10% Drop in 2014 Global Gold Jewelry Demand

This Indian woman who reportedly wore more than $600,000 worth of jewelry to her wedding may have helped India achieve an 8 percent gain in gold jewelry demand in 2014

Global gold jewelry demand fell 10 percent year-over-year in 2014 to nearly 2,153 tons as strong growth in India, the US and UK couldn’t offset declines in many other large gold markets, the World Gold Council said Thursday.

The WGC, in its quarterly Gold Demand Trends report for the fourth quarter and year-end 2014, says the decline was largely due to extremely strong comparisons to 2013. 

“2014 was always going to be a difficult year for jewelry demand, contending with comparisons to phenomenal strength in 2013,” WGC said in the report. “After a steep drop in Q2, demand for gold jewelry gradually recovered, culminating in the strongest Q4 since 2007.”

The report also notes that the year-end figure is “comfortably above” the 2,053 ton average for the the prior five-years. 

Despite the drop for 2014, year-over-year fourth quarter demand actually grew by 1 percent to 575 tons, again led by a surge in year-end demand in India, the US and the UK, according to the report. 

The report, which also tracks gold demand for technology, investment and central bank net purchases, says jewelry remains the biggest source of demand for gold, accounting for nearly 55 percent of total demand in 2014. 

Declines were reported in much of the world including nearly all of Asia, the Middle East, Russia and in gold manufacturing centers Turkey and Italy. 

The biggest surge in demand for 2014, by far, was in India—one of the two largest gold markets in the world. India had its strongest year for jewelry demand since the WGC began tracking demand in 1995, up 8 percent year-over-year to 662 tons. Wedding- and festival-related purchases drove fourth quarter demand up 19 percent and first-half 2014 up 37 percent, year-over-year. “The second half of the year was the strongest H2 in our data series (from 2000),” the WGC said in its report.

However, it should be noted that the results in India are being compared with extremely weak 2013 results, due to restrictions of gold imports and the decline in value of the local currency in 2013. 

The other largest gold jewelry market in the world, China, saw its 2014 demand fall by 33 percent year over year to 623.5 tons. Despite this, it was still the second best year for jewelry demand in the country since WGC records began. 

In the US, jewelry demand showed year-over-year growth for the seventh consecutive quarter. Its fourth quarter result of 54 tons was a 13 percent year-over-year increase and the strongest fourth quarter since 2009. The 2014 full year demand of 132.4 tons was a 9 percent year-over-year increase and the highest year-end total in five years. 

“That being said, it clearly has to be acknowledged that the market remains far below pre-crisis levels of jewelry demand, which between 2000 and 2006 averaged 360 tons per year,” WGC added.

In the UK, demand increased by 18 percent in 2014 to 27.6 tons. In the fourth quarter sales increased by 14 percent to 15.9 tons, led by the introduction of “Black Friday” sales events for the Christmas holiday season, the WGC said. 

“Lower carat gold jewelry took market share from silver and some interest in heavyweight plain gold chains was reported,” WGC said. 

In most other major gold jewelry markets, demand was down. 

The Asian region was generally weak, with smaller markets “affected by its own individual set of adverse economic circumstances that proved detrimental to jewelry demand,” WGC said in its report. Japanese demand for jewelry slid 8 percent in 2014 to an all-time low of 16.3 tons as the already ailing consumer sentiment “was dealt a blow by the sharp fall in the value of the yen after the central bank unexpectedly expanded its monetary stimulus program in the last quarter.” 

There was a 12 percent decline in demand in Indonesia, the largest of the non-Chinese Asian markets, due high inflation and political upheaval. Newly elected President Widodo announced the removal of gas subsidies in October, “which further choked disposal income.”

Vietnam bucked the trend with a 4 percent gain in 2014.

Other markets are as follows:

* Turkey, demand was down 7 percent to 68.2 tons. 

* Middle East, markets in this region lost a combined total of 8 percent in 2014 to 174.1 tons.

* Russia, gold jewelry demand in Russia dropped sharply in the fourth quarter, leading to a net decline of 4 percent to 70.6 tons for 2014. “The stratospheric rise in the gold price during the fourth quarter (as sanctions and sliding oil prices hit the domestic currency) proved too steep for many consumers.”

WGC says that Jewelry is by far the largest component of above-ground stocks of gold—accounting for almost half of the 177,200 tons of gold estimated to be held by private owners and central banks. 

