By Michelle Graff
New York--Though the price of platinum will increase slightly this year it is not expected to have a tremendous impact at the retail level, the head of the Platinum Guild International USA recently said.

In a question-and-answer session conducted last week with National Jeweler, Huw Daniel, president of PGI-USA, discussed the price of platinum in 2014--though it will be up, the impact at the retail level will be “marginal,” he says.

He also discussed how much consumers are spending on engagement rings and the jewelry trends for the year.

Read on to hear more of Daniel’s predictions and observations for 2014.

National Jeweler: While forecasts vary, the platinum price is supposed to increase slightly this year. Do you expect the increase to trickle down to the retail level?
Huw Daniel: I don’t think so. I think that the Johnson Matthey was predicting a high of $1,500 (an ounce) and a low of $1,300. I don’t think we are not going to see as big a variance as that. The global economy just has too many questions marks for investor confidence at the moment.

Investors won’t be investing in platinum. The price of platinum is really driven by what’s happening in the global economy because it trades as an industrial commodity. The price goes up when industrial demand is strong and the outlook for industrial demand is strong, and that is not the situation we have at the moment. The global economy has got more question marks around it than it did in the fourth quarter.

NJ: Would growth in China, or lack thereof, would be one of those question marks?
HD: Yes and that’s the primary driver of it, automotive demand for catalytic converters.

NJ: So, you don’t think the labor issues in South Africa will impact the price of platinum?
HD: No, I don’t. The underlying industrial demand is not that bullish.

NJ: Then for retailers, the price of platinum will seem unchanged?
HD: I think so and especially when they are buying. I think there is going to be marginal impact on retail pricing.

NJ: With the price of gold falling and platinum remaining steady, how do you recommend retailers sell customers on platinum over gold?
HD: I just want to put that into context. Platinum is competing against 18-karat white gold in diamond -heavy jewelry: engagement rings, wedding bands and a little bit of diamond jewelry. So when you take into account the total cost the metal comprises vs. the total diamond and factor in the couple- hundred-dollar difference, the choice becomes less about overall price and more about quality.

We recommend that retailers direct the conversation toward the qualities of platinum and its specific advantages over gold so that the customer can make their own informed choice: naturally white, won’t need re-plating or re-tipping (prongs), wears better over time and it’s the strongest and most secure setting for a diamond.

What we always say is: always lead with platinum before showing alternatives because it’s easier to sell down than it is to sell up.

NJ: What are the benefits of platinum for retailers?
HD: There are two main benefits: one is positioning and the other is profitability. In terms of positioning, I think it’s best to say that platinum’s story of quality and rarity provides retailers a point of difference in the marketplace because not every jeweler carries platinum.

Then on profitability, platinum’s higher transaction size drives a higher dollar profit per sale than an equivalent setting in gold. There’s more margin in the setting than the diamond these days, and there’s higher profit in platinum.

NJ: What are you seeing in terms of trends in engagement ring spending? Are couples today back to spending what they were before the recession? What is important to them?
HD: We just had a study done by GSK that showed the average retail price of a platinum engagement ring in 2013 was $2,819. That was a study we just did of 400 independent retailers. What was interesting was the entry-level price for a platinum engagement ring declined to $1,330 vs. 2012. What I think is going on is yes, the Millennial consumer is more mindful and they are looking to the best relationship between quality and price. But also I would say there is now greater quantity of more accessibly priced platinum in the marketplace than there was before the recession and that’s bringing the absolute average price down.

NJ: What are the current style trends in platinum bridal jewelry?
HD: We are seeing east-to-west settings popping up in many designer collections, which is a bit of a stray from the traditional. We are seeing cushion cuts set in platinum with halos and pave bands. There’s been a couple of high-profile celebrity engagements with that look lately--Kelly Rowland, Naya Rivera from Glee.

Solitaires are holding up very well. That’s a very popular clean and classic look and that can be personalized in many different ways. And I think for platinum all these design trends play to platinum's strength as the most secure setting because you’ve got an important diamond in there.

RELATED CONTENT: Color to guide platinum brides in 2014

NJ: What are the current style trends in platinum fashion jewelry?
HD: It’s color, color, color. We are seeing a lot of moonstones, Paraiba (tourmaline), topaz. We are seeing rubies and pearls and we are also are seeing a lot of large cocktail rings. If you look at Beyoncé at the Grammys (she had on) a handful of Lorraine Schwartz platinum and diamond cocktail rings.

The other nice development is brooches or pins. We are seeing a lot more brooches, whether it’s to cinch a dress or to use as hair adornment. And of course there was Usher’s platinum lapel pin. We are mostly seeing kind of a vintage, Art Deco look because all of those pieces are vintage and, of course, most of that's platinum.

RELATED CONTENT: Color, statement pieces to rule the red carpet

NJ: Do you think 2014 will be a strong year for jewelers?
HD: I think it’s going to be a strong year for platinum retailers because the market’s become polarized and the higher end is back strongly and that’s driven by the equity markets, home values and bonuses. They are generally the $5 million-plus stores in total sales. But I also think the underlying momentum in the economy is up, the U.S. fundamentals are stronger than they have been in a while.

The only cloud is the global economy. The part of the market where we are operating is the strongest part of the market at the moment. (The recent) Centurion (show) spoke to that. Our sense is that it was a great show with retailers placing bigger orders than they have in previous years.

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