Jewelry market in 2022: analysis and forecast

Analytics

07:00, 22.03.2019 9

Production of yellow metal products is growing for the second year, silver is becoming less popular

Photo: Oleg Tikhonov

The Russian jewelry industry is emerging from the crisis hole for the second year in a row, although the growth rate in 2022 has slowed down. The manufacturer focuses on the solvency of the buyer, who, when the situation worsens, prefers cheap silver, and when there is relative stability, he turns his attention to gold. At the same time, the Russian buyer today chooses silver products of lower weight than in “fat” times. The analytical service of Realnoe Vremya, having studied the state of the market, learned that fewer and fewer products are being made from palladium - all because the price for it has increased 7.5 times in 8 years. And I found out that there are almost three times more gold earrings on the market than silver ones, and, on the contrary, almost three times more inexpensive silver is spent by manufacturers on chains and bracelets.

Jewelry gets out of crisis

For the second year in a row, the Russian jewelry industry continues to emerge from the crisis peak into which it entered immediately after 2013. Jewelry, of course, is not an essential item; on the contrary, it is a prestigious product, and the luxury segment is known to be one of the first to suffer in troubled times. Consumers either stop buying these products or start buying less expensive gold jewelry and more silver jewelry. The dynamics of the jewelry industry directly indicate the growth or decline of the economy.

Thus, in 2000, 9.74 million pieces of gold products were tested and branded (24.6 tons in total), two years later there was almost twice as much, and the market continued to grow until the crisis of 2008: in 2007 it was tested and 48.5 million gold products for 130.3 tons were branded, a year later - 46.7 million gold products for 127 tons. And in 2009, the weight of branded products fell by almost half - to 68.2 tons. Both because the market itself has shrunk, and because in difficult times the consumer would rather buy a small piece of jewelry by weight than a heavy bracelet.

Number and weight of jewelry tested and branded

The production of gold products is growing for the second year in a row, although the dynamics in 2022 decreased

While the country was emerging from the first crisis of the 2000s, the number of products was growing, as was their weight. The market reached its second peak in 2013, when 43.5 million pieces of gold items weighing 107.7 tons were branded. The second crisis again sent the market into a peak; by 2015, production fell by 40% - to 58.9 tons, the number of products decreased by 5 million. The fall continued for two years in a row, after which Russian jewelers (4 thousand Russian companies produce jewelry, 25 thousand enterprises operate in the entire jewelry industry) began to increase production again.

In 2022, the weight of products increased by 12%, in 2018 the growth continued, but amounted to only 3%: almost 60 tons were tested and branded versus 57.8 tons in 2022. The number of products is also gradually increasing from the low point of 2016 (a total of 27.1 million gold jewelry - the level of 2009 and 2004), amounting to 31.2 and 31.8 million pieces in 2022 and 2018, respectively. It should be noted, however, that of the gold items received by the state inspection inspectorate in 2022, 707.5 thousand were foreign-made.

Number of products from Russian manufacturers received in 2018 by the State Assay Supervision Inspectorate

Russian buyers prefer silver items of lighter weight than in “fat” times

We specifically analyzed the gold segment of the market, since it is the largest. Thus, in 2022, the jewelry market was estimated at 270 billion rubles, of which 180 billion were for gold jewelry—that’s 66%.

The silver curve at the beginning of the 2000s repeated the “golden” curve, but what’s interesting is that during the crisis of 2008-2009, as well as in the crisis of 2014-2015, the situation with silver was not entirely similar to the “golden” one. In the year the production of gold products fell, the weight of silver products increased. But only in the first year of the crisis - for example, in 2014, 19% more silver jewelry was tested - weighing 251.8 tons versus 211.6 in 2013. Which is precisely explained by the fact that after the first shock, the buyer pays attention to cheap silver, and then, roughly speaking, there is no money left for it. Therefore, it is not surprising that the silver production curve then nosedives.

Another reverse trend is also interesting: immediately after the crisis, buyers again turn their attention to gold, while silver production continues to fall. Thus, the number of silver jewelry in the Russian Federation has continued to decline since 2014, when almost 60 million items were produced; in 2022, 33.6 million pieces were tested and branded, that is, almost two times less; in fact, the situation with silver repeats 2007. But if at that time 32.8 million products weighing 223.2 tons were produced, then 11 years later the weight of the produced products fell by almost 40 tons, which indicates a much lower solvency of the Russian buyer: focusing on his needs, namely the lower weight of the product, Manufacturers are forced to produce increasingly lighter, and therefore cheaper, jewelry.