The total global gold market in 2014 declined 4 percent to 3,923.7 tons, according to the report. The total global supply of gold was flat at 4,278.2 tons. 

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British Watch Brand Bremont To Unveil First US Boutique

Bremont, the British luxury brand known for its aviation themed watches, is set to fly “across the pond” to open its first boutique in the US.  

The company’s new store on 501 Madison Ave. (near 53rd street) will house 900 square-feet of retail space along with another 860 square-feet of space dedicated to a Bremont service center with trained watchmakers. The company said the new space will open in the early spring.

The store is laid out to tell Bremont’s story alongside that of its key partners. A framed Jaguar exhibit will sit alongside a hand-finished leather wall with a Bremont movement embossed on it. Its partnership with Boeing will be highlighted by videos on a transparent LCD screen along with a signature Martin-Baker ejector seat.

Bremont was founded in 2002 and its watches were first sold in the US in 2008. The company uses Swiss movements, assembled in the UK and placed inside UK-made cases. The company is in the process of building industrial capabilities for machining parts of movements at its headquarters on Henley-on-Thames, England.

“We saw New York, and more importantly Madison Avenue, as a really essential string to our North American bow and a fantastic brand showcase as we continue to expand our retail channel,” said Nick English, co-founder of Bremont. “The US is already a big market for Bremont with a large proportion of our military business hailing from there. Moving forward the US is a very significant and crucial part of the brand’s strategy.”

The interior space is being completely redesigned with the exception of the existing marble floor, which is being restored. The company boasts a “simple and elegant” design using black woods, chrome and leather.

The main displays in the front area of the store are framed in chrome and are incorporated into wood paneling. The front of the store will have displays dedicated to a Bremont core range, while the rear is a relaxed area dedicated to Bremont partnerships. Elements of the watches have been incorporated into the design with the fixture handles being modified straps and cabinet handles replicating Bremont’s barrel.

There will be a fireplace and seating area with a bespoke coffee table incorporating hundreds of Bremont watch parts, showcasing the complexity and number of components needed to produce a mechanical watch.

The new boutique also will enable the company to support its Bremont Adventurers Club in the US, where ambassadors and friends of the brand share their experiences with Bremont owners.

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Global Gold Jewelry demand Fell 30% While Sales in the US and UK Improve

Yellow and white gold bracelets by Italian jewelry brand, Antonini. There was increase in Italian gold jewelry exports for the second quarter of 2014. 

Plummeting gold jewelry sales in India and China led to a 30 percent year-over-year drop in gold jewelry demand for the second quarter of 2014, the World Gold Council said Thursday. The loss was slightly offset by increases in consumer demand in the US and UK. 

Gold jewelry demand fell to 509.6 tons in the second quarter of 2014 compared with 726.7 tons in the same period of 2012, the WGC said in its quarterly report, “Gold Demand Trends.” Officials for the gold industry market development organization said the decline was expected due to the strength of 2013 demand and a natural annual weak period for such demand. In addition, the organization (which also tracks gold demand in investment, among central banks and for technology uses) notes that jewelry demand historically has accounted for more than half of global gold demand and the second quarter of 2014 was no different at 53 percent. 

“In what is traditionally a quiet quarter for gold jewelry demand, Q2 2014, was unsurprisingly lower,” said Marcus Grubb, WGC managing director of Investment Strategy, said in a video addressing the report. “However, jewelry has been extending its broad upward trend from the base established in the depths of the financial crisis in early 2009.”

Nearly all Asian and Middle-Eastern countries experienced double digit declines in demand, while western markets either remained flat or fared better, according to the report. The exception is Italy, where consumer demand was down 8 percent. However, the country, known as a gold jewelry manufacturing hub, saw gold jewelry exports improve due to increased demand in the US and other key markets.

This decline in gold jewelry demand helped to influence a 16 percent drop in overall gold demand (investment, central banks and technology) to 963.8 tons, which the WGC described as “not surprising … given the stark contrast in conditions in the global gold market between the two time periods.” 

Grubb added, “Global gold market continues to recalibrate in 2014 following an exceptional 2013 for gold buying.” 

By country, China was the market most affected by the comparison with the second quarter of 2013, WGC said. Gold jewelry demand fell 45 percent to 143.4 tons. Hong Kong also experienced a similar decline (52 percent to 9.1 tons) due to a drop in mainland China consumers.

“The second quarter began as the first had ended, with consumers adopting a more cautious, considered and ‘occasion driven’ approach to gold jewelry buying,” according to the report. 

