Your jewellery is no longer worth what you originally purchased it for. If in the event of loss or theft of your jewellery, the cost to replace is going to exceed the original purchase price of your jewellery piece. Over the past year, some very unique events have led to the cost of jewellery increasing exponentially.
Jewellery items have become even more expensive as the price of precious metals and precious stones have seen increases over the past few years due to market forces and the COVID-19 pandemic.
Increase Price of Gold
What has caused the price rise in gold? For six years, gold languished below USD$1,375 but on 20 June 2020 it broke through and since then it has staged a remarkable recovery.
Further compounded by the COVID-19 pandemic gold and other precious metals have been observed as safe havens by investors, driving demand up for the resource.
The price of gold is primarily set in the London and US gold markets where huge transactions between corporations, institutions, governments, and individuals occur. The resulting gold price balances demand from buyers with supply from sellers.
The price relationship between a piece of fine gold jewellery and gold market prices generally isn’t so clear cut. Gold jewellery, for the most part, is priced for the creativity, workmanship, and exclusivity of an item. Stock items such as engagement rings, earrings mountings, etc. reflect gold ounce prices most.
The jewellery industry operates on a “gold price on the date of delivery” model. That means that manufacturers, wholesalers, and retailers, don’t know one day to the next what their gold purchases – or unfilled orders – are going to cost. When the order is filled from a supplier, the daily gold price is consulted, and the metal is priced accordingly.
Increase Price of Diamonds
Diamonds in particular have increased due to the pandemic shutdown. During the shutdown, diamond mines ceased or limited operational activity and since then major retailers in the US and China have been buying aggressively to keep up with strong sales, while rough diamond supply is tight because De Beers and rival Alrosa PJSC have limited supply to put onto the market. Perhaps most importantly, polished diamond prices are finally rising.
Diamond prices have skyrocketed from lockdowns around the globe as access to rival luxury offerings was limited. That first showed with stronger-than-expected holiday sales, from US Thanksgiving through to Chinese New Year, and has since continued.
There are supply shortages at the moment. That’s creating a sense of scarcity at every stage of the pipeline.
Couples who are now looking to buy a diamond engagement ring – an item with an average price around $12,000 AUD, buyers can expect to pay an additional $2,500 this year.
Prices in the industry are only expected to continue to rise in the coming months, as increased vaccination rates allow the economy to reopen and demand to surge globally.
This poses the ever-growing issue of the increasing replacement cost for jewellery in the event of loss, theft or damage. Would you be able to replace your jewellery if it was lost or stolen at the same price that you bought it for? The answer is, no. This highlights the need to ensure that your jewellery is covered appropriately, let’s face it, you would not buy a new car with inadequate insurance.
Contact the Centrestone Jewellery Insurance team today and get cover for your jewellery you can rely on.