Times Have Change, But Should You Really Buy a New Watch?

     We sit back on our couches as typical middle class Americans just wondering if the whole financial world will come crashing down around us. Those weekly trips to the mall for some retail therapy have come to an end and most of us have felt the pressure of a tightened budget. As of the 2007 Great Recession, retail businesses that once thrived have been forced to expect lower income as the economy has still not completed its recovery. With out focusing completely on politics and fiscal cliffs that involve mind-boggling variables, it is important to know that our economy is currently working at a GDP (gross domestic product) of .01, which is dangerously close to recession territory. With all of this talk of US money trouble and recession, it is not uncommon to see the values of goods and resources shift as well.

     As the Wall Street Journal claims, “Gold prices may be down more than 20% since 2011, but those looking to wear the precious metal rather than invest in it won't find a similar decline at the jewelry counter.” This means that although gold is not worth as much as it used to be, the price to purchase a gold accessory at the jewelry store remains at the usual high. It is said that gold, and other precious metals, are types of investment. For example, the miners mine gold, refinery’s prepare the gold, it is then melted down and turned into the piece of jewelry that is sold to the jewelry store. In this sense, the gold has already been paid for and the buyer is then essentially reimbursing the seller. I’m sure I would not be alone in saying that the price of gold jewelry should directly correlate to the price of raw gold. It seems baffling that consumers are expected to buy gold jewelry to keep the market moving, but in reality we are being ripped off.

     The expected mark-ups for manufacturing cost, etc. are not even half of the problem that the jewelry industry will soon face if cost of gold jewelry does not begin to match the actual worth of the metal itself. It is safe to assume that an unnecessarily high price of gold jewelry will cause a decrease in buyers demand or willingness to purchase these peices. The world of jewelry is so vast that consumers have the ability to seek out more affordable jewelry options, causing devestation to the gold industry. The Wall Street Journal was also quick to report, “Of course, if gold prices continue to drop, jewelers will eventually have to follow suit.” The retail industry has already suffered a drop in productivity just due to a general decrease in the average household's extra spending money. It makes sense that jewelers need to keep their prices up to make up for the inflation of gold itself, but the market of people purchasing jewelry is less likely to follow suit with these high prices.