Jewelry sales remain golden.

Byline: Joe Mosley The Register-Guard

RETAIL NOTEBOOK

The market for bling-bling is in the tank, with the cost of dog-collar-size gold chains pushed into the ridiculous range by high commodities prices.

But Eugene area jewelers said Thursday that customers have continued to buy essential jewelry such as wedding bands, as well as custom pieces - whose designs are more valuable than their materials - despite gold prices that have recently reached 26-year highs.

"We had a couple people who came in, and they decided to wait and see if (prices) stayed up," said Charles Beaudet, owner of Beaudet Jewelry in Eugene's Southtowne Shoppes. "But they came back, and we did some things for them after that.

"We're actually having a fabulous year," Beaudet said. "We're running well ahead of last year."

At Goldworks, 169 E. Broadway, owner Gary Dawson said he noticed a pause in sales when prices topped $720 per ounce in early May - gold's highest level since the combination of runaway inflation and a hoarding mentality pushed the price past $840 per ounce in January 1980. The New York Spot Price for gold closed at $582.30 per ounce on Thursday.

"During the last couple of months as gold prices have shot up, there's been a real lull in business," Dawson said. "It's picked back up again, and we're extremely busy right now.

"I attribute (this spring's slowdown) to people just being a little nervous about spending those extra couple dollars."

But as a cross-section of local jewelers pointed out on Thursday, gold commodity prices are only part of the cost of gold jewelry.

Beaudet estimated that this year's spike of nearly 40 percent in the cost of gold may have caused the price of simple jewelry such as plain wedding bands to rise as much as 20 percent, while higher-end, custom-designed pieces saw price increases of perhaps 5 percent.

To begin with, 14-karat gold contains just 58.3 percent pure gold - which itself is 24-karat. So even a 100 percent increase in the commodity price would bump the cost of materials in a 14-karat piece of jewelry by just 58.3 percent.

Even more important is the amount of designing and craftsmanship that goes into a piece of jewelry. An item made from only a few hundred dollars worth of gold and gems, for example, may sell for several thousand dollars if it is an elaborate, custom design.

"The intrinsic value of gold is just a small part of what goes into figuring out the price of a piece of gold jewelry," Dawson said. "People's hesitancy to step up and buy a piece of gold jewelry (because of fluctuations in gold price) is really pretty silly."

The World Gold Council predicted this month that lower-income customers may limit their spending on jewelry if gold prices remain high, but higher-income shoppers may buy even more. U.S. jewelry sales hit $17.7 billion in 2005 - a 4.4 percent increase over 2004 - despite strong gold prices, according to the Gold Council.

Dave Belcher, whose wife, Sandi, owns the Gold Conspiracy shop at 17 W. Fifth Ave., said their shop has had steady sales this year, but he sees the potential for a pullback in business if metal prices rise again.

"When money gets tight, jewelry's going to be one of the first things to go," he said.

However, Belcher said his shop sells a high percentage of wedding bands and ring sets, which he said "are always going to sell."

Beaudet said a run-up in the price of platinum has had a far greater effect on customers than the increase in gold prices. Platinum went from just over $950 per ounce at the first of the year to a high of almost $1,350 per ounce in early May, and remains near $1,200 per ounce.

And platinum jewelry is made of nearly pure platinum.

"A lot of people have decided not to buy platinum," he said, and that has increased the market for white gold - an alloy usually made with gold and nickel - and even palladium.

As for gold itself, Beaudet expects to see a few different approaches from larger-scale jewelry manufacturers if the metal prices remain high.

"A lot of the pieces will get a little lighter," he said, as jewelry makers scale back their designs to use less material.

Manufacturers also may go to a stamping process, using hardened steel dies, rather than the standard casting to mass-produce items, Beaudet said. The process uses less gold than casting.

And high prices may have an effect on hip-hop fashion, as oversized, solid-gold chains become financially impractical.

"People who want that and (other jewelry) like that probably will still get it," Beaudet said. "But as gold (prices) go up, you'll find more hollow chain and things like that. Unfortunately, it doesn't wear very well. But it still gives the look."

Retail Notebook runs on Fridays. Joe Mosley can be reached at 338-2384 or jmosley@guardnet .com.