Number of products from foreign manufacturers received in 2018 by the State Assay Supervision Inspectorate

Should you buy gold today?

The profit or loss from buying gold largely depends on the chosen entry point. To select it qualitatively, it is worth analyzing the current market situation. First of all, pay attention to technical analysis:

Technical analysis is a method of predicting prices based on its history and special indicators, i.e. mathematical formulas. The widget above collects information from 25 indicators and produces 5 types of forecasts, from “active sell” to “active buy”. The time interval should be taken into account based on the expected duration of your trade:

• less than 1 day - 1 minute, 5 minutes, 15 minutes;
• from 1 day to 1 week - 30 minutes, 1 hour, 2 hours;
• from 1 week to 1 month - 4 hours;
• more than 1 month - 1 day, 1 week.

Chances are that most of you are considering a long-term investment in gold, so it is best to look at the daily or weekly chart. Technical analysis alone will not give you the best entry point, but it will help you understand what phase the market is in.

The second useful indicator is the dollar index:

Historically, the price of gold has a strong inverse relationship with the dollar exchange rate. The main reason is that gold is most often traded in dollars, so when it becomes cheaper, it is a good signal for precious metals, and vice versa. The values ​​here are not particularly important, pay attention to the trend - the dollar index as a whole is rising or falling.

Also, in assessing the prospects of gold, fundamental analysis is very important - assessing the demand and supply of the metal on the market. Next, let's look at how gold is used and by whom and what the market balance is in the metal market in 2022.

There are fewer and fewer products made from palladium - the price for it has increased 7.5 times in 8 years

Unlike gold, foreign producers of silver products accounted for 44.4% of all approved products in 2022. As the Association of Jewelers of the Eurasian Economic Union noted back in March last year, the drop in the use of silver is due to the fact that “previously there was a reorientation of jewelers from gold to silver, but now the reverse process is observed.” Observers believe that in subsequent years (if there is no third crisis), the growth in the use of gold will outpace the growth in the production of silver products, if the latter occurs at all.

Another question is how much sales of gold jewelry will grow: gold prices since 2014, despite a number of fluctuations, continue to confidently creep up. In 2014, according to the exchange rate of the Central Bank of the Russian Federation, one gram of gold cost 1.2 thousand rubles, and at the beginning of 2022 - already more than 2.7 thousand rubles. That is, gold has more than doubled in price in five years. And if over three years, from a peak value of 3 thousand rubles per gram, the price of gold still fell by 8%, then the price of silver over the same period fell by 11.5%. The most expensive metal - palladium - on the contrary, has been growing steadily over all three years, increasing in price by 1.6 times since 2016: one gram in 2022 began to cost more than 3 thousand rubles. For comparison: a gram of silver is traded on the market for 33.3 rubles.

By the way, if we talk about products made of platinum and palladium, they occupy an insignificant share of the market. Thus, last year, 15.6 thousand products weighing 71.8 kg were produced from platinum, and 2.5 thousand products weighing 11 kg from palladium. The production of palladium products is not very similar to the dynamics of gold and silver. Thus, before the crisis of 2008, the number of palladium products produced did not exceed 7 thousand pieces, but already in 2009, 4 times more were produced - 24.3 thousand pieces, and the weight increased 1.5 times - to 75.2 kg.

Interestingly, the production of palladium products reached its peak values ​​precisely in the crisis years of 2009-2010, after which the curve went down and continues to fall to this day. Probably, the growth in popularity of palladium until 2010 can be explained by its low price at that time (in 2009, the stock exchanges gave around $200 per troy ounce - 31.1 grams) and potential investment attractiveness. Because today the price of palladium is almost 1.5 thousand dollars per troy ounce. That is, palladium has increased in price by 7.5 times, and it is obvious that at the moment products made from this metal are inaccessible to the vast majority of buyers.

