Understanding the Price of Platinum Jewelry
February 3, 2009 by Afshin Yaghtin · Leave a Comment
Why is Platinum Much More Expensive Than Gold?
Platinum is a hypoallergenic virtually pure precious metal. Jewelry stores who sell high quality platinum offer 950 Grade (95% pure platinum) jewelry. Anything less should not be considered either pure or hypoallergenic or of substantive quality.
This means that 95% of the content of a piece of platinum jewelry is pure platinum and 5% is another platinum group alloy such as palladium, ruthenium, or iridium. Most of these alloys are excellent choices to mix with platinum jewelry, but palladium and ruthenium should be considered top choices.
In addition, unlike white gold, platinum does not require rhodium plating for maintenance.
Platinum Purity Compared to Gold
Platinum is 30 times rarer than gold!
Compared to 14k gold (which is only 58% pure gold or 14 of 24 parts gold) or 18k gold (75% pure gold or 18 of 24 parts gold), platinum can cost significantly more due to its purity and value as a rare precious commodity.
Since platinum is a purer and denser metal than gold, it will weigh more than gold (about 60% heavier).
For example, the same wedding band weighing 10.0 grams in gold will weigh 16.0 grams in platinum.
Since the amount of a precious metal (or the gram weight) is a significant factor in determining prices, platinum tends to be more costly than gold, but well worth the difference in price if it meets your budget.
Manufacturing and Labor Costs
Platinum is also more expensive than gold due to the fact that it is slightly more difficult to work with and less platinum jewelry is produced than gold jewelry, thereby effecting the manufacturing and labor costs of platinum vs. gold.
Overall, you can expect to normally pay 3-4 times more for platinum than for gold. Although with platinum prices historically lower than average, you may be able to find platinum jewelry costing closer to 2.5 – 3 times more than gold currently. Still a premium, but a bargain today regardless.
Market Price of Platinum
Platinum is a voraciously volatile precious metal whose base price is directly connected to the metal’s market price. As of today, platinum hovers at $965.00 per ounce (a historically low price that will probably change by the time I finish writing this).
In figuring out the base price of a piece of platinum jewelry, a rudimentary formula is used to determine the value (exclusive of labor, manufacturing costs, as well as wholesale and retail markup).
Platinum Formula for 950 Grade Platinum Jewelry
Market price of platinum per ounce + 18 / 31.1 = Price of Platinum Per Gram
Taking today’s price of platinum of $965.00 per ounce, this yields:
965 + 18 / 31.1 = $31.60 per gram
(Why +18 and divide by 31.1? 18 is the amount of estimated loss of platinum when the metal is refined into jewelry, and 31.1 is the number of grams per ounce).
Keep in mind that rarely should platinum jewelry’s value or price be determined solely on gram weight alone–there are many factors including design and labor, limited production of a specific piece, whether the item is handmade or mass produced, and many other factors. But this formula will give you an idea of the base price of your platinum jewelry.
For example, a ring weighing 20.0 grams of platinum may cost $1,425.00. If you divide 1,425 / 20 — you will get $71.25 per gram. That is the amount you are paying per 1 gram of platinum in your ring (inclusive of labor, retail markup, etc.).
Apples of Gold has recently reduced the prices on all of its platinum wedding bands–in response to platinum’s current market valuation. Now is the time to buy platinum, before platinum prices skyrocket as they have in times past. (Platinum used to be valued at $2,300+ per ounce just 11 months ago!) It will probably return to such levels again.
The jewelry has not changed–but the market’s valuation of the metal has–for now.
Featured 950 Grade Platinum:
View more Designer Platinum Wedding Bands from Apples of Gold.
Invest in Platinum: 2009?
January 3, 2009 by Afshin Yaghtin · Leave a Comment
At face value, it seems that now is the right time to invest in platinum when you consider the highs and lows of the past 52 weeks. Platinum reached an all-time high of just over $2,300 per ounce in March of 2008 and today tries to hold firm around $940 an ounce–a 60% drop from its primordial heights of 1st quarter 2008.
But a New Year is upon us and things are already beginning to change. With the news of the bloody conflict in the Gaza strip, precious metals prices got a jump-start during the last few days of 2008. Platinum was actually struggling in the mid-800s before the news of increased instability and the breach of the cease-fire in the Middle East.
Still, even in the mid $900s, platinum is at an all time low. It’s hard to imagine such a historically expensive metal going much lower. But is it a good time to buy?
That depends on your time horizon and a very unexpected twist in the precious metals sector: ties to the U.S. automaking industry. In years past, automakers consumed approx. 900,000 ounces of platinum in a single year–for use in their automobile’s catalytic converters. This accounted for about half of all platinum demand worldwide, according to London-based precious metals refiner, John Mattey, Plc. With the spotlight heavily on the ailing “Big 3″ and the declining automobile industry, platinum took a serious hit in 2008.
Surprise, surprise–what to watch when considering an investment in platinum? Chevy, Ford, & Chrysler–”The Big 3″.
