As of the close of the last business day (April 6, 2012), gold closed at $1,634.10 per ounce and platinum closed at $1,602 per ounce. A year ago, the same date, gold closed at $1,461.50 per ounce and platinum closed at $1,808 per ounce. The gap between the metals was narrow enough back then for us to take notice, but gold remained in its placed as 2nd place to platinum (as it has historically, since platinum is rarer than gold). The gap has now closed (as it has a few times in the past), as gold prices have increased beyond what many of us in the jewelry industry are comfortable with.

Does this mean that platinum jewelry will now be cheaper than gold jewelry? Hardly. See: Why is Platinum More Expensive Than Gold Jewelry to find out why platinum persists as the more expensive metal as far as “finished jewelry” is concerned.

How Does This Effect Jewelry Prices?

As a retail jeweler, Apples of Gold, unlike investors and gold-hounds, wants all precious metals prices to come down. Why? Wouldn’t that help our inventory to become more valuable? Hardly, since most online jewelers stock very little to no inventory. As precious metals prices increase, costs also increase from suppliers and manufacturers, and thus the retail price of jewelry also goes up. This has little advantage for online jewelry retailers, like Apples of Gold, since increased prices means a harder sale.

That is why Apples of Gold has remained true to its value-based jewelry pricing methodology. Our intended mission as a jewelry company, has been and and continues to be to offer quality jewelry at affordable prices. We started Apples of Gold with the intention of charging about 40% below standard retail, once we evaluated how much margin we need to make to be profitable as a company, while providing the best possible value to our customers.

Where is gold and platinum prices headed? No one knows (and we hope you don’t believe all those radio & tv ads about how high the price of gold is bound to go!) All we can guesstimate is that as the U.S. and world economy improve, precious commodities such as gold and platinum should decrease in price. Not only are precious metals investments a type of hedge funds to protect an investor’s portfolio from downswings in the stock market, but as the price of gold and other precious metals stop looking as attractive to investors as they do now, gold funds start to become less popular in the minds of not only professional investors and day traders, but also in the minds of the average mom and pop investors, and metals prices start to stabilize and come down again to a more reasonable rate.

With the gap closing between platinum and gold jewelry, Apples of Gold remains steadfast in our stated mission to provide value. We hope you will think so too. Compare us to both offline and online jewelers and you will see that the difference in our jewelry is not the quality, but the price.

Related Post: Understanding the Price of Platinum Jewelry

Related Categories: Platinum Wedding Bands, Design Platinum Wedding Bands, Gold Wedding Bands

There are several factors involved in pricing platinum jewelry vs. gold jewelry, from the obvious to the less obvious.

The Metals Price of Platinum vs. Gold

Platinum, as a precious metal, is normally valued much higher in the precious metals commodity market than gold. Whereas historically gold has been valued at considerably less than platinum, for one of the first times in history, platinum is priced lower than gold on the market. As of the date of this post, gold is priced at $1,634.10 per ounce and platinum is priced at $1,602.00 per ounce. This is not usual for the market. Many years ago, the disparity was much more pronounced. Gold was often in the $1,000 range per ounce and platinum was in the $2,000 range. What we are seeing the market today is out-of-the-ordaniry.

Whit this in mind, you would think that gold and platinum jewelry would cost the same. Try to purchase platinum wedding bands vs. white gold wedding bands at any jeweler–online or offline, and you will quickly find that a Platinum ring still cost 2-3 times more than a gold one.

Why the Price Disparity? 

As mentioned above, traditionally just the raw precious metals would have had a significant difference in price when it comes to purchasing platinum vs. gold–and that would have accounted for a portion of the price difference. In the past, platinum jewelry cost as an average of 4-5 times the price of the same jewelry piece in gold. Today, the cost difference for platinum is down to about 3.5 times the price of gold. An example: This hammered wedding band in 14k white gold ($575 as of the date of this post) compared with the same hammered wedding band in platinum ($1,925). That is just under 3.5x the cost difference.

But the question must be asked: if the price of gold and the price of platinum are about the same, then why is there still such a difference in cost?

There are several reasons: 

1. Platinum is approx. 60% heavier than 14k gold. So the same ring that weighs 10.0 grams in gold weight will weigh approx. 16.0 grams in platinum. Therefore, you are paying more money per weight for the same ring design. Since jewelry (on the wholesale side) is valued based on metal content per item, you are already looking at about a 60% difference in wholesale cost–even when the precious metals prices are equal (which is usually not the case with platinum, except on the day that I chose to write this post!)