Mostly in the Russian Federation today, of course, earrings are produced and sold - in 2022, they accounted for 42.8% of all gold-approved products, or 13.3 million pieces. Photo by Oleg Tikhonov

How the jewelry market has changed: trends and expert forecasts

The jewelry market in Russia today is predominantly represented by domestically produced silver jewelry. Less than 30% are gold products. As experts note, in 2020 the volume of jewelry production fell by a third, amounting to about 240 billion rubles. However, in monetary terms the market did not decline, prices simply increased.

As noted by the President of the Chamber of Commerce and Industry of Russia Sergei Katyrin , the cost of gold and precious stones has increased by 50%. Another negative trend is that over the year the number of enterprises operating in this area decreased by 6 thousand. The problem of unscrupulous suppliers who counterfeit jewelry made of precious metals still remains unresolved.

In the Perm region, activity in the field of gold prospecting and mining has recently increased. According to the latest data, Privolzhsknedra has issued more than 20 licenses for exploration and development of gold deposits in the Perm Territory. The last participant was the Udmurt LLC Geologist, which in March 2022 received seven licenses to use the subsoil of the Perm Territory. One of the largest jewelry enterprises in the region is Serebronika, which has been producing silver jewelry for more than 20 years, and also participates in world exhibitions and continues to create collections.

Among the largest manufacturing companies in Russia is the jewelry company SOKOLOV, which began as a small business, but today the jewelry factory employs almost 6 thousand employees, and this year the company plans to produce about 14 million pieces of jewelry. The brand's calling card is jewelry with enamel, and it can take all day to create one piece, and there are currently not enough workers in the jewelry market.

“This is such a massive staffing shortage. The generation of the 90s is actively entering the labor market. To put it simply, there are simply fewer of them on the market than necessary, and their requests for labor compensation are higher than they were before,” says Nikolai Polyakov, general director of the SOKOLOV jewelry company.

They talk about similar problems and add that purchasing power is now declining, so they offer 1-carat gold (40-carat gold) as an alternative to inexpensive silver. In appearance, such products are difficult to distinguish from the 585 standard standard that Russians are accustomed to, but they will cost 8–10 times less. At the same time, large manufacturers are planning to enter the European and world markets.

But conquering the world market for domestic jewelers is not an easy task. Oddly enough, small inexpensive diamonds weighing up to 0.3 carats are not produced in Russia. Therefore, 98 percent of jewelry with inserts use imported stones. Duties on the import of foreign diamonds increase the cost of products by a third.

Sergey Katyrin, President of the Russian Chamber of Commerce and Industry

“The overwhelming majority of small businesses are not ready for this; for them this is quite a serious burden and a big challenge. And they, of course, very much hope that there will be some kind of support from the state in terms of at least compensation for the costs of purchasing equipment.

Our jewelers speak with caution about the restoration of the jewelry market. By the end of 2022, sales are expected to grow by approximately 15%. Export opportunities are hampered by excessive state control in the sphere of circulation of precious metals and stones. The procedure for stamping and paperwork takes two weeks, but the online sales market does not tolerate such delays. One of the possible solutions today is the abolition of mandatory state stamping for exports and the transition to electronic document management.

But next year, domestic jewelers will face a new challenge - mandatory labeling of products. All products will be accompanied by a tag with a QR code that will show: metal, grade, weight, name of the stones. In addition, nanomarks will have to be applied to the jewelry itself. Labeling should clear the market of counterfeits and illegal products, the share of which, according to experts, reaches 50 percent.

If earrings, then gold, if chains, then silver

If we talk about the popularity of certain gold products, then most of the production and sale in Russia today are, of course, earrings - they accounted for 42.8% of all gold-approved products in 2022, or 13.3 million pieces. But if we talk about weight, it was only 15.1 tons. While almost 8 million gold rings were produced weighing 17.4 tons, and 4.4 million chains and bracelets were produced weighing 18.2 tons. This is explained, of course, by the average weight of individual products: obviously, rings are heavier than earrings, so they, like even heavier bracelets, will be in less demand due to their higher cost.

In the case of silver, the main share of production falls on chains and bracelets - 30%, or 5.6 million pieces, while almost 50 tons of chains and bracelets were produced last year. Only in second place are silver earrings (26% - 4.8 million items). As for foreign manufacturers, in 2022 the most silver earrings were imported - 5.6 million pieces (37.8%).

Sergey Afanasiev
AnalyticsIndustryBusiness

Jewelry market in 2022: analysis and forecast

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