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Dealing with rising metal prices


#1

I would like to know how others are dealing with the rising cost of
silver and gold, specifically those who sell their work in their own
online shop. Most of my work was priced at a silver market of
$17/oz. and I am really not able to absorb the 25% increase in the
cost of silver at my current pricing. I don’t see others who sell
artisan jewelry online (retailing for $50 to $200) adjusting their
retail prices with significant changes in the metal market. I am
looking for a way to explain the fluctuations to my customers and
find out what others who are in the same situation are doing. Any
thoughts or ideas would be greatly appreciated.

Tracy Arrington


#2
I would like to know how others are dealing with the rising cost
of silver and gold 

My markup % stays the same.


#3

The problem for us is that the increase in demand for silver and
gold is from investors. Not jewelry consumers. Our cost for materials
is up at a time when demand for our work is down.

Stephen Walker


#4

Hi Tracy,

One way to post the price of an object & have it applicable to
whatever the precious metal price is as follows.

Post the weight of the item along with a price based on the price of
precious metal at a given level.

Example:

Price $40.00 Based on silver at $15.00/oz. Weight. 2 oz.

If the item is sold & the price of silver is now $20.00/oz the cost
of the item is now $50.00. (2 oz X $5 increase in silver cost)

Using this approach, the labor & markup remain the same but the cost
of metal can be accounted for.

Dave


#5

Tracy- We just raise our prices. We work mostly wholesale. We
keystone our materials. So we make that much more money on the mark
up. The same with the retailers we sell to. They make more too. Two
times 100 bucks is a whole lot more than two times 25 bucks. I like
to think of rising metal prices as an opportunity.

We never apologize for our prices. If asked we just shrug and refer
to the rising cost of metals. Folks then perceive that our work is
precious.

It’s all about perceived value.

Remember you have to replace that metal that you sold at 17 bucks an
ounce with metal that will cost you 21 bucks an ounce. You can’t keep
that up indefinitely without going out of business.

Have fun and make lots of jewelry.
Jo Haemer
www.timothywgreen.com


#6

Yeah I heard that, gold and silver remain a fairly stable
investment, so the price of metal will probably not go down.

We just have to adapt to it.

My wife wants a gold locket, so it’s going to be 9 carat (sorry
dear).

Regards Charles A.


#7

Hi Jo,

I’m not sure if I’m understanding you correctly. For wholesale
prices are you taking all the direct costs to manufacture the piece
and using keystone (cost of materials X 2) and then for retail taking
the wholesale price and using 3key for the markup (basically direct
cost x 6)? Or are you just taking a 1/3 at retail based on the
wholesale price?

Regards,
Richard


#8

Hi Tracy. I deal mostly in silver and am doing decent business on
Etsy. I’m worried about this too. But ever since I embraced the
freedom of non-rigid pricing, it’s easier to raise a price by a buck.
I’m not trying to shoehorn into specific price points. And if they
love it at $32, will they ditch it at $33? I hope not. I’ve thought
of having a note on my Etsy home page about silver prices, but I
doubt people would see it or relate to it. I can really sympathize
with those of you using lots of gold.

Allan
silvermason.com


#9
My wife wants a gold locket, so it's going to be 9 carat (sorry
dear). 

I believe that 9 karat is the standard in Ireland, or used to be!!


#10

It seems to me you either raise prices or cut costs or increase
volume.

If you’re really slick do all three.


#11

Hello all, question of the day, who is buying all the silver? Up to
over $ 21 usd. yesterday.


#12

Charles,

Even though the price of gold may appear high it is still cheaper
than we have had in the past when you take in our exchange rate. Do
you remember when the gold was priced at around US$1000 but the
exchange rate was 70cents to the dollar or worse?

Roger


#13
My wife wants a gold locket, so it's going to be 9 carat (sorry
dear). 

Charles- That’s what they all said back in the late 70s early 80s.
Folks flocked to buy silver at 40 bucks an ounce. It then dropped to
4 bucks an ounce. That’s when I bought and held it til it hit 20 and
ounce.

What goes up will come down. I wouldn’t be buying too many bonds to
hold for long term right now either.

I’ve been taking this time to encourage my clients to use platinum.
It’s a bargain compared to gold and silver right now. Palladium too.

Have fun and make lots of jewelry.
Jo Haemer
www.timothywgreen.com


#14

This is a very simplified explanation why gold and silver prices are
doing what they are doing at this current time. I’m sure someone here
will want to argue this, or at least the details, but since the
market has been kind to me during the last 3 yrs, I’ll tell you what
I see, and fly by.

The increase in the price of silver as well as gold, are not the
result of a supply and demand issue at this time. In fact, more gold
mines are opening up right now to take advantage of the current
numbers. Risky, but potentially very profitable investments are
currently being made in a field called gold warrants, which are a
major source of funding for gold mining start up companies. If you
know what you are doing, a 20,000 investment has upside potential of
returning several hundred thousand, but could also result in a return
of zilch.

Right now the main cause of gold price acceleration is a result of
dollar value depreciation. One week ago 1 Euro dollar equaled aprox
1.34 US dollars. This evening, that ratio is aprox 1Euro : 1.37US.
The US dollar is falling in value in relationship with the Euro, as
well as just about all other currencies out there. So the amount of
gold you can buy with 1 US dollar this week is smaller than last
week’s amount. Most of the precious metal prices are being
hammered(upwards) as a result of currency devaluations, not supply
shortages, or someone buying it all up. This gold/silver rush has a
totally different cause than the previous when gold and silver hit
800’s and 50’s, respectively.