2. Whereas platinum jewelry is 95% pure platinum, 14k gold jewelry is 58.3% pure gold. Another way to think of this is to think of it in terms of parts per karats. For example: We know that 24k gold is pure. But in the United States we are mostly purchasing 14k gold, which means that the jewelry you purchase is 14 parts gold and 10 parts other alloys (14/24), making it 14k. Likewise, 18K Gold is 18 parts gold and 6 parts other alloys. Platinum, on the other hand, is 95 parts pure platinum and 5 parts other alloys. So platinum jewelry is a much purer and denser metal-type than gold. As such, platinum jewelry costs more than gold,  not only because it is 60% heavier (a 10 gram ring vs. a 16 gram ring noted in #1 above), but those grams of precious metal are more pure, and therefore, more valuable and costly in platinum compared to gold. To explain this in one other way: 10 grams of 14k gold is going to still be more valuable than 10 grams of platinum, because in those 10 grams of metal, one is 58.8% pure and the other is 95% pure.

3. Labor & Demand. It generally costs a manufacturer more time and money to create platinum jewelry than gold jewelry. Platinum is more difficult to work with and is more labor intensive compared to gold. So even if the two above factors were not in play, platinum properties, such as the hardness level and pliability of the metal, are still in force, and therefore the labor costs of making platinum jewelry are higher than gold jewelry. Another reason for increased labor costs has to do with supply and demand. Since platinum is not in as high a demand compared to gold jewelry, not as much volume of platinum is produced and therefore some manufacturers must charge more to work on an item of jewelry takes longer to make and is not as often sold.

When you combine the three above factors, you see that even when the commodities price of both metals are at an equilibrium, platinum still retains its luxury status as the metal of choice for high-end jewelry.

So the next time you are in the market for that platinum or gold wedding band, which will it be?

Related Post: White Gold vs. Platinum

Such terms are sort of jewelers’ code words for their various pricing structures. So without getting too wordy, what simply is keystone pricing?

Keystone pricing = the wholesale cost of an item x 2

In other words, we are talking about a 100% markup on an item. If a jewelry retailer buys a gold ring for $100, then he or she will sell it for $200. This is the standard default method of many traditional jewelers.

Some higher-end or name-brand jewelers will go as far as charging was is called triple-keystone pricing. This is the wholesale cost of an item x 3 (hence triple markup).

Apples of Gold Pricing Model

When I first started Apples of Gold, I was very well acquainted with these terms and the exorbitant markup that goes into jewelry retail markup. I vowed to create an honest company whose prices were fair. With such in mind, our goal was to be an average of 30-40% below retail markup. As I researched more and more, many retail jewelers were actually selling above keystone pricing and their models were usually somewhere in between keystone and triple-keystone. Somewhere in the 200% markup range. This seemed so high and continues to appear that way to me today.

As a result, Apples of Gold prices are always below keystone pricing. Many of our wedding bands, for example, are priced well below retail. We still often get calls from customers who have found the same wedding band that we sell for $575-$625 advertised elsewhere for well over a $1,000.

One recent customer called about a ring that we have listed on our website for $875 and they wanted to know why another jeweler was selling the same thing for over $2,500! And if our ring was any different? At first our thought was whether they were selling it in platinum instead of gold? (platinum being much more expensive). But as it turns out, no, it was just 14k gold. The only difference we could tell was that it was made by a semi-known brand and they were charging for the name. Otherwise, it was the same item.

Same Style, Less Weight? 

As competition increased online, we also noticed that many online jewelers were selling similar rings to us but for less money and we wondered how this could be, as we knew that based on our direct manufacturer’s prices that we have obtained, it would be almost impossible for many online jewelers to beat our prices, especially since we had longer and deeper relationships with those same manufacturers who were producing the rings for both us and the other online jewelers.

As we looked closer and inspected the details, it quickly became apparent that many were taking the same rings and creating them in a lighter-weight version. As gold prices increased in the global market, many manufacturers and jewelry retailers responded by creating lower quality, lighter weight wedding rings. Therefore their prices had become slightly lower than ours. But the quality was not the same.

