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Editorial: The effect of cryptocurrencies on jewelry sales

We choose to go where others dare not venture! Cytprocurrencies combined market capitalization now approaches $2T, with Bitcoin market cap at $1T alone.

Over the summer of 2020, when the pandemic was raging, a trend reversal transpired. Gold surged above $2000/oz and Bitcoin fell to $10,000/coin. Gold has been falling ever since and Bitcoin and cryptocurrencies surging.

We know that jewelry has always been purchased in previous generations as a means to store wealth, and still is a very large practice in Asia, China and India in particular. Gold and silver were the only real alternatives to fiat money although diamonds and precious gemstones have also held there value as well. The rise of cryptocurrencies over the last decade has been putting a dent into the jewelry industry, whether insiders want to admit it or not.

At the early stages of the pandemic jewelry sales absolutely fell off of a cliff, diamond jewelry in particular. De Beers had to slash their prices of raw diamonds materially. As world governments pumped money into their economies jewelry sales, like everything else, picked up. However, unlike the fiat currency crises of the 1970's, investors are not flocking to metal commodities or jewelry to hedge like they used to.

Luxury jewelry should tread water as the rich get richer on government fiat money printing. The growing divide between the "haves" and "have nots" should put a damper on middle class and lower end jewelry shoppers. We've already seen a pivot towards lab created stones, partially because they are more ecofriendly, but also because they are cheaper.

Where does this leave the jewelry industry? In our opinion, the jewelry industry has lagged the overall digital economy for almost two decades, failing to embrace and invest in the digital future. The pandemic has pushed jewelry sales online at an unprecedented pace but the lack of innovation and digital foothold is allowing cyrptocurrencies to the steal the thunder of the once unflappable gold jewelry market in particular.

The future of jewelry not only relies upon fashion, but also upon precious metals and precious gemstones being a hedge against fiat money printing. The latter is being severely tested in the year 2021. Nobody has a crystal ball and we shall see what the future beholds...

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