Is Gold a Bargain?

December 1, 2009
Michael Sheehan

Retail experts are saying that, despite the run-up in prices, the gold in your local jewelry store may be a bargain. If jewelry is on your holiday "to-give" list, they say, it's a good time to buy.

Commodities analysts are at odds over where the price of gold is going, although for now it appears to be heading straight up. Some say it’s overpriced; others say it’s got more room to run. Retail experts, on the other hand, are saying that, despite the run-up in prices, the gold in your local jewelry store may be a bargain. If gold jewelry is on your holiday “to-give” list, they say, it’s a good time to buy.

That’s because jewelers bought the gold merchandise they have on hand six months ago, when the price of gold was several hundred dollars lower than it is now. It takes about six to eight months for the soaring price of gold to work its way through to the retail level. Later next year, jewelry buyers will most likely be looking at sharply higher prices. The holiday bargain possibilities are enhanced by the tepid performance turned in by jewelry retailers like Tiffany and Zale’s, where year-over-year sales are down by about 16%. The slump in demand may prod jewelers into offer deeper discounts.

Even if gold jewelry isn’t specifically on your holiday shopping list, you may want to think about shopping for silver and platinum items. Prices of those commodities tend to track the price of gold, which means the cost of jewelry made from these materials will also be going up next year. On the other hand, if you’re willing to make a bet on the gold market, some commodities consultants believe that gold is way too high and should come back down to earth by this time next year. That may be when some real bargains start to show up.