In response, we have adjusted our weights on select wedding rings that were unnecessarily too heavy and costing our consumers more than they needed to pay (for a while, we made them as heavy as could be, simply because gold was so cheap compared to its valuation today). But for the most part, our rings weights have stayed the same and thus the value and quality has not decreased. All of our rings are still substantial and made with an enduring quality that will last a lifetime. It’s just not worth skimping on the precious metals in order to turn a quick buck. Our goal, at Apples of Gold, is to stay around for the long-term and build a trustworthy brand that our customers will come to know, love, and appreciate!

Is Keystone pricing right?

As noted above, Apples of Gold does not use a keystone pricing model on most of its jewelry, but we maintain a discounted, value-based pricing model for the same quality jewelry that you would purchase in a retail jewelry store. However, if you are a jeweler or retailer reading this, you may wonder if keystone pricing is right for you.

Only you will know what is right for you business, but things to consider are overhead, slow moving items that will hold up your cash flow, advertising costs, availability or difficulty in dealing with a product, labor costs involved in a product, and whether that item is completely unique or is available through your competitors.

Having lower prices, as in the case of our company, has made it more difficult to offer many sales or steeply discounted prices. As we like to tell our customers, our prices are low year round and you don’t need to wait for sales and coupons. You are already getting a discount just by shopping with us, rather than our competitors. But if your business model is going to depend on heavy discounts and coupons, then you may want to consider keystone pricing or higher. This was not the model we went with at Apples of Gold.

I also grieves us to see jewelers who advertise their big 50% OFF sale or 70% off–you’ve seen the ads. We know that if any retailer can give you 40%, 50% or more off their regular prices that they have an exorbitant markup in place that allows them such luxuries. Imagine what their regular prices are normally and ask yourself if you should be shopping there!

At Apples of Gold, our normal sales (when we have them a few times a year) are usually in the 10% range, because we’re already priced well below what many of our competitors are and it simply would not be justified. We also offer free shipping on every order. So imagine if that is the case that we have little room in our margins for big sales, it stands to reason that our prices are already at a value-basis. Our customers understand that once they see our existing prices, quality, and compare us with our competitors.

For more information about the Apples of Gold pricing model, see our articles on: value.

The price of gold is affected by several factors. The condition of the United States economy as a whole is a defining factor for gold prices; 2012 figures clearly demonstrate the inverse relationship between the two. When the U.S. economy is strong, people tend to invest in dollars rather than precious metals because the value of the dollar is strong. This drives the demand, and thus the price, of gold down. However, when the economy is doing poorly, as has been the case for the past several years, prices rise.

Inflation causes a rise in the price of gold; 2012 prices are evidence of this connection. The buying power of $100 in 2000 is equivalent to the buying power of $131.63 in 2012. Thus, the rise of gold prices is also partially due to the fact that a dollar doesn’t stretch as far.

In the 1970s, the price of gold behaved similarly, seeing significant growth. Like the past decade, it was a time of inflation and the price of this precious metal rose accordingly. In late 1979 and early 1980, a time of political instability, gold prices spiked to $850 per ounce. When you consider that a dollar had nearly three times the buying power in 1980 as it does today, the similarities of this market with the market in more recent years become more evident.

Gold prices dropped as the 1980s got underway. Within a year or two the cost of gold fell to less than half of its peak value at the beginning of the decade, and maintained fairly steady for the next 20 years.

Gold prices have been rising steadily since the beginning of the new millennium. In the year 2000, the price of gold was below $300 per ounce. January gold prices 2012 were approximately $1,600 per ounce—over five times what they were 12 years before.

Thus far gold prices 2012 have been continuing on an upward slope: by the end of February 2012, the cost per ounce had climbed to over $1,750 per ounce. While economists disagree on exactly when and at what rate gold prices will peak, the vast majority agree that the cost of gold will not continue to rise if the economy improves.

While there has been much speculation about the future of gold prices, 2012 rates remain high to date. It’s been said that history repeats itself and the 2012 gold prices are an excellent example of history in the making.

While Apples of Gold maintains its commitment to ethical and fair pricing of all its fine jewelry, you may notice that the prices on some of your favorite ‘wish list’ items have increased to reflect the worldwide increase in the price and value of gold. Initially, this may seem like bad news. Who likes to see prices go up? But the positive news is that gold continues to hold value and worth in the global market. The wise investment you make today remains a wise investment tomorrow, and for years to come. When it comes to gold, the money you spend is always money well spent. Gold is not only beautiful to the wearer, it is a valuable commodity on the world market. If there was ever a time to own gold, the time is now.

