The Future of Gold Jewellery?

It has been almost impossible recently to escape from the news reports regarding gold price.  For those of us that have been investing in gold for many years this is obviously good news but more and more people are now jumping on the band-wagon.  There is a saying about horses bolting and barn-doors and all that but as far as I can see the upshot of all this is as follows:

1.       It is becoming increasingly difficult for dealers to find quality gold pieces with every Tom, Dick and Harry walking around with a loupe and scales in their pocket.

2.       More items are hitting the melting pot rather than being repaired and restored to their former glory.

3.       Less jewellery is being made due to the very high material costs, confirmed by the Birmingham Assay Office (UK)

As a dealer in Antique Jewellery for many years, this can be heart breaking.  On visits to some of the refiners that I use I have been forced to witness some beautiful items going in the pot – Victorian double Alberts and guard chains, a 15ct Gold mourning locket dating to 1811 just to name a few.  These pieces are now lost forever and even if they are reworked rather than remaining as a gold bar the likelihood is that the quality will never be the same.

I don’t know if other Antique Jewellery dealers find themselves in the same quandary as us but as gold price has continued to rocket it has become harder and harder to sell quality pieces.  Naturally we cannot sell below scrap price (now matter how much we love our customers) so prices have had to be adjusted accordingly.  I have lost count of the number of times at Antique Fairs we have had a price enquiry only to be looked at as if we were insane when we quote spot price plus VAT.  Would we just be better off scrapping our entire inventory?

That will never happen.  We do what we do because we appreciate the beauty in the items we sell, not because we want money, money, money.  We still scrap modern items, of course, and will continue to do so but the margins are decreasing all the time.  So (he gets to the point eventually) what do we think the future of gold jewellery is?

Over the past 5 years it is more than fair to say that wages have not increased, in fact many people have had to take a pay cut, and the cost of living has certainly increased.  So most people are worrying more about food and fuel bills rather than how much a gold chain will cost them. And so it should be.  Well in that period gold has risen 365% so whereas a £100 gold chain may have been considered a feasible purchase £365 would be considered a luxury.  This is the pattern we have seen developing – gold WAS affordable (it had hardly moved for 20 years after all) but now is not.

The fact is, though, that any piece of gold will always hold intrinsic value.  If gold price continues its upward trend then the value will increase.  If more and more jewellery is scrapped and less and less is produced then it becomes rarer and hence more valuable.  So any piece of gold jewellery can be considered for investment purposes, not just for its aesthetics.  This does not, however, detract from the problem that gold is so expensive in the first instance.

So what about gold plate?  Well, as an antiques dealer that is a term that I personally hate.  The trouble is that as soon as anyone hears the term ‘gold plate’ they instantly think of modern electroplated items (brush plated or dipped) with the thinnest of thin layers of gold only applied to give a colour.  It is true, these items often only have a coating of 2-3 microns of gold so will wear very quickly and have little to no intrinsic gold value – in fact the cost of the acid and refining materials make it unfeasible to recover the gold at all.  It is quite easy for anybody to buy a plating kit these days and plate whatever they like, so modern plated pieces offer no real alternative in our opinion.

However, the same cannot be said of many antique and vintage ‘plated’ pieces.  I say ‘plated’ but do not really mean it in the same context.  Today plating does not require any actual gold, just a solution containing gold salts.  This was not the case with many older items.  Rather than electroplating jewellery many of the historic Goldsmiths used methods such as Gold filling, Gold rolling and ‘Coring’.

Take, for example, one of Britain’s greatest and well known Goldsmiths Henry Griffiths (HG&S).  They produced numerous high quality items between c1850 and 1955 in both silver and gold.  They also made many items using gold and base metals.  Note I do NOT say plated.  The reason for this is that the processes and standards are very different.  In order to call an item rolled gold, gold filled or metal cored there are minimum gold quantity standards.

For now we will ignore ‘rolled gold’ as it has more diversity than the other two.  Gold filled means that sheets of gold are applied and heat bonded onto a base metal, usually jeweller’s brass.  To start with the main difference is that actual sheets of gold are used, rather than a plating solution.  There are minimum standards for calling an item Gold Filled (usually marked as GF).  For lower carat gold (9ct and 10ct) the item must be cast using at least 10% of the weight as gold content.  For higher carat gold (12ct, 14ct and 18ct) the item must contain at least 5% gold content.  5% may not seem a lot but this can be up to 100,000 times thicker than the coating applied by electroplating.

From this even the total amateur will realise the difference in quality and when these items are viewed they often look like solid gold.  The main difference, of course, is the price.  A 9ct gold bangle weighing 30 grams would currently scrap at approx. £408 (source Gold Price) whereas a 9ct Gold Filled bangle would scrap at a tenth of that.  So it is more than possible to purchase a beautiful vintage bangle for LESS than a tenth of the price a modern one would cost in a High Street jewellers as the retail mark up in the High Street is generally greater.

Metal Cored items can contain even more gold by content.  The easiest way to think of a ‘Metal Cored’ item is to think of the modern hollow jewellery that seems to want to fly out of your hand.  Of course, this is just a way of making items less expensive – less weight = less material costs.  However anybody who has bought a piece of hollow jewellery will know that they can become dented very easily.

Now imagine that piece of hollow jewellery, but the inside has been filled with a metal core to add to its strength and rigidity – there you have it.  Taking the same 30 gram bangle – if it were 1/5 9ct Metal Core it would contain 20% of gold by weight and would hence contain over £80 in scrap gold alone.  A couple of years ago we refined a couple of these bangles to test if the gold content was indeed true and actually achieved a 22% recovery rate, so it is fair to say that the amount of gold used can vary slightly.

The other point to note is the sheer quality of some of these bangles.  The goldwork, engraving and quality is often superb and we have had many customers say they would prefer a vintage or antique piece of quality than a modern item.  You can view a selection of such bangles on our website and judge for yourself.

Whilst it is true that many of these antique and vintage pieces are bangles it is also possible to find chains, bracelets, lockets, cuff-links and all manner of other jewellery using the same methods described above.

So, if gold continues to increase and becomes further out of reach of the average buyer maybe it is more sensible to look for a quality piece of antique or vintage jewellery with decent gold content, better aesthetic value and potentially higher investment value.  Or maybe modern jewellers will start to return to the older methods, producing high quality pieces at more affordable prices.

Original content by ADH Gems Antique Jewellery - not for distribution