:max_bytes(150000):strip_icc()/GettyImages-2188516554-ebbca4625baa4f14a16fed0b43bd1742.jpg "Silver Price Chaos Is Forcing the World’s Largest Jeweler To Shift Strategy")
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Key Takeaways
- Pandora on Wednesday said it will introduce platinum-plated jewelry this year in response to a blistering run-up in silver prices in recent months.
- The prices of silver and gold skyrocketed late last year and throughout January as investors chasing momentum piled into the precious metals.
Not all that glitters is gold, they say. Soon, even less of it will be silver.
Jewelry maker Pandora on Wednesday announced it’s introducing platinum-plated jewelry this year to diversify its precious metals exposure and reduce its reliance on silver, the price of which has soared over the past year.
“With this innovation, we can navigate the new realities of raw material costs while offering consumers precious metal jewelery that is exceptionally well-suited for everyday wear,” said CEO Berta de Pablos-Barbier in a press release.
Why This Is Important
Silver straddles the line between precious and industrial metal due to its efficiency as an electricity conductor. Volatility in precious metals markets, thus, threatens to drive up costs for jewelry makers like Pandora and companies making products that rely on silver, like electric vehicles and solar panels.
Precious metals prices rose throughout last year as tariff and geopolitical uncertainty, as well as a weaker U.S. dollar, boosted demand for safe haven assets like gold. But prices skyrocketed in the final months of the year when tech stocks wobbled and investors, hungry for gains, chased momentum in metals markets.
The run-up turned into a full-blown meltdown on Monday when gold and silver suffered their worst sell-off in decades. After a few days of relative calm, volatility flared up again on Thursday. Spot silver prices were down about 13% at $77.50 an ounce in recent trading, while gold slid 2% to trade around $4,880 an ounce.
Even with this week’s rout, precious metals are far more expensive now than they were last year. The price of silver is up about 140% in the past 12 months, while gold has risen 70%.
The exceptional volatility in silver markets is particularly concerning to Pandora. Silver accounts for nearly one-third of the company’s cost of goods sold, making the metal its single largest production expense. Gold, by comparison, accounts for just 8% of those costs.
As a matter of course, Pandora and other commodities buyers hedge their purchases to keep prices as stable as possible. Pandora said in its earnings report Thursday that hedging should shield at least 90% of its silver and gold purchases this year from price fluctuations. Still, the company warned commodity prices could skim as much as 2.5 percentage points off its profit margin this year, making it an even larger headwind than tariffs.
The transition announced Wednesday will reduce Pandora’s exposure to silver, but platinum is neither cheap nor impervious to market mayhem. Platinum prices have also soared recently, just to a lesser extent than silver. As of Thursday afternoon, an ounce of platinum cost $2,070 an ounce, slightly more than double its price a year ago.
Pandora isn’t the only jewelry maker responding to pricey metals by tweaking its offerings. Some designers have begun fashioning hollow gold pieces or mixing gold and silver to keep at least some of their products within an average consumer’s price range. Some have even replaced gold with brass, banking on consumers not being able to tell the difference.
