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Jewelry affected by the coronavirus, but is gold to be sold or purchased?

Published on May 6, 2020

Orefice al lavoro a TGold. Foto: Lapresse

How much has the pandemic hit the world of jewelry? And on the price of gold? Is it still worth investing in gold? It is early to do the math, but the latest report from the World Gold Council that examines the first three months of 2020 provides the first answers. The result is predictable: coronavirus has plunged the annual demand for gold jewelry in the first quarter of 2020 by 39% to 325.8 tons, which is the lowest level. If you consider the value, however, the global demand for gold jewelry has fallen less: 26% on an annual basis. And this is because in the meantime the price of gold has gone up: it sells less, but costs more. The quarterly average price of gold was $ 1,582.8 per ounce, or $ 50.88 per gram. Unworked gold, not jewelry.

China, India, the USA and Europe
Still if we consider the first three months of 2020, the country where the demand has fallen most is China, which is also the first area where the contagion has spread. China is also the largest jewelry market in the world and there the demand for gold has slipped by 65% on an annual basis, the lowest level for over 13 years. Jewelers and closed shops, lockdown: it is not surprising that purchases have precipitated despite government incentives to push consumption.

In India too, the demand for jewelry fell, but by 41%. In this case, the sales brake was also caused by the rise in gold prices in mid-February, which led to a slowdown in demand. Then came the covid and in March the demand for jewelry fell from 60% to 80% following the lockdown.
Despite being two areas with many differences, the World Gold Council unites the United States and Europe. In the US, demand has dropped by only 3.7%, but the effects of covid-19 arrived late in the States. The analysis notes, however, that online purchases have mitigated the virus effect. In Europe, where the evil virus has arrived earlier, the drop in gold consumption is double-digit. First quarter demand fell 15% to a record low of 10.8 tons. As expected, the losses were stronger in Italy, the first country hit by the epidemic (-22%), but also the United Kingdom (-20%).
For Middle East and Turkey, no surprise: jewelry sales fell 9-10%, but gold prices in Turkey reached new highs, also because metal was purchased as a safe haven asset.

Investments
As for investments, the demand for gold through the financial markets grew by 1%, to 1,083.8 tons. In short, the coronavirus has pushed purchases. Exchange-Traded Funds (ETFs, a type of investment fund) specialized in gold values have attracted strong demand from investors, an effect that has pushed the prices in these products to a new record. Total investment in bullion and coins, on the other hand, fell by 6% year-on-year to 241.6 tons, as a 19% drop in demand for bars at 150.4 tons outstripped the increase in demand for euro coins. ‘gold.
Those who follow the financial aspect will be interested to know that central banks have continued to buy a lot of gold, even if a little less than in the first quarter of 2019: net purchases decreased by 8%. Another aspect that can affect metal prices: covid-19 also caused the interruption of the supply of gold, given that mining production fell by 3%, to a minimum of five years of 795.8 tons. A factor that could push gold further up.

