For Shoppers Price of Gold Not Worth Its Weight
By Ylan Q. Mui and David Cho
Not many people have
come in to buy gold jewelry at Chas Schwartz &
Son lately. But plenty of customers have arrived
with gold baubles to sell -- class rings,
wedding bands, even gold teeth.
Owner Paul Pastor said the shift is just one of
the many changes in his business in recent
months as the price of gold has soared to
records. He's stocking cases with cheaper
alternative metals and encouraging shoppers to
buy jewelry with more gems and less gold as
rising prices begin to squeeze his margins and
send customers into sticker shock.
"Right now, the metal market is having a
devastating effect on the jewelry business,"
The weakening dollar and troubles in the
financial markets drove the price of gold to an
all-time high of $1,028 an ounce Monday, nearly
four times what it was just a few years ago, as
investors have sought out havens for their
money. Gold has pulled back since then and
closed at $919.50 yesterday in global trading
but surging demand from emerging markets such as
China and India suggest that the prices will not
fall substantially any time soon.
David Beahm, vice president of Blanchard, a
large retailer of precious metals, has seen a
120 percent increase in gold bullion sales this
year as financial institutions and traders have
been stockpiling gold coins in their safes.
Platinum, another key metal, has experienced an
even more dramatic spike, soaring above $2,200
an ounce, largely due to disturbances in South
African mines, which produce most of the world's
Such costs are causing havoc across a wide range
of industries. The auto industry relies on
platinum to make catalytic converters. Oil
refineries need platinum to turn crude oil into
gas. Computer manufacturers and even dentists
are also being affected.
But perhaps nowhere are the increases more
painfully felt than among jewelers, who must
cater to the often volatile emotions of their
clients while trying to maintain their bottom
"For certain unique purchases in one's life,
people don't want to feel they're sacrificing,"
said Matthew Rosenheim, president of Tiny Jewel
Box on Connecticut Avenue. But "there's a higher
investment that needs to be made for them to get
the products that they desire."
Standing inside his store in Dupont Circle,
Rosenheim recalled when gold went for about $260
in 2002. But as prices spiked, he noticed that
customers who normally shopped the store's
pricey first floor were migrating to the
less-expensive merchandise on the second.
Now, one of the most popular lines has become
David Yurman's Silver Ice collection --
bracelets, necklaces, earrings and rings that
set gemstones in sterling silver. The pieces are
priced between $1,000 and $5,000. The same
merchandise in gold would cost at least twice as
much, Rosenheim said. Prices of other gold
pieces have risen as much as 15 percent.
"We try to keep price increases very small, and
we will absorb some of it ourselves," Rosenheim
said. "But we will be forced to pass it on at
the counter as well. I think that's inevitable
for all jewelers."
Gorman has carried stainless steel jewelry by
Austrian designer Humphrey for several years.
But customers have expressed more interest in
the collection recently because of the rising
cost of metal, said Adam Gorman, one of the
The clients most affected tend to be young
couples seeking engagement rings or wedding
bands, he said. Platinum and gold remain the
most requested metals -- until they see the
Gorman said he gently suggests alternatives such
as palladium and titanium for significant cost
savings. A $3,000 platinum wedding band would
cost about $2,000 in white gold. In palladium,
it would run about $1,500, and titanium would
set a customer back only a few hundred dollars.
"They can see there's very little difference"
between some of the metals, Gorman said. "You're
not really sacrificing quality."
For some people, however, no compromise is
acceptable. Take Noah Cuttler, 29, of the
District. He met his true love, Garen Singer,
28, about a year and a half ago during Yom
Kippur service at Washington Hebrew Congregation
in Cleveland Park. They have dated ever since,
and Cuttler decided two months ago he was ready
to pop the question.
Through his friends, he found an independent
dealer in Maryland who helped school him in the
four C's of diamond buying -- cut, clarity,
color and, of course, carat. But Cuttler had
little idea that the band would be just as
He knew platinum was the metal of choice, but
there were white gold and yellow gold to
consider. His dealer urged him not to go down
"He wouldn't even show me gold because of the
pricing on it now," Cuttler said.
He thought about buying a loose diamond and
getting the band elsewhere to save money. He
even walked into Tiny Jewel Box, but walked out
after seeing the prices.
The bands "were so small, I couldn't imagine
what would sit on it," Cuttler said. "And they
were more than I ever wanted to spend."
Finally, he pulled out his credit card and
charged $1,000 for a platinum band from his
dealer and several thousand dollars more for a
1.3-carat diamond. He plans to propose after she
reads this article.
"I know she'll be happy with whatever, but at
the same time . . . it's supposed to be for a
lifetime," he said.