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Gold Demand Rises in Value, Falls in Volume
Jewelry Scene

Gold jewelry retail sales in the U.S. increased by approximately 6 percent in 2006, according to the World Gold Council, the strongest growth for gold since 1999. The annual U.S. gold jewelry sales summary was conducted by GfK Audits & Surveys.

"Gold has received extensive media coverage in both fashion and business media," says John Calnon, U.S. managing director for World Gold Council. "The continuing media coverage of yellow gold's growing popularity in the fashion world and the rising gold price has strengthened awareness for gold in the mind of the consumer. Today's consumer is responding to both gold's radiance and its intrinsic value."

Worldwide gold demand hit a record level of $65.3 billion in 2006, with double-digit dollar growth in gold jewelry demand. This record demand in value was despite a fall in quantity, thanks to the higher gold price. The 2006 international figures, compiled independently by GFMS, recorded a 14 percent rise in gold jewelry demand in dollars but a 16 percent decrease in quantity due to a volatile gold price in the first half of the year.

"We are very encouraged by the record value of gold demand in 2006, showing that consumers are spending more on gold as jewelry and as an investment," says James Burton, chief executive of the WGC. "However, we must recognize that although we have seen a steep rise in the dollar value of gold demand, there was also a decline in tonnage demand as extreme price volatility impacted consumers' jewelry purchases. The first half of the year proved a difficult one for the gold jewelry market as high price volatility deterred buying. More stable prices towards the end of the year resulted in a very satisfactory level of demand."

In the U.S., gold jewelry sales were strong across multiple distribution channels, including both traditional jewelry stores and department stores. Beryl Raff, J.C. Penney's executive vice president and general merchandise manager for fine jewelry, lauded the incremental advertising for gold jewelry in USA Today and Parade magazine, which was supported by J.C. Penney, World Gold Council, and a collaborative group of gold jewelry suppliers. According to Raff, "This unprecedented group marketing initiative clearly had significant consumer impact and was instrumental in the growth of our gold jewelry sales, both during the holiday period and full year."

Ben Bridge Jeweler also had a good year in gold. "Gold jewelry really performed this year," says Peter Luplow, vice president and merchandise manager. "We focused a lot of attention on our 18k gold Toscano brand this year, investing in both incremental product and promotion. The results were outstanding. The surprising thing is that our Toscano brand grew phenomenally but not at the expense of our 14k gold business, which also performed quite well."

The complete 2006 annual U.S. gold jewelry sales report, based upon the results of a retail market audit derived from confidential sales reports from a panel of over 7,500 stores encompassing all major gold jewelry distribution channels, will be available this May from the World Gold Council.