Our recommendation is to hold platinum for those few of you who actually own platinum coins or hold investments–now is certainly not the time to sell, with platinum prices at an all-time low.
Consider buying when you see the first signs of recovery in the auto-industry. The vast and great challenge of platinum investing: with platinum historically and unbearably volatile, timing the market in such a commodity can prove challenging–more so than gold and more familiar precious metals. By the time a recovery is underway, the rug may have already been pulled from under your feet, and platinum may have already shot up 20-30%. It is too late to invest.
Our recommendation: Hold or Buy for Long-term investment (but be prepared to wait!)
Related Posts:
Platinum Prices Related to Big 3 Automakers?
Gold Takes Lead over Platinum by Head
Platinum Rings: The King’s Heavy Metal
Platinum and Gold: When Metals Collide
Gold Takes Lead Over Platinum by Head
December 15, 2008 by Afshin Yaghtin · 1 Comment
With a front-running style, favored Precious Gold takes the lead by a head December 15th, 2008, 5:30 Eastern, with Price of Platinum coming in second at a price of $835 per ounce–$2 below gold. The prelude to this historical event was Friday, December 12th, when platinum and gold collided within a $1 spread of each other. Platinum still managed to take the lead last Friday–but not so today.
It’s nothing short of an exhilarating horse race.
What finally put platinum trailing in the sand was unexpected: what else but the failing American auto-making industry. Platinum sank again with news of the U.S. senate’s rejection of the auto “bail out”. This made the difference since the auto-industry utilizes platinum in catalytic converters–and not just a tad. Approx. half of annual platinum demand comes from the auto-sector, which used 905,000 ounces of platinum in 2006!
Gold is clearly the winner over platinum in 2008, since the gold price performed at a 21% decrease vs. platinum’s 65% decline since March, 2008.
For those of you in search of your platinum diamond engagement ring this season, this does not mean that platinum rings will cost the same as gold rings, but now is the perfect time to buy that platinum ring, because platinum prices will be considerably lower in 2009 and possibly to the end of this decade unless the economy rebounds quicker than we anticipated, the auto industry does not substitute another metal for platinum (such as gold) in its catalytic converters, and platinum miners cut production in years to come, thereby reducing supply and effecting demand for the precious metal.
Platinum Rings: the King’s Heavy Metal
December 13, 2008 by Afshin Yaghtin · Leave a Comment
Italian humanist Julius Caesar Scaliger described platinum in 1557 as an unknown noble metal found between Darién and Mexico, “which no fire nor any Spanish artifice has yet been able to liquefy”. King Louis XV of France declared platinum the only metal fit for a king in the 18th century. Today, platinum is still considered the most exclusive of all precious metals.
December 2008: platinum traded at nearly the same price as gold, as the rare metal plummeted to $823 per ounce, with gold closing at $822 per ounce on the same day.
While it is the perfect time to pick up that platinum diamond wedding ring for your bride-to-be, there are several reasons why it is unimaginable that platinum jewelry prices will ever breach gold’s vastly affordable price:
- Platinum is a pure metal, with platinum jewelry usually being crafted in 950 grade platinum (95% pure platinum, 5% precious alloys, such as iridium, ruthenium, or palladium). Gold is usually made of 14k or 18k gold (58.3% or 75% pure). When considering precious metals’ prices, metal prices are determined at 100% purity (pure platinum and 24k gold).
- Platinum jewelry is approx. 60% denser than 14k gold. Since weight plays a determinant role in pricing fine jewelry, platinum remains more expensive than gold.
- Since platinum is 30 times rarer than gold and is found in only a few parts of the world, mostly South Africa, with a smaller portion in Russia and Canada, transporting platinum is more costly than gold.
- Platinum mining is a difficult and time-consuming process. Ten tons of ore (rock containing gemstones and precious minerals) must be mined to produce 1 ounce of platinum.
With platinum prices down 65% since March, Apples of Gold Jewelry has lowered prices on all of its platinum wedding bands and added new designer platinum jewelry to its extensive line-up, such a new version of its best selling men’s solid gold cross in platinum. Apples of Gold expects to add more platinum jewelry to its collection in 2009 and 2010; especially since platinum is–for now–exhibiting signs that it will adhere to Apples of Gold’s value-based jewelry pricing methodology.
Related Posts:
Platinum and Gold: When Metals Collide
Platinum and Gold: When Metals Collide
December 12, 2008 by Afshin Yaghtin · Leave a Comment
Although platinum is 30 times rarer than gold, the two metals’ prices collided throughout the day and finally closed with gold at $822 per ounce and platinum at $823! Today’s $1 spread was nothing short of historical for precious metals; the last time platinum and gold met at such close quarters was 1996!
Platinum has plummeted 65% for the year; gold has dropped 21%–making platinum next year’s bargain.
Metals had already seen a decline due to decreased consumer demand as a result of the economic downturn. Adding to the ailment, platinum prices dropped further after the U.S. senate rejected a “bail out” for automakers today–deepening platinum’s fall from grace because of decreased demand for platinum in automobiles who use platinum for catalytic converters.
