(Kitco News) - If gold-jewelry sales are any indication, U.S. consumers are opening their wallets again.
For the first half of 2014, U.S. gold-jewelry sales rose, and this trend is expected to continue as some consumers seek out small luxury items.
The World Gold Council’s second-quarter gold-demand trends report showed U.S. jewelry purchases totaled 26.1 metric tons, a 15% rise over 2013’s second quarter and more than double the tonnage purchased as bars and coin investments. This isn’t a one-quarter anomaly, either, as the data show for the 12 months ending with the second quarter, U.S. gold-jewelry demand was up 18% over the time period in 2013, at 125.6 tons.
U.S. gold-jewelry demand was a small bright spot for total global gold demand, which was otherwise down 16% in the second quarter, with global jewelry demand down 30%, as top global buyers China and India were less active.
Factors Driving Demand
Sally Morrison, managing director of marketing and jewelry at the World Gold Council, said there’s been consistent growth in the U.S. jewelry market for the past five quarters, following drops in the price of gold, starting last year. Unlike in China and India where the reaction last year to price falls was quicker, it’s taken some time for lower gold prices to trickle into the U.S., she said, with the effects of cheaper prices likely being felt only beginning this year.
“Generally speaking, luxury has been doing better in the U.S. over the last year. I think there’s a fairly positive sense of the economy, a little more optimism,” Morrison said.
Some of that can be seen in corporate earnings. Luxury jewelry retailer Tiffany had stronger-than-expected second-quarter earnings on the back of solid sales growth in stores in the Americas and Asia-Pacific regions, Chief Executive Officer Michael Kowalski said at the time.
Amanda Gizzi, director of public relations and special events for Jewelers of America, a national trade association for businesses serving the fine jewelry retail marketplace, said consumers are back to wanting to buy gold after selling off pieces a few years ago when prices were at multi-year highs.
“Once the gold price settled back in, people (wanted) to reinvest and buy pieces once again, to fill in (what) they had sold off,” Gizzi said.
She also said the “May is gold month” promotion had a “huge impact” on gold sales this year. Mother’s Day is the second-largest jewelry buying time of the year, even more than Valentine’s Day, she said, adding that May also brings gold buyers out for graduation gifts and bridal jewelry for summer weddings.
Not So Mellow Yellow
The color yellow is popular this year, and that works in gold’s favor, said several jewelry experts.
“Yellow is definitely huge this year,” said Louis Farkovitz, a master goldsmith, who works for an ultra-luxury New York jeweler on the Upper East Side of Manhattan.
“Big heavy pieces are very popular, definitely artistic pieces... many of these are statement pieces and investments at the same time,” Farkovitz said.
Yellow was popular in fashion magazines, and the sunny hue was featured in many places in the recent New York Fashion Week, down to gold-colored nail polish.
Armen Darakjian, co-owner of Darakjian Jewelers, a fine jewelry store located in the upscale Detroit suburb of Birmingham, Mich., has also noticed his customers want yellow gold, and rose-colored gold, too.
Part of this has been generated by brands, he said, but part of it is likely that people want to make sure others know their jewelry is real gold.
“What I think also has happened is when 2008-09 (credit crisis and recession) occurred, jewelers were pushing silver as it was more affordable for the masses. But now with incomes coming back up, people are feeling more OK with being conspicuous and spending their money. People don’t want their white gold jewelry to be misinterpreted as silver. No one buys brass jewelry, so if you see it’s yellow, you know it’s gold,” Darakjian said.
Upbeat consumer sentiment for jewelry suggests that buyers may feel more comfortable about the U.S. economy.
“I think it’s (the economy) definitely feeling more stable for people, whether this is the new reality or if people think things are looking up,” Gizzi said. “People are thinking, ‘I have a little bit of money left over, let me reinvest it into something beautiful.’ People are feeling like they deserve it and people want beauty in their lives again.”
Morrison said the high gold prices of the past few years allowed gold to re-establish itself as a premium product and the resurgence of yellow gold may be a bit of “brand value.”
“I think when gold became incredibly expensive, (for) people who could afford to wear it, it was important that other people knew it was gold,” she said.
She also said when the high-end jewelry companies like Cartier and Bulgari started to show big statement pieces in yellow gold, that started to have an influence. Additionally, “with more of the fashion designers, like Jennifer Fisher, Jennifer Meyer, these ‘cool girls’ were making jewelry for other cool girls, were including a lot of yellow now. I think that’s been the case for the last two years,” Morrison said.
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Social Media Campaign
Morrison said the WGC started about 18 months ago reaching out directly to consumers rather than the trade as part of its jewelry-marketing strategy. They launched the website LoveGold.com, which features global jewelry designers, and the WGC is active on other social media sites like Pinterest, You Tube, Instagram, Twitter and Weibo, among others.
The idea was to reach out to younger consumers, particularly women in their 20s who might be able to buy for themselves their first piece of jewelry, she said. Morrison said to date they have about 600,000 active members of the social community.
“It’s definitely a tribe of young, interested fashionable people who are coming together in this kind of global meeting marketplace to talk and get inspired by fine gold jewelry,” she said.
Popular Jewelry Styles
As far as jewelry styles go, some classic looks such as gold hoops and chandelier earrings are always popular. Trendier pieces include ear cuffs, which wrap around the outside of the ear, and chain bracelets, which include a bracelet and a ring, with a chain attached to each.
Darakjian said his customers like layering pieces, such as wearing a 26-inch gold chain with a shorter chain with a pendent in the center. Thin, stackable bracelets are also popular, he said.
Thinner, stackable gold pieces are definitely trendy, Gizzi agreed, whether its bracelets or rings.
“We are seeing some bigger, bolder styles throughout fashion. The gold styles continue to be a little bit thinner, with a lot of open work, which gives them that big look for less of a gold weight,” she said.
Zoe Chicco, a Los Angeles-based jewelry designer, said the most popular designs she sells are ones women can wear every day.
“Our client loves wearing personalized pieces - especially our pave diamond initials - in every form - necklaces, bracelets, earrings, rings. She loves to layer those with staple pieces from our best-selling Bars & Curves collection. I’ve been designing with curved and straight bars in all different sizes for over 10 years now and it’s amazing to see that these pieces are still among our most popular styles and standout as some of our clients’ most beloved,” she said.
Chicco echoed what the other jewelry experts said about trendy pieces.
“Lariats - or Y necklaces - hand chains, ear climbers, ear cuffs and ear charms are incredibly popular for us at the moment. I think with the oversized sweater trend this fall, the focus will continue to be on interesting earrings as well as oversized rings and hand chains,” she said.
With jewelry demand rising, the industry is “quietly positive” for a good holiday season with the Diwali, Christmas and Hanukkah coming up in the next few months, Morrison said.
Darakjian said for 2014 to close out strong, the winter weather needs to hold up after 2013’s record-cold temperatures in parts of the U.S.
“Last Christmas we had some bad weather in the Midwest and East Coast. It was awful weather. We’re hoping the weather will be better, maybe a little dusting of snow to get everyone in the mood,” he said.
By Debbie Carlson of Kitco News; dcarlson@kitco.com
Follow me on Twitter @dcarlsonkitco
