Gold prices hit a record this past week, and the new gold rush is electrifying the jewelry industry and commodity markets — creating an unprecedented era for Chicago retailers, consumers and traders.
The market is so hot a customer at Stanley Brown Jewelist in Lincoln Square recently made a few thousands dollars from scrapped gold pieces, unused after their custom redesigned ring was finished, owner Shauna Hunter said.
“I ended up writing her a check for $2,000,” Hunter said. “She was shocked.”
The 113-year-old business, one of the city’s oldest family-owned and operated jewelers, specializes in custom designs, engagement and wedding rings, and repair work.
“Now is the time to go through your drawers and find all those scraps that have been rolling around for years,” Hunter said.
But customers should also expect higher price quotes, especially for custom projects that take weeks to complete.
“If we started a custom job three or four months ago and you’re taking time to get back to us, it’s going to be really hard for us to honor the price that we gave you,” Jill Freemen, owner of Bryn Mawr Jewelry Co., said.
The Uptown retailer handles between 40 and 50 custom projects per month, and it typically fulfills orders in four to six weeks.
Retailers also have varying policies related to older inventory.
Bryn Mawr Jewelry, for example, prices pre-owned gold pieces at the market rate of the original transaction.
“We haven’t increased our inventory prices,” Freemen said. “We’re going to keep that price the same.”
Behind the spike
Gold futures hit a record high on Wednesday when it reached $4,000, continuing a nearly two-year bull run fueled by a number of factors from geopolitical events to the U.S. economy.
An ounce of gold on Friday traded near $4,010, peaking again after President Donald Trump threatened a “massive increase” of tariffs on China over rare earths. This year, gold is up 53.7%, and it’s on track to have its best performance since 1979, when prices rose more than 100%.
Prices could continue to skyrocket amid inflationary pressures, widespread tariffs, U.S. and international monetary policies, asset allocation shifts endorsed by the world’s largest money managers and a bit of FOMO, or fear of missing out, among retail traders trying to catch the wave.
“There’s a possibility of a pullback in the near term, but I think that $5,000 to $6,000 within the next eight months is probably my base case,” said James Iuorio, managing director at Chicago-based TJM Institutional Services.
The catalyst, according to economists and political experts, can be traced back to February 2022 following Russia’s invasion of Ukraine, which prompted the U.S. to freeze Russian dollar-denominated assets across the globe.
Several countries, including Russia, China, Poland, India and Turkey, responded by stockpiling gold at rates unseen for decades. At the same time, more dollars were flushed into the system as U.S. spending deficits increased, further devaluing the dollar while propping up the value of gold as holders held out for larger returns.
In early 2024, non-professional, or retail, traders began initiating more gold transactions through exchange-traded funds, or ETFs, according to Iuorio, a longtime futures and options trader in Palatine.
“What’s really helped the gold trade over the last 20 years is the launch of ETFs and the access,” he said.
The first gold ETF in the U.S. was established in 2004, and since then, gold has outperformed the stock market.
The changing dynamics also reflect eroding investor confidence in U.S. economic and monetary policy, according to Mark Witte, economics professor at Northwestern University.
“For a long time, U.S. Treasury securities served well as safe assets, but given the undermining of U.S. government data gathering agencies and of the Federal Reserve and its role in managing inflation, U.S. bonds are no longer so well regarded,” he said in an email. “Historically, gold has been a substitute choice for people who want what they hope is a safe asset.”
Changing customer preferences
The rising cost of gold compared to other precious metals is swaying buying decisions, according to jewelry retailers.
“Due to diamond prices generally falling and gold rising, I’m seeing a lot more diamond-centric designs coming through, as well as some thinner designs in order to save on gold cost,” said Ren Thompson, owner of Ren Private Jewelers and president of the Chicago Jewelers’ Association.
Natural diamonds have been losing value since peaking in late 2022, a decline driven by the growing popularity of lower-cost, lab-created diamonds, fewer weddings and changing sentiments toward mined diamonds, particularly among younger generations, industry experts said.
Engagement rings are also selling well at Ren, which caters to young professionals and high-net-worth clients, including celebrities and entertainers.
“We’re also seeing a large rise in using platinum as opposed to 18 karat gold, which has been our most popular metal type,” Thompson said via email. “I do experience some apprehension on the more fashion or extravagant pieces, primarily due to the large material cost these projects require.”
But costs are rising for retailers, too, particularly for custom orders like wedding bands and multiple unit designs.
“Profit margins continue to drop as gold prices soar,” said Theresa Cowan, owner and designer at Mineralogy in Ravenswood.
“We are trying to keep our pieces priced so that they are still accessible to clients while acknowledging that costs continue to climb against revenue and that we have to be able to pivot during uncertain times.”
Tariffs are also cutting into the bottom line.
A 10% levy on gold chains and bracelets shipped from India in late August added more than $400 to Chicago Pawners & Jewelers’s order.
“It’s getting really expensive when you tack on the price of the gold and the cost to manufacture,” said Daniel Lebovitz, co-owner of the Near West Side store by the United Center.
“We’re pivoting a lot into smaller stuff. The big ticket items are becoming out of reach, especially in a low- to mid-range income area.”
For Mineralogy, the cyclical nature of engagements and weddings have steadied business amid the volatility, but lingering concerns persist.
“Similar to how COVID affected the wedding industry for years, I think we will continue to see the effects of this through the years,” Cowan said. “To what extent, we just don’t know yet.”
Managing expectations with clients is also taking on more importance, as jewelers and consumers feel the squeeze.
“It’s made it very tricky to balance profit margins and general sticker shock to the consumer,” Thompson said. “Many of my clients are generally aware of gold prices, but they don’t know just how quickly the price of gold is rising.”
