Gold prices reach parity with platinum

Gold prices rose 2.7% to $1,706.44 during yesterday morning’s trading putting it on parity with platinum for the first time since 2008.

The price rise has lead investment bank Goldman Sachs to raise its 12-month prediction for gold prices to $1860 in 2012.

“Gold has been the traditional commodity to buy into in times of economic trouble, so with the downgrading of the US credit rating, sovereign debt issues in Euroland, falling stock markets, low interest rates and exchange rate uncertainties, gold looks like a good temporary refuge for money and value,” said Michael Allchin, chief executive and assay master for the Birmingham Assay office.

He added: “We need to remember that platinum has more industrial uses than gold, and that there is physically much more gold available to buy than platinum, so the market dynamics are not quite the same.”

However these price hikes will have an impact on retailers and designers, especially those who work in fine jewellery.

Alexander Davis, who has his eponymous brand and a shop in London’s Duke Street thinks that, if this continues, it could mean designers have to rethink how they work with precious metals.

“The high price of materials, especially gold gives fine jewellery designers three choices: firstly the quality or quanitity of materials can be decreased and gold and diamonds can be substituted for silver & “semi-precious” stones. A second alternative is to persuade customers to buy into the advantages of precious materials. They are, for example, much more durable and tarnish-resistant that silver, and diamonds are the hardest gemstones.
The third thing to do is go higher-end out of the middle market. Add enough value through design to make the material content insignificant in the price and transition away from describing how many grams of gold or carats of diamonds are in a ring. Make it more about the design. Did Picasso sell according to how many litres of paint he used? I think not.”

Davis thinks if these prices continue, designers will start doing more of their own retail.

“I can imagine smaller designer jewellers doing more of their own retail where they can determine their own markups and offer customers better value for money.”

Economists have pointed to the US losing its AAA crediting rating status and the concerns over the economic situation in the Eurozone as the reasons behind the dramatic hike.

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