Our Wreath Wedding Band in 14K Yellow Gold, shown here, is gold at it’s finest. This band measures 6.5mm wide, is crafted of solid 14k gold, and features the distinctive engraved leaf pattern around the entire band. Polished to high shine, this is a ring you’ll be delighted to wear for years to come. With each year of your marriage, it will not only hold its beauty, but its value as well.

To browse more gold wedding bands from Apples of Gold, click HERE.

Why is this going on now?  Because some of the world’s currencies are slipping.  The euro, for instance, fell to its lowest point against the U.S. dollar this week.  Greece’s economy is teetering on chaos, with the government’s debt surpassing its ability to pay it off.  The World Bank and the International Monetary Fund are stepping in with a loan package for the Mediterranean nation that will help the country return from the crisis, but the damage is done.  Greece will be borrowing money for many years to come at a much higher rate than previously paid.

When people get nervous about the economy, the state of the world markets and their own financial security, they turn to gold.  The price goes up as demand rises and supply tightens.  That’s nothing new.  But how much higher will this go?   There’s some good and bad news on that.

Bad news for those of you who are interested in selling and good news for those of you who are considering a Mother’s Day gift, an engagement and wedding set or just a personal reward for having survived the worst recession since the Great Depression of the 1920′s.   Gold probably will not go much higher at this time.

The reason for that is because the U.S. economy is recovering and in spite of everything that we learned during this recent economic downshift, we remain the world’s biggest consumers.  We buy all kinds of gadgets and electronics.  We like new cars.  Our houses are large.  Our lives are large.  And although slowly shrinking, our debt is generally large, too.  

So why the expected flatline?   The eye is on the United States Federal Reserve Bank.   As the economic recovery gets underway in the U.S., the Fed is expected to increase interest rates, which had been at all-time lows.  When the Fed raises the rates, the dollar will likely see a boost and if gold follows history, when the dollar strengthens, the price of gold usually will fall.   

Good news for the economy.  Good news for gold retailers.  Good news for gold buyers.   We hope you’re ready to “feel the love” for gold once again.

The economic news is mixed, it would seem.  We are officially in recovery here in the United States, but our concerns continue as we try to sort out what the word recovery will really mean for us.   The economy still seems far from what most of us have seen during our lifetimes and even further still from stable. 

 Oil prices are slipping this week, with the price of crude slipping to under $80 a barrel (considered outrageous a few years back, I know!) on worries about the world economy and whether it will recover.  The price of oil slipped and investors fled that worrisome risky business to… the dollar.  (Apparently, it’s regaining its lovely green color these days.)

The price of gas also is a key factor in several leading reports that suggest that food prices will be very high for the foreseeable future.   A harsh winter, high costs of seed and chemicals to grow the fruits and vegetables (or sadly, even higher costs of organic produce) and the cost of shipping will all factor in to concerns about this part of life.

Unemployment seems to be beginning the turn-around, but it’s turning around at painfully slow speeds.  It now appears to be improving, but it is still at near record highs.  It’s a tough time to be unemployed and record numbers are feeling this pinch.

As all of these factors combine, there is the growing concern among Americans that maybe the glory ride is over.  An increasing number of experts are predicting that perhaps China is about to emerge as the leading global financial power.  I have wondered that myself, and asked a friend visiting from the UK that very question recently. 

She looked at me with a bit of annoyance.  She said that most people from around the world think Americans have nothing to complain about, because as bad as we might think things are, they are so much worse “at home in the UK.”  She told me that while we are hearing the faint flickerings of recovery, they are still in free-fall on the other side of the pond.

Certainly this seems true in Greece, where the country is dealing with massive debt and shortfall, and trying to hold its creditors at bay.  It’s also true in Iceland, where the nation’s largest bank failed and then voters were asked by referendum whether they would pay to cover its losses to investors in Europe.  (Not surprisingly, the answer was an overwhelming, 97% “no.”)

But the price of gold, where is it in all this?   It is hovering just above $1100.  It’s been steady for the last month but increased a whopping $660 in the last five years.   That’s more than half of its value in that time period. 

Whether it will see increases and further gains depends on a great number of factors, most of which are unforeseeable.  But if we know anything from the past, it’s that gold will hold its value through market ups and downs.  And it’s something tangible: a hedge against the worries of inflation and time.