(Bloomberg) — According to London based metals refiner, John Matthey Plc, automakers make up about half of the world’s platinum and palladium demand. In 2006, North American automakers used 905,000 ounces of platinum.
According to Derek Engelbrecht of Impala Platinum Holdings, “the agony will continue in 2010″, if platinum miners in South Africa, who account for almost 80% of the world’s platinum supply, do not cut production. Without it platinum will, at best, stay at equilibrium or continue to decline.
2009-2010 will be the year of platinum jewelry as a direct result of decreased platinum jewelry prices. Perhaps now is the time to trade in your gold coins and buy that high-end platinum and 18k gold wedding band!
Platinum Prices Tied to the Big 3 Automakers?
December 4, 2008 by Afshin Yaghtin · Leave a Comment
Platinum fell below $800 an ounce on Thursday–a welcome sight for most in the fine jewelry industry, who consequently are able to lower platinum jewelry prices in hopes of motivating consumers to purchase such items as platinum wedding bands.
Platinum has exhibited nothing short of a bona fide crash in 2008, with platinum precious metal prices down 65% since its monumental peak of approx. $2,300 in March 2008. Platinum, today, hovers near $795 per ounce.
As a second generation jeweler and CEO of Apples of Gold Jewelry, I have been trying to fathom the mechanics of platinum’s elephantine decline. To the evident chagrin of precious metals investors, I have been outwardly gleeful to be able for the first time in six months to actually lower prices on jewelry, rather than raise them. Our goal, after all, at Apples of Gold, is to adhere to our value-based pricing philosophy which has helped boost jewelry sales in past years.
One recent timely factor of platinum’s fall from primordial heights: worries that trouble for American automakers will cut demand for platinum which is used in catalytic converters (motor vehicle pollution control devices). The economy, as we know, is intricately weaved in all of its multi-chromatic facets. Platinum prices fell, however, much earlier than the CEOs of the “Big 3″ flew their G4 private jets to Washington in the most surreal moment of 2008.
The biggest factor: Crude oil prices, a commodity that is economically and intricately tied to precious metals. Oil prices have declined 70% for the year since oil’s otherworldly 52 week high of $145 per barrel. Oil hit a 5 year low today, closing at $43.67 per barrel, a low not seen since 2003. It’s noteworthy that gas prices have not yet fallen 70% since–but they have made large strides in the right direction.
A marginally rising U.S. dollar and falling oil prices are major contributors to falling precious metals, including gold, platinum, and palladium. The U.S. dollar is up approx. 18% vs. the Euro this year–all of which is contributing to precious metals’ decline (historically precious metals are inversely tied to the U.S. dollar as a hedge against inflation and instability in world markets).
Another major factor for platinum’s fall-out and perhaps the one that makes the most sense? Q1-Q2 platinum prices were simply too inflated at $2,300 per ounce and could not sustain long term jewelry demand. Platinum was far too expensive and out of the reach of most consumers. Although still a “metal for the masses”, platinum has become more attainable.
Personally, I feel much more comfortable with platinum prices in the $700 range. The lower the cost of raw materials, the lower jewelers are able to market their finished, designer jewelry pieces. With the economy in an untenable ball of fear, lower prices are a refreshing and welcome sight in the jewelry industry.
Apples of Gold has recently lowered prices on all of its platinum jewelry. And we hope this trend will continue.
Platinum — The More Volatile Precious Metal
October 25, 2008 by Afshin Yaghtin · Leave a Comment
Gold and jewelry enthusiasts, even economists and investors, have been closely watching the unpredictable gold market in the past several years as it began to behave uncharacteristically erratic. But platinum, its more expensive counterpart, has been largely ignored.
Platinum has had some dramatic swings as of late – enough to make gold seem tame by comparison. Platinum, reaching a high of $2,300 an ounce in March 2008, today closed at $794.00 (October 24, 2008), losing more than 65% of its value in the space of only 7 months.
Have platinum jewelry prices followed? Not entirely. Jewelers are still hesitant about lowering platinum prices for several reasons:
- Unstable platinum prices means that platinum as a commodity could quickly increase again in price. Platinum markets sometimes see a 15-20% swing in a single day.
- Jewelers have a genuine need to make up for lost profits due to record prices in other precious metal categories, such as gold and the overall loss of sales, margins, and unprecedented challenges in the jewelry industry.
- A considerable increase in business expense and risk to jewelers over the past several years. Many manufacturers have simply closed their doors after decades of business.
Jewelers will have to see a sustained decrease in the price of platinum and other precious metals over the long term before safely lowering prices. In addition, for jewelers who stock inventory there is the added challenge of buying jewelry at the right moment—and the subsequent fear of losing the value of the jewelry if they buy high and prices fall shortly after.
Our stance at Apples of Gold Jewelry? We have tested the waters recently by lowering prices on all of our platinum wedding bands in order to meet changing market conditions. Or goal is to continue lowering prices if we see a steady decline in the platinum precious metals market.
The question now remains—where will the gold, platinum, and precious metals markets head tomorrow?
