Thursday, March 27, 2008

What Does the Future Hold?...

Dollar is Down
Prices for Gas Up
Stock Market is Down
Gold Hitting All Time Highs
House Prices Continue to Fall
Food Prices Continue to Climb
Financial Institutions 'Bear'ly Hanging On

The dollar and probably most other currencies are no longer tied to gold, so governments can print more paper money anytime they wish. The Bretton Woods Accord made the U.S. dollar the reserve currency - the currency used by other governments and institutions to settle their foreign exchange accounts and to trade commodities such as oil and gold. There is talk that this status could being jeopardy, possibly making the Euro or even the Chinese Yuan the reserve currency! The dollar is down about 50% when compared to the Euro. Most other world currencies are high flyers when compared to the dollar. In fact, we have only been back from Thailand for a few months, and the Baht is now 15% higher than the dollar. What does this mean? Upon our return to Thailand, we will pay 15% more for anything bought in gemstones, food, hotels...everything! That will mean an immediate increase in any gemstones. This is not true of only the Thai Baht, but every other currency that gemstones are purchased in. So gemstone prices will not only be higher due to the weak dollar, BUT, gemstones are also increasing in value and that means even higher prices for gemstones purchased today when compared to a few months ago, a year ago or within the past few years. Many of our prices on line are below wholesale, at wholesale, just over wholesale or somewhere in between wholesale and retail. Our goal has always been to price our gemstones below retail, to price items based on what was paid and not necessarily on the normal/current wholesale prices. We seek out 'deals' and then offer them back to the trade or the public. With over 27 years in the business, we do pretty well in this respect!

People are waiting in lines to turn in their gold not only because the price per ounce is high, but because they could use the money to pay for gas, food and other essentials. Unlike many other countries who value gold as a hedge against uncertainty in currencies and governments, Americans just utilize gold for adornment, numismatic appeal and sell when prices are high when it might be advisable to hold onto hard assets. They say if you adjust the value of gold from 1980 to reflect inflation, a new high in gold would actually be well over $2,000 per ounce.

With bank interest being low, the dollar continuing its decline and the stock market having issues, hard assets like art, gold, platinum, diamonds and fine quality colored gemstones have been another option for many. For the owner of All That Glitters, the stock market has never been a money maker, even after a few decades. $17,000 invested into a high flying company turned into less than $200 and there is no pretty stock certificate to even hang on the wall. At least in gemstones, there is a hard asset that still exists. Hard assets are tangible and just don't evaporate.

We have been seeing more and more funds coming in from abroad. Many feel that there are a number of investments in some newer material being found and the trade magazines are just announcing the news and discussing the prices. Mozambique Tourmaline is dazzling the trade with wonderfully unique colors and much of this material contains Copper and is therefore, Cuprian Tourmaline, similar to Paraiba Tourmaline in composition. Though the prices might seem high, how long will this material be available? Many would like to keep this quiet and to continue to purchase in hopes that prices will continue to climb as demand in the trade and in retail becomes greater. The reason why demand hasn't sky rocketed is that the material (and prices) are just not known. That will change as the trade magazines continue to publish more information.

More news to show how prices are increasing dramatically, on especially the fine, unique, rare, unusual material (as well as even the lower end, as larger off color diamonds are increasing almost weekly). A very fine Canandian specimen of Ammolite which sold this time last year, was just sold once again at auction for $220,000. That is 7 TIMES the price of only one year ago.

We are seeing and hearing all kinds of stories. In watching the national news the other night, it was noted that there is a hugh influx of Europeans and Asians visiting the U.S. as everything here is priced at bargain prices. Americans might not think so, but a gemstone dealer in the most recent Modern Jewelers Magazine (Gem Profile) had the following to say about prices, no-haggling on prices and the quantities of gemstones being bought from foreigners visiting the U.S. - "It makes you wonder if Americans grasp the new reality of the marketplace". Some U.S. companies are now accepting Euros to make it even more attractive - foreigners don't have to exchange their currency and the sellers get a currency which is in more demand and strong against the dollar. With the All That Glitters philosophy of value and price, this is the main reason why we have continued strong sales in both America and abroad.

Finding the high end material is always difficult, but in this niche,
All That Glitters is still positioned to shine in both quality and pricing.

Addendum: After attending the GIA Alumni New England Chapter for a dinner and discussion on Beryllium and Lead Glass Treatment of Corundum by a member of the GIA staff in NYC, there were many conversations at the dinner tables. All That Glitters Purple Mozambique Cuprian Tourmaline was a very big hit as many had read about it in trade articles/magazines recently, but had not seen it in person. We understand that only two companies in the U.S. are known to have this - All That Glitters and a very well known company on the West Coast. In the discussions, one of the individuals indicated that he had been to Antwerp for diamonds within the past few months, and they DO NOT want U.S. dollars in payment. One must convert U.S. dollars into Euros. This is another case that we have heard of and that implies gemstones (as well as all other items imported or purchased abroad) will be much more costly for Americans. It costs Americans 50% more to exchange U.S. currency in to the Euro, so one gets an idea as to what to expect in price increases in the future when the newly purchased items are placed for sale...