The falling gold price makes it cheaper to design luxury jewellery, bu – Sanur Jewellery Studio

The falling gold price makes it cheaper to design luxury jewellery, but does it make a huge difference to most jewellery brands already well established?


In the last two weeks I have been reading financial forecasts for the jewellery market in Indonesia and in China. I am fascinated by the waxing and waning of comments on this bullion billions market. In China there is a slow because the top tier businesses have pretty much ceased gift giving to each other and China is fed up with making luxury brands for other countries, when they could be making their own. Much thought is now being put into creating jewellery colleges and teaching prospective top designers, to take the luxury brand reigns off the Louis Vuittons of the world. Building brands in the luxury market is predominantly new business for China. Look, they are just aren't good at it.

But watch this space, because this is about to change dramatically in the coming 5 years.


The other day I read an article on how the Indonesian jewellery market is progressively climbing (growth at 8%) and as the middle class is forming quickly and strengthening, so is their disposable income and spend on making themselves look 'richer'. You only have to visit some of the clubs or the whiskey bars in Jakarta, to know this. Women dripping in jewels, stepping out of Lamborghinis and dropping five thousand at dinner (and I don't mean ruppiah).


But what do they want?


From what I can see, they want fancy and BIG, giant stones, lots of gold and most importantly, they still want BRAND. They want everyone to know they have spent a filthy amount of cash on an item that maybe a one-off or limited edition, that cries out their status in the world. Does this sound familiar? That's right, this was the Western world of consumerism in the late 1980's. It's taken a long time, but it's here now and it does not look like it's leaving. The era of The Nouveau IndoRiche has begun.


So how does the fall in gold price affect the jewellery market overall?


Well you would think it would seriously be beneficial to the jewellery producers wouldn't you first and foremost, but according to brands such as Van Cleef and Arpels, it doesn't really scratch the surface. Firstly they buy their gold a year or two in advance. Gold was at $1900 in 2011 and now its at just over $1100 thanks to the slow in China and the strong US dollar, but Van Cleefs says the artisan work put into their jewellery is their biggest cost. Personally for the price you have to pay for a necklace with them, I would pass, but to understand what artisan means is a story in itself. Good brands have good stories to tell (whether true or made up, it's all in the marketing) and that's what makes them successful This brand might say it takes 'a thousand hours to make one piece' and there's your story. A drop in gold price is going to help your bottom line if you produce, but honestly, if anything is going to help your bottom line anywhere in my opinion, its the cost of labour. Indonesia still has this going for it and hence why I think the market here in jewellery will explode over the next few years and that rise of 8% could go to 12 or more.


Let's not forget the consumer too because....a big, big drop, means a big, big shop.


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