Fope, Prima is good

Published on March 30, 2018

news

Anello in oro e diamanti della collezione Prima

The 2017 of Fope shines thanks to the success of Prima collection and sales in the US and Europe. New investments planned ♦ ︎
Prima is ok. In the sense of Prima collection by Fope. In fact, the Prima jewelery line, presented in 2017, had the merit of increasing the company’s revenues by 20%, without cannibalizing the other collections. The data was communicated to an audience of financial analysts in Milan, during the presentation of the economic results of the jewelry company for 2017. The success of the brand, and of the Prima line in particular, is due to two factors, those that characterize Fope : the style and technology used to make the jewelry. “Hidden in a bracelet Prima, for example, there are up to 150 micro springs, which give elasticity but also softness to the jewel: a system that boasts a worldwide patent”, explained the company’s managing director, Diego Nardin. That, in addition to the continuous renewal of the jewelry lines, has underlined the efforts of the company, listed a couple of years ago on the stock exchange in Milan, in playing on two factors: expansion of distribution and investments in technology.
Export and investments
The goal is achieved. And consolidates by Fope as the second Italian group in the sector, after Damiani, which however has a completely different story. The decision to list on the stock exchange was courageous and, in the panorama of small and medium-sized Italian companies, a rather unusual move. But far-sighted. In fact, the company used the new capital to expand its business. And investors understood this, given that the value of the stock has more than doubled in a year. “There is a significant increase in all the indicators and a strong financial solidity,” stressed Nardin. “The growth in sales has affected the main foreign markets on which we are focusing investments”. For this reason, for example, Fope Usa was set up, a subsidiary that has taken the place of the previous company in America. Abroad, on the other hand, Fope records 80% of revenues. And in 2017 those in the Americas (USA, Canada, Central America) have risen by 22%. But revenues are also going well in Europe (+ 24%): note that Fope Jewelery Limited, a company incorporated under British law, has just been set up. The corporate refocusing moves of the US and British subsidiaries are to be seen, perhaps, also in relation to two non-secondary aspects: the US-Europe tariff war and the Brexit: “We are prepared, in both cases we could use the two company with a simple redevelopment of the company name, “said the manager.
In any case, even Italy, all in all, does not disappoint (+ 9%). Among other things, Nardin pointed out, growth has not been curbed by a retouch of about 5% on part of the price list: that brand’s jewelry is not looking too much linked at price. Lastly, part of the result is also due to the success of the mono-brand boutique opened in Piazza San Marco, which is fully part of the company’s perimeter since last November.
The budget of 2017

Net sales for 2017 amounted to € 28.03 million, an increase of 21.4% compared to € 23.08 for the previous year. Margins also improved: Ebitda (gross result) was 3.9 million (+ 72%) compared to 2.26 in 2016. If you are a shareholder of Fope, you should also know that 600 thousand euros of the net result, increased to 2 , 33 million, will be distributed in the form of dividends, while the rest will remain in the company, because Fope does not stop there. Nardin cited a desire to increase the number of shop-in-shops (now 13) around the world, to open a single-brand store in London and an ambitious project to expand offices and the production site in Vicenza. Last but not least: forecasts for 2018 are positive. It should be another golden year.

Bracciali in oro rosa, bianco e giallo della collezione Prima

Diego Nardin, amministratore delegato di Fope, alla presentazione dei dati di bilancio 2018

It is a good business to invest in jewelry

Published on December 27, 2012

money

gioielli grafico 1 — Quanto pesa la gioielleria nel mercato dell’arte

andamenti jewels market — Indici a confronto. Fonte: Mps

andamenti jewels market value ind — Andamenti a contronto. Fonte: Mps

istogrammi invenduto — Non si vende sempre però… Fonte: Mps

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Investing in jewelry is a real bargain. Especially in times of economic turbulence, such as what we live for a few years. It supports the Monte dei Paschi di Siena, which has carried out a study on the art market and that of precious metals. The survey analyzes the art market of the MPS market performance of painting, divided into three segments of reference, summarizing the results of the largest transactions of auction houses ( about 1,550 observations total) in three indices according to the period historical reference : MPS Art Old masters and 19th century Index, MPS and MPS Index Art Pre War Post War Art Index. The evidence of the 3 indices are then summarized in the Global MPS Painting Art Index.

But, as anticipated, the discussion does not end here. Experts have also introduced indexes that aim to analyze the trend of so-called minor arts : antiques, furniture and sculptures, jewelry, wine and photography. Within the minor arts, we analyzed the performance of the sector Jewels compared to other minor arts given the particular function as a safe haven covered in this segment.

The most important segment after painting, in fact, is represented by jewelry and watches, whose temples stand out for their high average turnovers and weighs a total of 14.2% of total revenues ( +3.1% compared to the portion of the first half 2010). This segment is expected to grow further by the experts of MPS, especially given the success that the rods of precious stones and are enjoying all the squares on the continent.

Conclusions : The weight between the various segments still seems to be intended to change, with a strengthening of the minor arts that show, in just the last calendar year and in all categories, the best performance in terms of percentage changes compared to the MPS Global Painting Art Index.

The MPS Jewels index summarizes the trend of the auctions of jewelery, watches and precious stones of the most important international centers : Geneva, London, New York and Hong Kong. The segment shows the growth rates of the most interesting segment of the minor arts, with an increase of 160.8 % over the last 5 years ( first half of 2011 over the first half of 2006).

