Pricing on the International Market
we begin 2006, the buzz in the silver jewelry market is all
about silver prices. How high will they go? Are we headed
for a big correction?
more than just idle chat at the water cooler. If you are involved
anywhere along the supply chain, from manufacturer to retailer,
then the current price crisis will affect your business. As
of February 1, the closing price of silver was US$9.79 per
ounce. Compare this to the closing price on September 1, 2005
(five months ago) of $6.85 and you can see what a wild ride
it has been!
we have seen a spike in silver prices in the face of declining
demand in both the photography and jewelry sectors. What is
even more interesting is the fact that production of silver
has actually been increasing over the past several years despite
the decrease in demand. Economics 101 tells us that if you
have increasing supply and declining the demand, the price
should go down, not up.
the question that I have been hearing over and over lately:
What the hell is going on with silver? And of course the answer
to this question depends on who you ask. According to the
analysts at the website technical
indicators, the market is headed for a correction. This
prediction is based on the increased supply, decreasing demand,
and the fact that the rally in silver prices has been fueled
by something other than concerns about the US Dollar which
they say is often a primary price indicator. They say look
for prices to fall as low as $4.00 to $4.20.
have the $20+ price that Theodore
Butler, the analyst who predicted the famous silver crash
of the early 80's, says is not just probable, it's certain.
He lists the primary reasoning for this as the loosening of
control of the silver market by the manipulative hands that
have artificially suppressed the price for the past 60 years.
certain is that as the silver price increases, we will see
a decrease in demand from the jewelry sector. Jewelry is discretionary,
and as prices climb consumers will spend less because silver
(and gold) are more expensive. The rumor among silver jewelry
manufacturers in Jaipur, the silver capital of India, is that
prices will stay high until the spring, then head downward
in Tucson in early February, I spoke to a gentleman who predicted
(correctly) a year ago that silver prices at the show this
year would be near $10. Last year's price during the show
was below $7/oz., so his prediction of an almost 50% rise
seemed crazy to me at the time, but now I admit I give him
some serious analytical street cred.
this year? Nothing but up, with $15 or $20 prices per ounce
of silver being totally possible by next year's show. Ultimately,
it's out of our hands. The best I can do as a supplier
of silver jewelry is to continue to produce the highest
quality pieces at the lowest prices possible. Other than that,
lets keep our fingers crossed for lower prices before much
article written by Mike McGinnis and published originally
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