Published on February 7th,2012 at 3:29 AM
By >Ike

[INTERVIEW] China’s precious metal demand to affect future hardware prices?

Bloomberg wrote a piece recently about China’s latest gold-buy spree. Mainland China purchased 102 779 kilogram of pure gold from Hong Kong in November 2011. A month before that, they bought “only” 86 299 kilograms. Statistics from the CPM Group show a peak in gold consumption between 1995 and 2000, a decline in annual gold demand starting from 2001 keeping a steady figure up to 2007.

2008, the year many financial professionals will call the start of Europe’s financial recession, clearly shows deep plunges in demand both from EU and USA. Only last month the ECB reporting gold prices taking a short dip of 10%, this being of particular interest for China’s heavyweight gold imports.

There is one thing that pops out. Gold jewelry production kept steady, demand in developed countries took a deep plunge, but what’s interesting is the number of gold going to the electronics industry keeps going strong. It’s a common fact that gold is necessary to assure quality connections on motherboards, just like the pins used to communicate with the CPU. Unfortunately the recycling process done by Tom’s hardware lately showed the juice really isn’t worth the squeeze. Well, not for 1 motherboard that is.

Nevertheless, gold is still showing remarkable popularity for people seeking a more reliable investment than equities or some currencies. We had an interview with TRAXNYC, one of New York’s most notable stores and leaders in custom designed jewelry, now focusing mainly on online sales. We asked them how the raw-material prices affect their business, and if these latest reports would affect other industries equally.

1-212-391-3832                                   62W. 47th st. Suite 14A-1             New York NY 10036

 

This is a discussion thread designed for you as a reader to give your opinion and ideas, please feel free to share them with us. Note: inappropriate & rude comments will be deleted.

 

Could you tell us when your store first started off, and compare that period in sales to current date. Would you define the growth to be steady, or rather a strong decline in certain types of metal/mineral?

When the company was first established in 2004, sales revenue was roughly $50,000k for the first year. In the previous year that had just passed we hit 6 million in sales. We definitely had steady growth but it had been curbed due to the economic climate. Certainly gold prices affected our products; we have a decline in gold and increase in silver merchandise.

Back in 2008 when Europe started feeling the first clear signs of economical decline (recession). How would you describe the last 4years being active in a sector that saw huge rise in value, yet with (perhaps) less fortunate clients to pursue purchase?

Jewelry industry sales have collapsed by 50% in the last three years and are now, just starting to recover. We have been very successful.  However, it’s just not the same industry as it used to be.  As far as rises in value, in our eyes, they are just rises in cost and have no positive effect on our business.

Being located right in the zone, how would you describe the impact to focusing on online sales? How many percent of your buyers purchases online, how many prefer to visit by appointment, how many prefer to order online and pick it up in store?

In the showroom sales are about 70% online and about 30% walk in. That ratio is increasing in favor of online every year. And of course some local customers prefer to order online and pick up their merchandise in store.

Bloomberg mentioned last week the gold price being on a 4 week high due to China’s high demand. Europe’s debt woes. Could you give us your vision on the impact for the American market that China is buying high quantities of precious metal.

Here in the states we don’t attribute the gold price to financial problems in Europe. As far as the gold jewelry market is concerned, it has seriously declined in the states. Gold has become an unreasonable product for people who used to purchase it. For example, for a high school graduation gift a parent might spend $300 and they would get a 10k chain that weighs about 20 grams. Now, that same chain costs about $900 making it an unreasonable purchase. Customers who were once purchasing 14k have started to purchase 10k and customers who were once purchasing 10k have started purchasing silver. Merchandise has overall become lighter and less quality.

Although Asia purchases high quantities of precious metal, both from Europe and USA. What’s your personal opinion on the fact that much of this precious metal is actually being resold at much higher value in form of hardware and cable assemblies, where both US and EU are their biggest buyers.

Basically, that is fine. Whatever they want to sell it for and whatever we want to buy it for is entirely up to business and it will work itself out.

You announce very low prices and very competitive deals on custom jewellery. How do you manage to beat your competitors from cloning your concept?

The question pretty much answers itself. Our prices are low and our custom jewelry process is extremely refined. Our competitors don’t have the expertise to create such a streamlined and technically advanced jewelry process.

We wish to thank TRAXNYC for their interesting insight on this matter. Now feel free to share your insights on gold, jewelry, gold used on logic boards…

-  Will the price inflate further?
- Will it decrease, and due to what reason?
- Are you still buying chains/pendants, or does the price tag repulse you?

Personal opinions are always welcome.

 

Via TRAXNYC
Category Interview
              
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Comments
 

  • SARVDEEP

    GOLD PRICES WILL ALWAYS REMAIN HIGH DUE TO INCREASED INDUSTRIAL USAGE,
    INDIAN & CHINESE INVESTMENT AS JEWELRY, SAVE HAVEN BY LARGE HOARDERS, 

 

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