Gold to Surpass $1,000: An Answer for Shoppers

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Many market analysts had as early as 1st quarter 2005 predicted the price of gold to reach $600 per ounce. Earlier this year, analysts estimated gold to reach $800 within the next 1 to 2 years. A minority of analysts are now even resolute enough to predict gold hitting the $1,000 per ounce level within the next 3 years.

An online jeweler, Apples of Gold Jewelry, and similar online jewelry stores may be an unexpected answer for jewelry shoppers in the midst of dramatically rising gold prices.

Many market analysts had as early as 1st quarter 2005 predicted the price of gold to reach $600 per ounce. Earlier this year, analysts estimated gold to reach $800 within the next 1 to 2 years. A minority of analysts are now even resolute enough to predict gold hitting the $1,000 per ounce level within the next 3 years.

How does the increase in gold prices effect retail jewelry stores and consumers? Many traditional jewelry stores use what is known as keystone or triple keystone pricing--a pricing mark-up structure that doubles or triples the cost of wholesale jewelry for retail sale.

For example, if an item of jewelry costs $100 at wholesale levels, a jeweler utilizing keystone pricing will mark up the same item of jewelry to $200. Another jeweler using triple keystone, will mark that same item of jewelry to $300.

Jewelry consumers shopping at these type of traditional retail stores, will be the hardest hit by increased gold jewelry prices. A 20% increase in the price of raw gold can translate to a 40% or 60% increase in the cost of finished jewelry at such stores.

An answer for consumers in the midst of rising gold prices may be internet jewelers, such as Apples of Gold Jewelry, whose website, http://applesofgold.com, offers over 1,500 items of gold jewelry at significantly lower prices. Since many online jewelry stores like Apples of Gold Jewelry mark their items up an average of 30%-45% above their wholesale cost, instead of keystone pricing, these businesses stand apart as a haven for value, especially when gold is on the rise.

Discount and online jewelers may see a significant rise in their online sales, if the once traditional jewelry consumer braves the threshold from brick and mortar stores to buying their jewelry online.

Apples of Gold Jewelry, http://applesofgold.com, was founded in 2000, as an alternative to high-cost jewelry stores. They offer the same quality gold jewelry at affordable discount prices, which may actually make their jewelry not just a jewelry purchase, but a long-term investment.

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James Strutton