It has been a golden year for jewelry. That’s according to the World Gold Council’s Gold Demand Trends. The analysis indicates that 2013 saw the largest increase in volume demand for jewelry in 16 years, thanks to the decline in gold prices. Demand was 17% higher than in 2012 and reached the highest level since the financial crisis in 2008.
Record Sales
The jewelry sector saw continued growth throughout 2013, with the bulk of the increase concentrated in the first part of the year. Interestingly, the United States and the United Kingdom generated much of the growth in the latter part of the year. Although the fourth quarter is traditionally the most important for these markets, due to the Christmas effect, the growth is noteworthy for its size and pattern: it was the first year-over-year increase in fourth-quarter demand in both markets since 2001. The dollar value of jewelry purchases in the United States, however, fell from the record high of 2012, due to the general decline in prices. But the decline was only 2% (less than the decline in prices), a figure that clearly demonstrates the strength of consumer demand in terms of volume. New records were set in India, China and Turkey, while Japan recorded the highest value since 2008.
Jewelry as an investment
A long-term analysis shows that since 2003, a growing share of global collective wealth has been converted into gold jewelry (with the exception of 2009, during the worst of the financial crisis). In 2013, the value of yellow metal jewelry was almost 0.14% of global GDP, compared to less than 0.08% in the previous ten years. Significantly, the share of jewelry sales in the world was a fifth higher than in 1997, which was the peak year for gold jewelry demand measured by weight.
The low end is falling
Another trend is the growing preference for jewelry with higher carats. Also because those who buy jewelry as an investment want pieces that can retain value over time, and therefore of higher quality. In the United States, where the high-end segment has been relatively robust, this trend has been even more evident, with mass-produced brands decreasing production at lower prices to move up into the 14-carat jewelry segment.
Not just jewelry
Despite the cost of the yellow metal falling (or perhaps because of it), demand for bars and coins has risen to an all-time high of 1,654 tonnes. Few people know that gold is also used in some technological devices. But from this point of view there was no news: the annual demand for gold used in electronics stabilized at 404.8 tons, from 407.5 in 2012. Instead, central banks took advantage of the decline to increase their reserves by 368.6 tons.
