In modern history, 2020 will certainly be one of the most reviewed years in hindsight, but right now as we go through it, it is foresight which is needed and which will help us out!
The most recent thing to affect us, in the jewellery industry is the huge increase – and volatility of metals prices, and for all of us this is very important, – businesses who get it wrong can get into serious trouble, and for those who get it right there is opportunity t be had, how we navigate this is critical.
At Kapit Mas we are doing what we can to give you options and alternatives during these times to minimise your risk and, even perhaps take advantage of any opportunities that come your way
During this time we are seeing clients fall into two distinct areas, those who’s brands make them committed to production with silver and gold, or possibly with gold micron plating, and those who are selling a fashion or style and are more price concious and not committed to precious metals but can easily switch to bronzes and brass and still create a beautiful line of jewellery, without the price fluctuations and increases we are going to see from precious metals. These two categories require vastly different t responses to navigate this situation well and I want to give you a few ideas on this.
For those of you,committed to using precious metals the only real opportunities arise from studying the markets well and placing orders – or buying metal stocks when you see a good buying window. Following metal markets is very important. Silver has done a massive rise this year and in the last month truly has gone parabolic, usually a sign that a fall is immanent, however, I feel it still has some upside left, it might get bouncy for a while, but I still feel there is potential for more increase. During the days – now ancient history when we had both a silver and gold standard, the value of gold was always roughly 15.5 to 32 times the price of silver, these were very real numbers based on the availability of both metals from mining and the costs of extraction. The silver standard was dropped in different areas at different times but subsequent to this it had not basis in holding wealth and had no industrial or medical demand the only thing really holding the value of silver up was is use in photography, which also died with the beginning of the digital age. Silver prices slumped, early this year the price of gold was more than 100 times the price of silver! Now silver is facing increased demand in industry and medical applications, which post COVID look to increase dramatically as the world looks towards better greener solutions with reductions in pollution levels. I will not bore you with details here but reports show that COVID may be one of the final nails in the coffin of using oil, gas and coal and coal as primary energy sources, an d this may happen fast. Creating robust demand for silver.
We note also the price of gold is also rising on “safe haven” buying , protection against currency fluctuations and geopolitical manoeuvrings that are happening in the world today, Increase in gold values tend to increase silver prices, combine this with the above thoughts and I still see strong support for silver prices to rise more.. even though they are already this week in a parabolic state, as I write this the gold to silver price ratio is 1:72 way down on where it was earlier this year, but as fiat currency becomes more fickle, we might be heading back towards 1;32…. maybe…. and the price of gold is still going up. If you wanted a prediction from me of silver prices by years end – I would say between $ 35.00 and $ 80.00! that is an outrageously massive spread – but that is how difficult it is to pick and shows how important smart buying will be.
For those of you who are selling a look, fashion or style and its important to maintain price points now is really a time to migrate your collections away from silver and into brass, we have increased our ranges of quality brasses and bronzes we are carrying – please ask your merchandiser for more details, and we are also doing work in our plating lab to work more with non-precious white and yellow platings to mimic silver and gold colour, but with cheaper and vastly more stable prices. The cost increases of micron plating due to increased gold prices will have big effect on prices also, so you may want to move away from this to our new non-precious yellow plating solution. We are upgrading our coating options also, to ensure we can provide a coating alternative to fit your requirements on any items. Please speak to us about these options if you have any questions.
We have also installed an enamelling line earlier in the year and are very happy with the results, if you want to give your lines a lift and add a little more colour to your work, please talk with your merchandiser.
During these unusual times Kapit Mas is focused on helping your brands navigate its way through, we are committed to helping your success and doing it with heart.
I wish you all the very best, and am always here if you have any questions
Many Good Wishes,