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A sterling silver pendant from Blue Turtles. Blue Turtles co-owner Doron Berger said he would be increasing his product prices to reflect rising silver prices.
A sterling silver pendant from Blue Turtles. Blue Turtles co-owner Doron Berger said he would be increasing his product prices to reflect rising silver prices.

Volatile silver prices cause jewellery havoc

Despite last week’s blip in the spiralling price of silver, many jewellery suppliers have begun to concede that price adjustments are “inevitable” and one manufacturer has already taken action.
Although silver prices dropped from US$49 ($46) to US$34 ($32) an ounce last week, suppliers remain wary about the soaring cost of the precious metal.

Doron Berger, co-owner of sterling silver jewellery manufacturer Blue Turtles, was last week forced to issue a price rise notification to all his stockists – telling them that the state of the market made a price adjustment “inevitable”.

He explained, “If you’ve been keeping up with the financial news lately, you’ll be aware that the price of precious metals has risen sharply and consistently over the past few months. Silver has been particularly active, with the price rising by as much as 50%.

“Consequently we now have to adjust our prices quite significantly. We've held out for a while, giving you the opportunity to take advantage of Mother’s Day at original prices, but a price adjustment is inevitable.”

Berger’s announcement came amid news of silver’s surprise price drop. However he told Jeweller that, despite the dip, Blue Turtles still needs to raise product prices to maintain profit margins.

Other suppliers remain cautious about escalating silver prices. Georgini director Gina Kougias said, “Although silver prices have dropped in the last week, my feeling is that they will rise again later in the year.”

Georgini specialises in rhodium-plated sterling silver pieces with cubic zirconia. It has not raised its prices since February 2009 but Kougias said it would be forced to do so again in the face of escalating silver prices.

“Since starting business seven years ago, we have only had the one price rise. We can’t keep absorbing price rises for much longer,” she warned.

Silver jewellery brand Najo’s managing director Jo Tory agreed with Kougias regarding the dip in silver prices.

“Obviously the market is very volatile and it is subject to speculation. However, I don’t think the dip will continue. I think the market has made a huge correction and the bubble has burst. Perhaps momentarily or perhaps silver has found it’s correct level. It’s hard to say,” Tory said.

Bunny Bedi – owner of Made in Earth Creations which designs, manufacturers and wholesales unusual gemstone pieces set in sterling silver – said his prices were protected at present because he had previously bulk-bought silver at a lower price.

“We invested in silver a long time ago when the prices were lower. We are cheaper than our competitors because we sell our older stock for the price that it was initially manufactured at,” Bedi said.

However, he admitted that he was being forced to bring new stock in at new prices, to reflect the increased cost of silver. Bedi predicts that the precious metal will reach $US2 ($1.90) a gram in the next few years – equivalent to $US57 ($53) an ounce.
Conversely, Ellani Collections director Paul Hicks said the volatile raw metal prices had not affected the price points of his silver jewellery.

“We focus on putting out a competitively priced product. I know silver prices are volatile but I think any short-term increases are offset by the high Australian dollar,” Hicks said.

Stones & Silver founder Alex Bonett agreed that the strong value of the dollar had helped wholesalers combat the price increases – but warned that this could not continue for much longer.

“Even the dollar has not been able to keep up with the increase in the price of silver over the past few months. Naturally, as with any industry, when the raw materials continue to climb, the price has to eventually increase,” he said.

Although Berger is conscious that retailers may need to work with consumers to explain why product prices have increased in their stores, he insisted that the spike in silver prices will help increase consumers’ appreciation of silver jewellery.

He reassured stockists, “What's positive about the rise in silver is that it promotes the appreciation of quality work in silver.”

Berger added, “With each spike in the price of silver, we’ve noticed a corresponding spike in demand for our products so we continue to have a very positive outlook.”

Others agreed. “Customers are not shying away from buying silver. If anything, the high prices are raising its profile. Silver is now highly regarded as a metal that is worn by a lot of people,” Bedi said.

Tory echoed Bedi’s thoughts. “Silver is a precious metal and has been undervalued for a long time.”

Bonett said he had experienced a growth in sales, with many customers moving away from gold towards silver.

“There is a new awareness of its beauty and value. Retailers have the opportunity to promote their silver jewellery as an investment and as fine pieces of jewellery that the customer will have for a lifetime,” Bonett said.

Hicks said while the high prices have increased silver’s status, its primary appeal lay in its comparatively affordable prices when compared to gold.

“Discretionary consumer spending goes to competitively priced product and silver is appealing to the fashion conscious consumer.”

On the flipside, Kougias believes the high prices will act as a deterrent against price-conscious consumers.

More reading:
Global silver jewellery production hits five-year high
How to sell more silver jewellery to Gen Y
Tips on upselling silver jewellery

Australian Diamond Trading Corporation (ADTC)

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