Metal Commodities Sizzling, Looming Over Holiday Jewelry Sales

(IDEX Online News) - Silver is at a 30-year high, gold prices are not falling far from their record high, platinum keeps pushing up and even crude oil is past $80 a barrel, as the global markets keep placing money in commodities during jittery times. Are these early signs of another impeding crash?

The price of silver crossed $22 an ounce in heavy trading on Sunday. Silver for immediate delivery softened after touching $22.21, the highest level since September 1980 when it reached a record $50.35. December delivery contracts reached $22.24 in electronic trading, easing to $21.98 at publication time.

Platinum touched $1,671 in speculative buying, with the sentiment in the market being that the price is sustainable. In 2008, platinum reached a $2,252 high before tumbling to $774.

Coupled with high gold and fuel prices, jewelry retailers may find their costs rising just as they start stocking up for the November-December holiday season. At the same time, consumers may decide to limit their spending come November because of the economic mood in general and the cost of jewelry in particular.

The rush to commodities is viewed as a short term speculative action but also as a long term safe harbor investment while the dollar is weak and government spending is high. Both scenarios are not indicating deep trust in the economic environment.

As a result, jewelry retail sales may hurt this season, dashing the hopes of diamond traders for relief and hoping for a revival in sales. They are also interested in pushing up polished diamond prices to justify their rough diamond expenditures.

Moving up the pipeline, if sales won’t materialize this holiday season, manufacturers will be forced to take back goods from retailers, and once again see their stock rising in a difficult economic climate.