Figures released by the British Assay Office for October 2011 reveal an incredible drop in numbers of pieces being hallmarked this year against last.
1. Hallmarking figures for October 2011 were down 40% for gold and 44% for silver against October 2010 – a massive decline for this time of the year.
That matches up with the fall in numbers of people heading out to the shops.
2. The number of shoppers heading to UK high streets was down by 4.7% in October. This was the sharpest drop in footfall since the bad weather last December.
Gold jewellery demand in the UK was 25 million items annually in 2003. It is now heading under 5 million pieces, and of those that are selling, the average weight is considerably reduced. This must equate to a 90% fall in the weight of gold jewellery being sold each year.
Such a drop in demand is not easily discernible from figures released by the industry’s other bodies, such as the World Gold Council, which represents the interests of the mining industry. Yet can Britain’s story be very different from that of all other countries around the globe?
Is the gold price boom bound to come to an end with jewellery demand on its knees? Once gold bullion speculators get cold feet,the price from here could crash, as they are the only buyers left in the field.
Jewellers are all waiting, it would seem for a return to more normal gold prices, and a return to work. In the past gold price surges have been more short lived, and trade was able to ride out the storm more easily. It is difficult to see how demand could fall much further. In fact scrapping activity is still very high, making net jewellery demand negative.
With Italy and other European debtor nations thinking of issuing debt backed by their gold reserves, is this the turning point? All the indicators would suggest that it is.