Any article about gold prices automatically dates itself, consider this your gold price time capsule for October 14, 2020, and as of today, gold is at $1907.

Refer back to it for your future history books. Hopefully, it won’t be a quaint quote like “Why, look at how cheap gold was in 2020, only $1907. Why these days it goes for $50,135!”

Keep a daily or weekly eye on gold prices

That also means keeping a loose eye on what’s happening in the world. There are always theories as to why gold goes up in price, but an unstable and uncertain economy is the most likely reason for this year’s meteoric rise. Historically speaking, steep increases in gold prices track with steep drops in the health of the world economy.

During the 2008-2011 recession, gold went up and up and up, and when the recession receded, gold came down (though not as far down as I had hoped). During the 70s, gold prices surged 2300% (that’s not a typo) thanks in part to global political unrest, recession, and stagnant economic growth (this all sounds familiar). Whenever the economy dives, investors start parking their money in gold to make sure that they don’t totally tank.

They do this because gold isn’t a business run by fallible humans, gold isn’t a fly-by-night tech company; gold is gold.

I mean, we aren’t talking about Lehman Brothers here – gold can’t just close its doors and lay off employees overnight taking all of its assets with it. It is a tangible form of wealth and currency and has been used as such for eons. Even with some wild fluctuations, gold almost always keeps some value.

How will you know when it is time to change your prices?

At the start of 2020, gold kicked off the year at $1519 and is currently holding at around $1900, give or take $25. Seeing that these prices fluctuate day to day, this means an average increase of about 25%.

25%!!!

When you run a business, a 25% increase in anything has a huge impact. A 25% increase in sales can mean that you need to hire an employee. A 25% increase in your raw materials? Well, now you have to start rethinking everything.

Should you raise your prices?

This question I get a lot from students and clients. It is a great illustration of why I advocate that jewelers keep an eye on the overall financial health of their businesses.

Because the other way of asking this question is “How long can my business sustain at the old prices when my costs have jumped?” So, look over your numbers and ask yourself:

• How much does this cut into my profit margins at the current prices?

• How will this impact my cash flow over the next month? Two months? Half a year? Assuming that prices stay this high.

• At my current website prices, would I lose money on any item if I had to place an order for materials today?

• Do I have time to market a price increase to my customers for wholesale and for direct-to-consumer?

The point is, determining your business’s threshold is really important. At what point do you decide that the increase in gold costs means a price increase too? That’s a question that each of us might answer differently, but a 25% increase is harsh enough for most of us to consider price increases.

Start raising your prices – it isn’t easy

One of the ways that jewelry designers deal with rising gold prices is to raise prices on our work. This is usually done with great consternation, lots of kicking and screaming, and then sullen resignation.

It involves lots of time, analysis, and then massive website updates and sometimes lots of marketing work around it. It is not a small undertaking and many a time I wondered if the price increase was even worth it for how much work goes into rolling it out.

That said, we as jewelers usually have to raise prices when gold rises so sharply.

Start with a spot check

I recommend starting with a spot check. If you make production jewelry, that is, pieces that you reproduce in multiples, then pick your top ten best sellers. These are your bread and butter and you’ll want these pieces to be appropriately priced.

The idea of running sustainable businesses extends to ourselves, and if our businesses can sustain us, then they can sustain our future too, and that means that our prices have to go up. I can speak for myself, and many others that this isn’t a decision that is taken lightly.

Not all customers are ready for raised prices, some price increases mean that some of our customers drop off, which we understand.

And some customers understand about the metals markets, and they come with us for the ride.

What to expect from the future of jewelry prices

Expect anything, frankly. If you have gotten this far, you might be wondering why I would share so much about pricing strategy and the cost of gold. In the coming months, you may see your favorite designers increase their prices. This is a good thing. It means that they are taking their business seriously and want to be in it for the long haul. In order to live to make jewelry another day, the prices have to reflect some very real costs of doing business.

How have you managed rising gold prices? Drop a comment below!

I like to keep the education and information flowing as freely as possible. If you gain value from my blog posts and YouTube videos, help me do keep it all going by adding a tip to the tip jar.