It closed the week at $1092.60 per ounce, which is quite a fall from the ballpark-benchmark of $1200 we saw only a few months ago.   But if you are watching the markets and pondering the financial dealings, it would seem that there’s still room to grow.   The United States has pulled out of the recession technically, but unemployment is still at 20+year highs and most people have a general state of mind about the economy that can only be described as grim. 

The price of gold, as we all know, is tied greatly to the success of the world’s financial markets.  For decades, it has been tied to the stability of the American dollar.  The dollar hasn’t been steady for some time now because of the debt loads taken on by American households and the financial institutions that carry them.  That debt, in turn, was purchased heavily by foreign banks, many based in China and elsewhere around Asia.

What?  The debts of American consumers now are held by the Chinese?  Yes, the economies in both burgeoning China and explosively successful India are recovering nicely.  They are enjoying a boom.  And they hold the notes on U.S. banks debt. 

So there’s one source of the confusion on gold prices.   Since confidence in the U.S. dollar hasn’t quite returned, the price of gold should still be steady and high.  In real dollars, adjusted for inflation over the course of the past 30 years, gold is still relatively cheap.  But if the world economy is slowly turning, warming its heart to the bloom of the Chinese and Indian economies, the price of gold may be confusing to watch for some time to come until we all find our footing in what may be a somewhat changing world order.

We’ve all read the reports and seen the heart-rending pictures out of Haiti.  The world’s poorest nation has been hit by a 7.0 magnitude earthquake, killing what the Red Cross believes will be between 45,000 and 55,000 people, injuring tens of thousands more and leaving hundreds of thousands without shelter or food.  It’s a grim situation and we all want to do whatever we can to help that painful situation.  (If you can, take a moment and donate $10 to the Red Cross by texting “Haiti” to 90999.) 

In addition to that new crisis, our global financial worries continue.  The hopeful start to the new decade is still being marred by worries, such as the employment numbers released on Thursday, which showed new unemployment numbers taking an unexpected jump.    This was actually quite puzzling to economists, and we have to hope it is, indeed, a blip.

Also down: retails sales.   They weren’t as strong as hoped or expected in November and December.  Experts say it means our recovery is still very tentative.

In spite of these sorry reports, the price of gold continues to slip downward, too.  The price today is trending around $1132, down almost $10 on the day.  That’s actually a hopeful sign.  The reason is because, as we’ve discussed many times, gold is a market hedge in many investors’ minds.  They use it as a place to hide money when the dollar lurches or the economy rocks.

So if the price of gold is slipping, that means demand is down and could be seen as an indicator that investors aren’t quite as bearish as one might think.  They believe that the economy is coming back, however slowly.  They aren’t putting their money into gold, but out there, buying, selling and trading happily in the belief that the recession is over and better days ahead.

I am going to choose to hope with them.  For myself, my investments and my world.  And for Haiti.  I hope you can see your way to do the same.

Americans have a lot to think about financially.  Our economy drives much of the rest of the world.  Our approach to consuming goods and services is what has provided jobs, homes and education in much of the world.  And yet our spending (and debt) habits are a sizable portion of what landed us this past year in the greatest financial crisis since the Great Depression.  Our economy tanked.

To recover, we are told we will have to spend.  But to prevent the same spiraling problem in a downward spin, we have to work our way out of debt and begin to save.  How is it possible to do both?   Like most people, I’ve been pondering this a lot for the past year.

For myself, I’ve come up with one singular answer: Gold.

The price has slowly backed away from the $1200 mark we saw in the last couple of months.  Perhaps investors are feeling more confident in the American dollar and stashing less of it away in gold.  But what it truly means is that it is now a better buy than it was only weeks ago.  It’s a buying opportunity.  Whether the current price ($1093.60 on Tuesday) is your price point, is up to you.  But it is significantly down from where it was and from where it is predicted to go.

So let’s think about this.  How can you spend money but at the same time save for the future?  If you invest in gold, you have something that will hold its value.   The intrinsic value of the metal is always there and available.

You can buy someone a gift of fine gold jewelry that remains with them always and may even be handed down to someone else with a sense of increased value.  Or you can buy them a gift of investment gold.   Either one will hold its value, although admittedly, the investment gold will be an easier mark to retrieve the value should it be necessary or desirable.

If we all save our money, our “stimulus” efforts will fall far short.  If we spend our money, our future slides out our back pocket and into the street.   If we spend our money and get value for our investment portfolio, whether we’re talking about actual investments or investments in those we love, then we may have the best of all possibilities.

And isn’t that our best resolve for 2010?