 June 2009
In our newsletter this month:
• Gemstone Prices during Recession
• New and Interesting Gemstones
• Rare and Unusual Gems
• Customer Questions
Gemstone Prices during Recession
The prices of many goods fall during periods of economic recession. Multiple factors contribute to declining prices, including falling consumer demand, liquidation sales, and attempts to stimulate business through discounting. Depending on the severity of the economic downturn, the effect may be shortlived. In a protracted recession, such as Japan experienced in the 1990's, a nasty deflationary spiral can develop, where steadily falling prices lead consumers to delay purchases in the hope that they can buy the same goods in the future at a lower price.
But not all commodity prices fall during recession. While oil prices fell dramatically during the current recession, the price of gold has remained stubbornly high, even rising from the start of the global economic crisis in October 2008. This is not unusual in a recession, when speculators seek a safe haven in gold.
The high price of gold has certainly cut into jewelry sales, even leading some consumers to cash in their gold jewelry. Sales of luxury items like jewelry are always slow during economic downturns, but the high price of precious metals has made times even tougher for many jewelers and jewelry designers.
Surprisingly, the gems trade has not suffered to the same degree. This is because the market for fine gemstones tends to be supply-limited, not demand-limited. The demand for the finer stones always exceeds supply, and the better the stone the more competition there is to buy it. Smart gem dealers put as much effort into establishing sources for good stones as they do marketing their wares.
We are fortunate to have a diversified business, with customers in more than 90 countries. That has helped cushion the impact of the recession on our business. In fact you may have noticed that we've actually increased our buying in these tough times while many other dealers are cutting back. For us it's an opportunity to buy special stones at good prices. We've been buying more calibrated pieces and more top-grade sapphire, including many unheated stones. We've also added substantially to our stock in aquamarine, spinel, tanzanite and spessartite garnet.
Few economists are brave enough to forecast an end to this recession. We're all hopeful that we might see some improvement by the end of the year. In the meantime we're taking advantage of the opportunity to buy some especially fine gems.
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