Previously, we looked at what high precious metals prices meant for marketing. In this post, we’ll talk about maintaining your margins while you’re spending more for gold and other precious metals. Is this something to worry about? Should we start raising prices? While we’ve never seen precious metals prices rise this high this quickly, how the jewelry industry handled rising prices in the past can guide how we react to the current surge.
The last time we saw such a surge in precious metals prices was 2009, in the wake of the global financial crisis. By 2011 the price of gold climbed to nearly $2000/oz before falling and stabilizing between 2013 and the beginning of the pandemic. That is perhaps the first lesson we should take from the past: this won’t last forever. The war in Iran, as Barron’s reports, has driven the price of oil up, and since oil is traded in USD, central banks are selling their gold reserves to buy dollars, driving the dollar up and gold down. It is possible that gold prices have already peaked for now and might find some balance in the near future.
We’re not making any predictions, though. The market that led to the 2008 crash was irrational, but the 2026 market makes the runup to the last economic crisis look sober and sensible. The market suddenly becoming rational and stable is not something you can plan business strategy around.
Over the long term, however, the value of gold only increases. So even if prices have peaked for now, they will rise again in the future (perhaps—hopefully—not as dramatically), and gold will continue to be a safe bet for those who buy jewelry as an investment.
That’s where the economics of gold are right now. Given the unpredictability and instability of the current global economy, what does this mean for your business? The unsatisfying answer is, unfortunately, it depends on your business and your customers. It’s hard to provide the right answers. What we can do instead is list a few things to consider.
Know your customers. Are they price-conscious? At the lower end of luxury they might be, but the saying “if you have to ask, you can’t afford it” still applies to prices at the higher end of luxury. If you’re the kind of luxury retailer who doesn’t display prices, your customers probably won’t experience sticker shock.
Choose the right pricing strategy. While “cost plus” is a common pricing scheme, your work is worth more than cost of materials plus labor. Your pricing strategy should reflect that. The value of your jewelry comes from its aesthetic beauty and the meaning it holds for customers. This is why we wrote a separate article about precious metals prices and marketing. If you connect with customers on a deep, personal level and clearly communicate the value your products add to their lives, they won’t ask how much it costs.
Consider your inventory order cycle. With the price of precious metals in flux, you might be better off placing smaller orders more often rather than larger orders spread out over a longer period of time.
Transparency. If your customers are price-conscious, be open about how rising costs will affect them. Communicate price changes before they happen to allow your customers to buy jewelry at current prices.
Higher prices might be a good thing. Lower prices, sales, and discounts tend to send the wrong message to luxury consumers: this brand isn’t exclusive, it isn’t high-quality, and it isn’t appealing to people like me because no one is buying it (why else would you put it on sale?).
What if I can’t raise prices? If you’re a jewelry designer, the answer might be to incorporate more silver and platinum into your designs or do more with less. Create the illusion of larger pieces while using less gold or really go all-in on your personal style and what makes you unique as a designer.
Keep the Focus on Your Customers
When the focus turns to cutting costs to maintain margins, it’s easy to lose sight of what really keeps you in business: your customers. That’s why it’s so important for your pricing strategy, your sales strategy, and your marketing strategy to be rooted in the needs of your customers and the way in which you help them fulfill their needs and solve their problems. If you create a clear value proposition and a strong rapport with the people who love your products the most, they’ll be willing to stick with you even as prices rise.
