The Modern Jeweler - All Jewelry Information For The Modern Era!

In 1983, the country was recovering from a recession, unemployment was a 10 percent and gold prices were double what they had been five years earlier — but Joseph Lisitzky was still selling a good number of gold rings and watches out of his downtown Miami jewelry store.

Twenty-six years later, the simultaneous rise of the price of gold and the unemployment rate have hit Lisitzky-Rosner Jewelry especially hard, slowing sales to a sluggish pace.

“It’s the worst I’ve seen in the last 60 years, no question,” said Lisitzky, who is 78 and has been in the wholesale jewelry business for more than half a century.

As consumers shy away from luxury purchases and potential buyers express shock at the current going rate of gold rings, bracelets and necklaces, jewelers have been hit with a staggering one-two punch of rising unemployment and soaring gold prices. Gold reached $1,070 an ounce last Wednesday, a new record for the metal. The price has tripled since 2003 and doubled since 2005. Up more than 20 percent this year, gold has seen a boost as investors have rushed to the metal as a long-term hedge against inflation.  As a result, purveyors of gold have seen their sales nose dive.

Last week, at downtown Miami’s Seybold Building — the second-largest jewelry sales location in the nation — jewelry stores sat idle while employees, who often outnumbered customers, passed the time by wiping down already clean display counters and chatting.

“Well, it doesn’t help sales,” Leonor Rancano, vice president of Aruba Gold Jewelry, said of the rising price. “Gold is expensive and customers are holding off. They know it’s expensive.”

Rancano’s store sells rings, necklaces and charms out of the Seybold Building, and has seen a significant decrease in foot traffic in recent months. About 20 percent of Aruba Gold’s merchandise is solid gold — and most of it isn’t moving, Rancano said.

She has stopped ordering gold pieces and doesn’t plan on picking up any more until early next year — and that’s only if she’s able to offload some of her inventory during the holiday season.

Other stores in the building and across the region are facing similar challenges as jewelers try to convince cautious customers to buy jewelry during a time when rings, bracelets and chains fall into the tabooed category of “discretionary spending” in many family budgets.

CUTTING PRICES

To cope, jewelers are slashing prices, buying up scrap gold and stepping up their efforts to sell other metals and diamonds.

At Aruba Gold, shoppers are being steered towards watches, diamond pieces and silver jewelry, which offer more attractive price points than gold.

“Thank God we have a good selection of watches,” Rancano said.

Daniel Davidoff, who co-owns Ocean Jewelers in Hollywood, said that because people are still getting married, his sale of diamonds has been steady. But his gold pieces, especially his heavier ones, are not selling because the price has escalated so rapidly, he said.

A gold bracelet that cost $300 a few months ago now retails for $700 or $800, he said, and customers aren’t going for it.  He decided to cash in a lot of the heavier pieces in his inventory, rather than hold on to them in hopes of finding a buyer.

“I’m thinking, `You know what, it’s going to stay here for a long time, so why not cash it in and make it some money’ ?” he said. “I know that no one is going to buy it now.”

Many jewelers say the new age of frugality that emerged amid steep job losses has paired with the recent spike in the price of gold to create a tsunami of bad news in their industry.

“I think it’s a perfect storm,” Rancano said. “If things were good, and you still had to buy a gift, and your wife wanted a certain metal, you’d buy it even if it was expensive.”

Added Lisitzky: “If things weren’t so bad, people would be willing to pay a little more. The price would go up, but they wouldn’t even notice.”

As the holiday season approaches, jewelry store owners, investors and consumers are keeping a close eye on the price of gold, which is notorious for its volatility.

With a large number of potential consumers looking to sell old jewelry in popular cash-for-gold programs, more are tuned in to the metal’s price changes, said Jeffrey Nichols, managing director of New York-based American Precious Metals Advis0rs.

GOLD COULD GO HIGHER

Nichols believes the price of gold could double or even triple in the next few years as speculators invest in the gold market and turn away from a weakening dollar. If this happens, the prognosis for jewelers could be painful.

“I think the individual retail jewelers will continue to have a difficult time,” he said.

At the Seybold Building and at jewelry shops across South Florida, jewelers are cutting expenses and restructuring operations in anticipation of continued slumps in luxury spending, while at the same time crossing their fingers that things will turn around.

“We just hope that things are going to get better,” Lisitzky said. “We always remain optimistic. But at the moment it’s very rough.”

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