In comparison with the MPS Minor Arts Index Without Jewels ( +71.0 % between 2006 and 2011 ), it is evident success of the jewelery, which at the moment are confirmed safe haven par excellence, with a performance estimate for 2011 +10, 0% (latest data considered in the study ).

The jewelry will also reveal a rather good ‘liquid’, at least for the high quality pieces : the rods considered to show that the branded jewelery or antiques are a safe investment. In addition to diamonds are always very popular natural stones ( untreated) and natural pearls (not cultivated ). The success of the segment can be attributed to two main reasons: 1 ) the jewelry is seen as a safe haven warranty, and 2) the value of the underlying ( gold, silver, diamond… ) has grown significantly in this period of recession.

Of course, it is not automatically sell a gem, but no more than a painted picture. The unsold rates recorded in the last five semesters, note analysts Sienese bank, settle in the region of the five-year average rates ( average rate per lot 21.4%, 17.6% by value ), and below the peaks achieved in 2008 : the market in the last two years seems to have found a sustainable balance for supply and demand.

Compared to the past, the demand for precious focuses more on top quality diamonds, colored stones with particular as to the Burmese rubies, Kashmir sapphires and for the Colombian (Muso ) for emeralds.

On the square in New York are appreciated especially great carat white diamonds, as well as large colored stones and colored diamonds. The jewels of the ’20s and ’50s are very welcome in both the old and the new continent. The UK market is more geared towards the cushion cut diamonds for their particular for their luster and charm. In Italy is more and more interest in the vintage jewelry, thanks to a consolidated goldsmith tradition that has produced manufacturing, design and proportions of high quality. The signatures, known internationally, they add value to the jewel with exquisite designs and a perfect bill.

There are, finally, advice for those who decide to embark on an investment in diamonds. It is necessary, experts explain, evaluate the so-called 4 C’s : color ( color), purity ( Clarity ), cut ( Cut) and carat ( Carat ). Not to be overlooked, moreover, proportions, fluorescence and polishing.

The market for fine jewelry is synthesized in a series of graphs. The performance of the MPS Jewels Market Value Index in the entire observation period (September 2008 – September 2011) is quite positive ( +63.5 %) and superior to other national stock indices considered, all in negative territory : SMI ( -4, 9%), CAC 40 ( -36.7 %) ** and FTSE MIB ( -54.5 %) with the exception of S & P 500 ( +2.7%).

The investment in the stock market jewel of luxury appears to be the only positive with respect to the major indices which are representative of 4 -contributing countries, with their society, the definition of MPS Jewels Market Value Index ( Damiani and Bvlgari for Italy, LVMH, Hermès and Dior for France to Switzerland Richemont and Tiffany & Co. for the United States ).

Be careful, though : the dangers out there. The segment of the jewel of luxury, the study continues, it is subjected to numerous threats : 1 ) increasingly strong interest in substitute goods to meet the psycho – physical (eg, travel, spas, gyms, etc. ), 2) increased demand for the productions of the fashion industry, especially by younger people, attracted by prices less prohibitive and innovative features, and 3) preference for fashion products than for products – value ; 4) strong seasonality of sales in some periods of the year ( for jewelry Christmas and Valentine’s Day ), 5 ) the risk of counterfeiting; 6) reputational risk ( for example, when the production is decentralized abroad ) ; 7) change in consumer tastes, often sudden and unreasoned.

The high rates of unemployment and the levels of tax rates in emerging markets are factors that can influence demand. Moreover, the products of the luxury market have good nature of secondary ones, which makes them susceptible to the macroeconomic environment and require a constant upgrading and re-launching the brand.

This is also why in recent months the performance of MPS Jewels Market Value Index was affected by the difficulties in the financial markets ( -20.5 %), but were also negative performance of all other indices ranging from -31.9 % of FTSE MIB to -10.7% for the S & P500.

On the overall performance of the MPS Jewels Market Value Index, however, have impacted primarily LVMH ( -19% approx. ) And Richemont (-23% approx. ) Which together account for about 70%. the entire index.

Little significant effect on the growth performance of the title Bulgari (+50% approx. ) Following the tender offer launched by LVMH, because of its limited weight on the aggregate (4.5% approx. ).