Grubb added, “Price sensitive consumers … held back from purchasing more due to uncertainty around the future direction of the gold price and the fact that purchases have been made in 2013 instead.” 

In India, jewelry demand fell by 18 percent to 154.5 tons. The WGC said holiday and wedding purchases remained steady but the drop was primarily because of the recent general election that culminated in the victory of Narendra Damodardas Modi who took office as India’s 15th prime minister in May. High value purchases were restricted by the previous government in the run up to the election, the WGC explained. Now consumers are waiting to see whether Modi will remove those restrictions.

“Consumers held back from buying on the expectation that restrictions on gold would be relaxed by the new government,” Grubb said. “No substantial changes have been made by the Indian government to date.”

In the Middle East gold demand saw a 25 percent decline to 47 tons. The WGC says the escalation of violence in Iraq had a “deleterious impact” on demand across the region. In addition, demand slowed ahead of Ramadan. “Nevertheless, the region as a whole remains relatively healthy, particularly as non-resident Indians provide a steady source of demand for the 22k segment.” 

While the east and Middle East markets are in decline, western markets are continuing to rebound from the 2008-09 recession, with the most notable increases in the US and UK. 

Gold jewelry demand in the US for the second quarter increased 15 percent to 26.1 tons as the country is taking in more imports from India, China and Italy. It was the country’s fifth consecutive quarter of year-over-year growth. In the UK, demand increased 21 percent to 3.6 tons. 

Gold jewelry demand in other key markets is as follows:

* In Turkey, demand fell 20 percent year-over-year due to a clampdown on credit card purchases and ongoing political turmoil, WGC said. The lower end market took the brunt of the decline while larger, more established brands were “relatively resilient.” 

* Thailand experienced a 60 percent decline in demand due to recent political instability and high comparisons to the second quarter of 2013, the WGC said.

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US Sales Remain Strong At Signet Jewelers While UK Sales Disappoint

Signet Jewelers, the largest specialty retail jeweler in the US and the UK, said Thursday that second-quarter year-over-year sales increased 3.1 percent to $880.2 million. Same store sales for the period increased 3.6 percent year-over-year while eCommerce sales grew 7 percent to $31.2 million.

This was offset by a 1.2 percent decline in net income to $67.4 million. During a conference call Thursday, Mike Barnes, Signet CEO, said the decline was primarily due to the costs associated with the acquisition of the Ultra outlet jewelry store chain and the conversion of many of them to Zale Outlet stores, and lower gross margins compared to other Signet holdings. Without Ultra, earnings per share were up 5.9 percent.

In the company’s US division, which now accounts for nearly 85 percent of total sales for the company, sales increased 5.6 percent to $741.1 million. Same store sales increased 4.9 percent for the period. Sales increases were driven by strength in bridal, colored diamonds and watches. Signet owns 1,449 jewelry retail stores that operate under the brand-names Kay, Jared, Kay Outlet stores, Ultra and stores and some regional brands.

Kay and Jared experienced increases in both transaction counts and average transaction value. Meanwhile, eCommerce sales increased 36 percent to $25.3 million.

In the UK division, total sales declined 8.5 percent to $139.1 million in the second quarter. Same store sales decreased 2.4 percent. The company said the sales decline was primarily due to a same store sales decrease of $3.4 million, the impact of closed stores of $5.6 million and currency fluctuation of $3.9 million. Signet owns 500 retail stores that operate under the H.Samuel and Ernest Jones names.

The company said that at Ernest Jones, the number of transactions increased driven primarily by strength in branded bridal and watches, excluding Rolex, and the average transaction value was lower, primarily due to the impact from Rolex being offered in fewer stores. In H.Samuel, the number of transactions declined, primarily due to store closures and lower traffic. This resulted in lower sales across many merchandise categories, partly offset by strength in branded bridal products. Sales in both businesses were impacted by lower bead transactions. UK eCommerce sales in the UK increased 5.4 percent to $5.9 million, which include 45 percent coming to the websites through mobile devices, Barnes said.

Barnes noted during the conference call that Signet is in the process of updating its websites and mobile presence to take advantage of the increased traffic.

Other second quarter highlights:

* Gross margin declined, falling to $309.7 million or 35.2 percent of sales, compared to $311.2 million or 36.4 percent of sales in the second quarter fiscal 2013. The includes the results for Ultra increased gross margin dollars by $5.7 million; however, it reduced the consolidated gross margin rate by 50 basis points and the US gross margin rate by 70 basis points. The Ultra gross margin is lower than the core US business due to lower Ultra store productivity and the impact of the Ultra integration.

