Gold jewelry: prices have fallen by 40% in six months!

Has gold lost its safe haven status? After closing 2012 with a performance of 8% internationally, reaching a price of $1,659 per ounce, the yellow metal breaks its upward trend that lasted almost 13 years. As of June 8, it was down 16.5% since the beginning of the year, to $1,384 an ounce. If we compare this price with the highest threshold reached in 2011, that is, $1,900, the drop reaches 28%.

The reasons behind this decline are macroeconomic and financial. First of all, the global economic situation is in the process of recovery after a long period of crisis, and inflation remains very low. This situation does not favor the evolution of the price of gold because it is especially appreciated in periods of economic uncertainty. Furthermore, the monnaie de invoicing du métal jaune, le dollar, a démarré l'année sur une tendency haussière suite aux anticipations de réduction des injections de liquidité de la part de la Réserve fédérale américaine, ce qui exerce une pressure mécanique sur le cours gold.
Furthermore, other investment products, particularly stocks, are performing well, contrary to what many professionals had predicted. For example, the CAC 40 has seen an increase of 6.36% since the beginning of the year, while the Dow Jones has improved 16.4%. As a result, investors are reorienting their investments towards these assets, which are certainly risky, but liquid and offer attractive capital gains.

Added to this are specific factors such as the desire of the Central Bank of Cyprus to sell part of its gold reserves, which recently pushed investors to liquidate their positions, causing a sharp drop in price.
Under these conditions, how does the price of gold behave in Morocco? In fact, it only takes a quick visit to some jewelry stores in Casablanca and Rabat to conclude that gold jewelry has lost much of its value. If at the end of 2012 a gram of new gold cost around 550 DH, it is currently sold between 330 and 350 DH, which represents a decrease of 40% in six months. A jeweler specifies: “From April 16 to June 7, the price of a gram of gold fell 15%.” These prices refer to the pieces manufactured and displayed in the shop windows. A gram of raw gold costs an average of 284 DH, knowing that a few weeks ago it had reached a minimum of 275 DH. To this price, manufacturers add the cost of labor including the jeweler's margin, i.e. 20 to 50 Dh, or even 150 Dh per gram, depending on the level and precision of the shape. In addition, we must take into account the price of punching, which costs 6 DH per gram. This is an authorization issued by the customs administration to be able to carry out sales operations.

At resale, prices have also dropped to between 250 and 280 DH per gram, while six months ago they reached more than 340 DH. These prices can obviously vary depending on your destination. If the pieces intended for resale lose almost 15% compared to their purchase value, those to be recast depreciate more: up to -30%, because they generally contain impurities and stones that, when removed, reduce the weight. Of the piece. For example, a piece of jewelry that weighs 150 grams may have a net weight of only 100 grams.
Thus, although the gold jewelry market in Morocco is not really linked to the international gold market, prices there evolve in perfect correlation with world prices. In fact, the supply of raw materials for Moroccan jewelry stores is only marginally dependent on imports. The market relies heavily on jewelry recycling. It is true that Morocco imports industrial gold, but this proportion remains insignificant in the country's balance of payments. At the end of April, imports amounted to 14.8 million dirhams.

Read: Purchase of jewelry from abroad: authorized maximum of 500 grams

That said, traders continually tend to adjust their prices to world prices, not because there is an economic correlation, but above all to avoid exits (if gold in Morocco is cheaper) or entries (if gold abroad is more cheap) to informal Moroccan gold. or from other countries. Furthermore, there are even some jewelers who subscribe to financial information platforms to follow the price of the metal.

In any case, although prices have deteriorated in Morocco, the demand for gold has not registered any particular growth. A jeweler from Casablanca confirms this: “We expected greater demand for jewelry with the fall in prices, but this has been slow to arrive. Potential buyers expect the decline to continue.” In fact, buyers are increasingly astute, they are more attentive to international developments and do not hesitate to follow the behavior of gold in foreign markets before acting. However, our source maintains, “now is the time to buy gold. Given that the latter has experienced 13 consecutive years of increase, this decline can only be momentary and recovery will occur soon. However, other jewelers, more skeptical, expect a continuation of the current downward trend and do not hesitate to offer prices well below the market average in the event of a purchase.

In any case, if you want to buy gold jewelry to resell after a few years, you should prefer simple pieces that do not contain many stones and do not require complex modeling work. Because, it must be remembered, the resale price does not include the stones contained in a piece of jewelry. Only the gold, its content and its weight count. In addition, sober jewelry has the advantage of always being “in fashion,” which would make it suitable for resale as is. This would maximize the added value.

Furthermore, it should be noted that there is no difference between yellow, red and white gold in terms of of market value, since they contain the same gold content authorized in Morocco, that is, 18 carats. In fact, the color changes depending on the nature of the alloy. Consequently, their resale value should be identical, which is not usually the case, because jewelers take advantage of their clients' lack of knowledge on the subject to demand a lower price than the market price.

On the other hand, wealthy investors can make a more thoughtful bet on gold through wealth management companies. Although the managers prefer the products developed by their groups, often banking (UCITS, life insurance contracts, term deposits, etc.), a part of clients' savings is invested in gold, as confirmed by the director of a local private bank: “Gold has always been one of our preferred investments beyond traditional banking products. It produces a rapid and largely… attractive return “Our clients, especially those who control the situation of their investment portfolio, have recently shown a particularly strong demand for gold, taking into account the price levels achieved.”

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