Cred importing record breaking amounts into the UK and delivering similarly impressive amounts to the USA. Victoria Waugh, manager of major retail accounts at the Fairtrade Foun- dation, explains that the ‘I Do’ campaign – designed to encourage couples to buy Fairtrade wedding bands – is going from strength-to-strength. She says: “We have had a fantastic reaction to the campaign from the press, industry and consumers, with jewellers involved in the launch seeing an uplift in sales as a response to our activity.”
An example of this can be found at Cred Jewellery, which saw its sales jump 64% year-on-year across its London and Chichester stores in Q1 2015. It now hopes to import the first stock of African Fairtrade gold this summer.
Currently, there are over 260 designers signed-up to use Fairtrade gold as part of the Goldsmiths Registration Scheme, plus a growing network of Licensees globally, including 61 in the UK.
Waugh continues: “Feedback from the jewellers we work with suggests a growing interest in gold, particularly on higher value items. As gold is an investment purchase – something to be kept and treasured – ensuring that is has been responsibly sourced gives consumers added piece of mind when making a purchase. Choosing Fairtrade means they are investing in the future of the miners who have produced the gold, as well as in a piece of jewellery to cherish.”
Cred Jewellery managing director Alan Frampton has been instrumen- tal in importing 22 kilos of Fairtrade gold this year alone, predominantly from Peru. He credits the Company of Master Jewellers, Arctic Circle, Mastercuts, Cooksongold and Merrell Casting, among others, for driving Fairtrade gold forward in the last 12 months. Now, Frampton is gearing up to bring the first shipment of Fairtrade gold from Africa to the UK, with plans to take a small group of CMJ representatives to Tanzania at the end of this month.
He explains to Professional Jeweller: “We have three mines in South America now and we’ve got really good volumes at the moment – we could do around 80 kilos if we wanted to. We are keeping our prices low to make sure that it goes into the system, but we need to work on consumer awareness.
“I did a survey last year where only 3% of the public knew that Fairtrade gold was available. As a result, everything we are doing at the moment is consumer facing. If we can get the sales we’re getting based on 3% it demonstrated that people are starting to be more interested. Where we used to have one or two appointments, now we’re fully booked in our London studio every Saturday. We’re getting 8,000 people to our website every month, so everything is moving in the right direction.”
Retailers and brands putting extra mark-ups on Fairtrade is an issue Frampton faces, alongside lack of consumer awareness and the difficulties associated with importing Fairtrade gold in general.
He explains: “We sell it [Fairtrade gold] for 107.5% of the LBMA on the day it leaves Lima. I pay the miners 98% of the LBMA plus the fairtrade premium of $2,000 per kilo, that’s 5%. I then export it out of Peru, fly it and import it, I then pay the secure shipment and insurance to the refinery, I refine it and I pay 20% VAT on it. My last two VATs were £80,000. Cred isn’t a big company and we don’t have big overheads or big offices, so we really are efficient. When people say someone else thinks they can do it better, I say the door is open. We have always been the pioneers and the ones driving it forward. We are facilitating making it work.”
Now, Frampton is focusing on projects in Tanzania, Kenya and Uganda alongside his work in South America to get African Fairtrade gold to the market. Speaking of the African miners he meets on his travels, Frampton says: “Local traders are paying them as low as $25 per gram. We will pay them $37 plus the $2 Fairtrade premiums — this is a huge difference.”
Frampton will conduct another survey later this year to see how consumer awareness has changed in the wake of the I Do campaign and other initiatives. He will also revamp Cred Jewellery’s website to show the positive and inspiring side of the Fairtrade journey from mine to finished jewellery.
It’s clear that positive changes are being made, but how does this translate to the wider industry? As Stella Layton of Assay Office Birmingham adds: “For Fairtrade gold to be a staple the volumes available would have to be massive – serious tonnage of material – and I’m not sure how likely that is.”
Although this is true, there are certainly enough volumes to make a se rious bid for the lion’s share of the bridal market – an area where ethical purchases are gaining ground. Plus, Fairtrade gold offers great opportunities for retailers to attract more socially conscious consumers, while supporting the industry as a whole.
A recent example is Sarah Layton Jewellers in Lancashire, which is the first business to take on the bridal collection of Fairtrade gold and Canadian diamond jewellery brand Arctic Circle. With more decisions like this being made, it’s clear that Fairtrade gold will secontinue to flourish.
As for the rest of the UK gold market, everything suggests that even more growth is just around the corner; with retailers returning to their core ranges and consumers on the hunt for accessible fine jewels in-line with the vogue for a yellow gold-hue.
This feature originally appeared in the July issue of Professional Jeweller, read it online here.