* Gross margin dollars in the US increased by $1.3 million compared to second quarter of fiscal 2013, reflecting higher sales offset by a gross margin decrease of 180 basis points. The company said the lower gross margin was primarily attributed to a gross merchandise margin decrease by 50 basis points, attributed to Ultra; and store occupancy and operating costs deleveraged by 70 basis points, of which 40 basis points was due to Ultra. The remaining 30 basis point change was due to the increase of new store openings.

* The US net bad debt ratio increased to 4.9 percent of sales compared to 4.5 percent of sales in prior year second quarter. The increase in the ratio was primarily due to the growth in the outstanding receivable balance. In addition, the US division experienced a “slight decline in collection efficiency” and a change in the credit mix. In the UK, gross margin dollars decreased $2.8 million, primarily reflecting the impact of decreased sales and currency fluctuation offset by a gross margin rate increase of 40 basis points.
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* Selling, general and administrative expenses increased 4.2 percent to $250.5 million. As a percentage of sales, SGA increased by 40 basis points to 28.5 percent. This includes the results for Ultra, which increased SGA by $13.5 million and increased the consolidated SGA rate by 70 basis points. The company said Ultra’s SGA is expected to decline as the final steps of the integration are completed.

* Operating income fell 4.9 percent to $105.5 million. Operating margin declined 100 basis points to 12 percent.

* The US division’s operating income including Ultra declined 4.9 percent to $111.5.

* Operating margin for the US division including Ultra was 15 percent, compared with 16.7 percent in fiscal 2013, down 170 basis points. Excluding Ultra, the US division’s operating income was $119.3 or 16.8 percent of sales, up 10 basis points.

In its guidance, the company said it expects same store sales to rise in the low-single digit for the third quarter.

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Royal China for the Royal Baby Available for Purchase

The official trust of the royal family has released a set of china commemorating the new son of Prince William and Catherine, Duchess of Cambridge.

Royal Collection Trust presented the official range of china Wednesday and has made it available for preorder. The items are decorated with scrolls incorporating the name and birth date of their son (who has reportedly been given the title of Prince of Cambridge), with the lion and unicorn from the Royal Arms supporting the coronet of the duke and duchess of Cambridge, surrounded by oak leaves from the Middleton coat of arms.

The four-piece set was be made in Stoke-on-Trent, a pottery center in Staffordshire, England, by the same potteries that produced the official china celebrating the marriage of The Duke and Duchess of Cambridge in 2011, and marking The Queen’s Diamond Jubilee in 2012 and the 60th anniversary of the Coronation this year. Using methods and techniques that have remained unchanged for 250 years, every item is hand-made from fine bone china and gilded in 22K gold before being gift-wrapped in tissue paper and boxes designed for the occasion.

The items include a pillbox for 30 British pounds ($46), a small loving cup for 39 pounds ($60), a dessert plate for 45 pounds ($70) and a limited-edition loving cup for 195 pounds ($300), of which 2,013 will be produced. Three of the items are pictured above.

All profits from the sale of the china are dedicated to The Royal Collection Trust, a registered charity. The Royal Collection is one of the largest and most important art collections in the world, and one of the last great European royal collections to remain intact. It is held in trust by The Queen as Sovereign for her successors and the nation. It is not owned by her as a private individual. The aim of The Trust are the care and conservation of the Royal Collection, which receives no public funding, and the promotion of access and enjoyment through exhibitions, publications, loans and educational programs.

“The range is contemporary in style, while maintaining the traditional formality of royal commemorative china,” said Nuala McGourty, Royal Collection Trust’s retail director. “The design also makes reference to the heritage of both parents.

The china can be preordered online by following this link.  

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Royal Gifts For Royal Babies Past

The Portland Font, a private christening basin commissioned by William Bentinck, third duke of Portland , for the birth of his first grandson in 1796. Photo credit: British Museum

Tradition is very much a part of Britain’s Royal Family but when it comes to newborns the practice of gift giving has a lot of leeway, said Geoffrey Munn, one of Britain’s foremost authorities on antique jewelry.

“In the past there’s been a whole range of things given to high ranking royal babies,” Munn said Monday from Wartski, where he serves as managing director. The antique dealership has a “royal warrant of appointment,” making it one of a handful of jewelers that supply goods and services to the royal family.

