Six months ago, Bill Crescent, owner of Crescent Jewelers Inc. in Lansing, sold a man's platinum wedding band that no longer fits, so the customer wanted to exchange it.
However, the original retail price was $700 and Crescent now has to pay a wholesale price of $1,400 to replace the ring in a different size, because of the soaring price of platinum.
"I basically have to sell the piece of jewelry cheaper than what it costs to satisfy the customer," Crescent said.
The meteoric rise of gold and platinum prices, compounded with a slowing economy, is cause for concern by jewelers in Illinois and Indiana who reluctantly are accepting lower profit margins, and some are offering jewelry in cheaper metals, such as palladium.
Gold and platinum surged to new record highs Monday. Gold hit $991 an ounce, propelled by weakness in the U.S. dollar. Platinum rose to $2270.50 per ounce, following power outages in South Africa that disrupted mining operations.
Karen Fowler, owner of Highland Jewelers Inc. in Highland, said one of her major challenges is satisfying the customer in the face of skyrocketing gold and platinum prices.
"We are really focused on finding the best value for our customers with these gold prices," Fowler said, adding she has seen her customer base invest more in diamond and colored stone jewelry, versus pure gold items, since the precious metal prices
shifted upward.
Jeffrey Janowski, owner of Belush Jewelers Ltd. in Crown Point, said his business is facing a difficult situation.
"All gold right now is more expensive to purchase," he said. "Unfortunately, as the prices go up, people cannot afford to purchase the items and my profit margins go down."
Janowski added that as he pays more for gold and platinum inventory, he cannot use the same markup on the jewelry as previously.
"Most people just aren't going to justify spending over $2,000 on a piece of jewelry in this economy," he said.
Palladium has made inroads in the wedding band industry across the country.
"Palladium is going to explode into our industry unlike anything we have ever seen before," said Scott Kay, president and chief executive of Scott Kay Inc., celebrity designer and manufacturer of jewelry in the wedding sector, in a statement released by the Palladium Alliance International.
Every style in Kay's U.S. bridal collection is already available in palladium. In Kay's jewelry line, the price of a palladium ring is nearly $2,000 less than the same style in platinum.
Despite alternative low-cost options for consumers, jewelers worry that soaring gold and platinum prices will diminish the already weakening consumer base.