This is what happens when the Federal Reserve starts turning on the
printing presses- more dollars for the same amount of goods - that’s
inflation. The Fed calls it Quantitative Easing, or QE2 for short.
Currently the Fed is trying to stop a round of DEFLATION(about a
50-50 chance), which is more damaging to an economy than high
INFLATION. Japan has been in a deflationary spiral for over 10 yrs
now, and still hasn’t quite shook it. An example of deflation would
be if you bought silver wire and sheet at $20/oz, and before you
could turn it into something beautiful and saleable, the market
dropped to $15/oz. Now the stuff you have will be harder to sell
than the same stuff the other guy has cause he bought it at $15/oz
this week. And so on. Very vicious cycle.

A small stable amount of inflation is far better than any level of
deflation. Without inflation, you cant make a profit. But too much
inflation, as a result of very poor fiscal management by our
illustrious people in Washington spending WAY TOO MUCH money that we
don’t have, can be serious especially if it gets out of control like
it is currently doing. We currently owe China a boatload of money
that the federal government borrowed by way of selling bonds, T
Bills, etc, to institutional investors, like China and a lot of other
countries We spent this money on programs like welfare, war,
Medicaid, and many others. Well, now we owe more in just interest
payments than what we can pay with tax revenue. If the economy
shrinks(deflation) then tax revenue decreases, and it will be tuffer
yet to pay our government debt. If our economy grows(inflation), then
we will be better able to pay our government debt obligations. It is
possible, mathematically, to inflate our currency right out of debt.
Sounds good, but then other countries will not buy our debt(bonds,
Ts) because they no longer trust our good economic word Since our
government currently is struggling to pay our debt, they have been
practicing Qe1 and QE2- artificially inflating the dollar. By
creating ‘money’ out of thin air, with no ‘real’ increase in the
level of goods and services available to be bought and sold in the
common market place. Now we have more money, but same amount of
goods, so prices go up. Its not that gold became more valuable, its
because your dollar shrank.

Historically, silver usually runs in a ratio with gold of aprox
50:1. For a few yrs now it has been in a range of 60:1 to as much as
64:1. In essence, silver was a bargain compared to historical
averages with gold. I believe today was the first in sometime where
it has dropped(ever so slightly) below 60:1 (59. blah, blah, etc :1).
If gold goes to, lets say 1500/oz, then silver would need to be
somewhere around $30/oz to be in historical average alignment. There
are currently a noticeable number of legit economists that say we may
see silver in the range of $175(2-10 yrs out), which means gold would
need to reach $8750/oz to keep this historical average going. This
means that silver has a much greater upside potential (inflated
prices) than gold has- and golds potential is very high right now.
Nothing is a sure bet, but right now, upward metal prices are
probably the safest bet in town.

One metal that has not done well for a while is rhodium, as a result
of the auto industry crash. Its used in catalytic converters. Aprox
1/2 dz yrs ago, rhodium was selling at 600/oz, shot up to 10,000/oz
in the course of a couple yrs, then came crashing down below 2000/oz
as a result of poor auto sales. As I watched the rhodium market go
fro 600 to 10,000 I wondered if I should play or not but decided I
didn’t know enough about that market, and stayed out. Coulda got
rich(or poor) in a matter of a year or less with a 10,000 initial
investment. Hind sight is usually 20/20.

EdR


#15

Hello Group,

One thing that’s good about these silver prices these days, is the
return for scrap! I just sent in a little over a pound of silver
scrap, and will get a little over $200. I don’t want to think about
re-supplying in the future… but for now, I’m a happy camper.

Vicki K in hot, humid SoCal with thunder, lightning and no rain


#16

Thanks Jo,

I've been taking this time to encourage my clients to use
platinum. It's a bargain compared to gold and silver right now.
Palladium too. 

My wife wants gold coloured metals, so I’m stuck. Apparently it
looks better on her skin (yes I am well trained :wink: ).

Regards Charles A.


#17

Hi Roger,

Even though the price of gold may appear high it is still cheaper
than we have had in the past when you take in our exchange rate.
Do you remember when the gold was priced at around US$1000 but the
exchange rate was 70cents to the dollar or worse? 

I remember when the exchange rate was 75c AUD would get you $1 USD
(yes I am that old), but it was held artificially.

Today the exchange rate is almost dollar for dollar.

When you look at it the way you explained it it’s not too
unpleasant.

Just wish it was cheaper so I could do more with it.

Regards Charles A.


#18
Yeah I heard that, gold and silver remain a fairly stable
investment, so the price of metal will probably not go down. 

You need to look at historical gold prices, they fluctuate quite a
bit. Back in the early 80’s it hit over $840 US toz then dropped
back down to a fairly flat level of around $350 Us toz for 24 years,
that is not a good investment. Investors run to gold in times of
economic upheaval as a safe place but damn few ever make money in
gold investments. The cost to deliver at oz of gold to the market
right now is about $750-$800 US per oz everything above that is pure
speculative burden that can and will likely disappear as markets
stabilize and investors feel safe to go out to play again.

Jim

James Binnion
James Binnion Metal Arts


#19
I would like to know how others are dealing with the rising cost of
silver and gold 

My opinion is to not change your markup but do change your costs to
reflect rising prices. I base my prices on 3X cost, plus labor, plus
10%, then Keystoned. Since the cost to replace the materials in the
piece has gone up, why shouldn’t my prices?

Michele


#20

silver and gold went on sale as ETF’S (easy to buy sell) not very
long ago.

no more the problem of storage or mailing the stuff’ being treated as
any stock.

can go anywhere as in any bubble.

zev

ps so if you have the cash and 21,2 or3 $/oz is ok for your work, buy
silver etfs to hedge any increase if silver goes up sell etf’s to buy
actual silver.(will equal out) if silver goes down buy actual silver
with cash and at least you have a ceiling price you can live
with,the etf’s(for as much as you buy that is)