From the beginning of the royal monarchy to the early part of the 20th Century, baby deaths were a common occurrence, even among royal families. Because of this, a popular gift to a royal newborn in past centuries was a gold rattle with a handle made of red coral.

“The coral was used as a talisman to keep away evil spirits,” Munn said. “Some people adhere to it now with the use of a red silk, but it’s a very, very, ancient thing.”

Gifts to newborns are often conservative, Munn said. A small string of pearls for a girl and cufflinks for a boy were common gifts. The more elaborate gifts were reserved for the christening, the most important moment in a royal infant’s life. Again, in the past baptisms were done as quickly as possible because of the high chance of infant deaths. Of course, they are still done while the baby is an infant.

“The baptismal is a crucial part of an existence of a child and a royal child even more so,” Munn said. “Until the 17th Century its offspring was thought to be there by divine right, and thought to be chosen by God. Then the baptism was even more crucial.”

For the royal baby who has everything probably the most elaborate christening gift is the personal baptismal font (basin). They were often kept in the possession of families to be used for generations. The only known example of a private basin is on view at the British Museum: The Portland Font (top photo). It was commissioned by William Bentinck, third duke of Portland (1738-1809) for the birth of his first grandson in 1796.

The detachable bowl of the gold and marble basin rests on four winged cherub feet, surrounded by three free-standing sculptural figures representing the Cardinal Virtues. These are: Faith (standing with a cross and her hand held over the bowl in the act of benediction), Hope (seated, holding a symbolic anchor) and Charity (seated and shown comforting children). It was designed by Humphrey Repton and built by Paul Storr, one of the best known goldsmiths in London.

Christie’s London held an auction in November 2009 of “Property From the Late Duke and Duchess of Kent and Families,” which gave other examples of the types of gifts given at christenings. 

Austrian-made silver gilt service was given in 1907 to Princess Marina of Greece and Denmark, who would become the Duchess of Kent. The gift was from Princess Thayer of Hanover and Duchess of Cumberland. Photo Credit: CHRISTIE'S IMAGES LTD. 2013

For example, a tasteful Austrian-made silver gilt service was given as a christening gift in 1907 to Princess Marina of Greece and Denmark, who would become the Duchess of Kent. The gift was from Princess Thayer of Hanover who was also the Duchess of Cumberland. The tapering on the beaker and the flatware are stamped with husks and shells. The set consists of a tablespoon, teaspoon, fork, a knife with silver-gilt blade, and a knife with steel blade. Each piece is engraved with the initial M below a Royal crown. The leather covered case was marked with J.C. Klinkosch, Vienna, dated 1907 with Imperial Warrant. The inscription reads “from Great Aunt Thyra 1907.” 

George VI silver flatware set given in 1942 to Prince Michael of Kent. Photo Credit: CHRISTIE'S IMAGES LTD. 2013

An even more modest example of a christening gift was given in 1942 to Prince Michael of Kent. It was a George VI silver flatware set of a fork, knife and spoon with facetted plain handles in a fitted case with an inscribed note. It was made by London silversmiths, Wakely and Wheeler. It sold at auction for 525 pounds ($806).

A personally inscribed Victorian silver gilt cup and cover from King Edward VII and Queen Alexandra in 1903 for their grandson, Prince George, Duke of Kent. Photo Credit: CHRISTIE'S IMAGES LTD. 2013

A more elaborate christening gift came from King Edward VII and Queen Alexandra in 1903 for their grandson, Prince George, Duke of Kent. It was a Victorian silver gilt cup and cover with an inscription that reads: “To George Edward Alexander Edmund 4th Son of George, Prince of Wales and Victoria Mary, Princess of Wales from his Grandparents and Sponsors King Edward VII and Queen Alexandra at his Christening at Windsor Castle January 26th 1903.”

Shaped like an inverted bell, it is adorned with scroll handles and a detachable cover with baluster finish. A silver medallion depicts King Edward VII and Queen Alexandra. It has the mark of Elkington and Co., London, 1900.

Munn said that engravings that appear handwritten, such as what is on the gilt cup, are popular among royalty and is a common service of jewelers used by the royal family, including Wartski.

“What we usually do is engrave small cups of silver and that can be done in the facsimile of the parents handwriting,” he said. “Every generation of royalty has enjoyed facsimile of handwriting. It’s a very interesting procedure, taken up by the great jewelers. They all know how to do it.”

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