prive of platinum in the past week

[arabiangoggles]

In negotiations with a vendor i am being told that the price of platinum has gone up the past week enough to make my setting $100 more expensive. Wondering if this is true?

 

[Richard Sherwood]

Platinum rose from 1440 per ounce on 11/2 to 1475 per ounce on 11/6, and then down to 1465 per ounce today (11/.

Just a month ago (10/9) it was at 1360 per ounce.

 

[strmrdr]

A lot of vendors who do a lot of custom work will buy in volume so very short term market jumps may not tell the story.
Lets say they bought several onces 2 months ago then used up that batch at the price they paid + markup.
The next batch of several onces that your ring is coming out off may cost a lot more than the short term jumps may indicate compared too the last batch.
With the way prices are going up it is not impossible that $100 more is fair but seems like a lot with the small amount in a ring to me.

 

[denverappraiser]

Date: 11/8/2007 8:39:13 PM
Author: strmrdr
A lot of vendors who do a lot of custom work will buy in volume so very short term market jumps may not tell the story.
Lets say they bought several onces 2 months ago then used up that batch at the price they paid + markup.
The next batch of several onces that your ring is coming out off may cost a lot more than the short term jumps may indicate compared too the last batch.
With the way prices are going up it is not impossible that $100 more is fair but seems like a lot with the small amount in a ring to me.

One of the key problems for manufacturers is that they must base materials cost on what it will cost them to replace their stock, not what it cost them to buy in the first place. A manufacturing or custom jeweler will have an inventory of platinum and this is effectively a bank account. This is different from more ‘typical’ retail environments and even slightly different from the way records are required for tax compliance. This is true of diamonds as well. When a jeweler buys a diamond for stock they obviously will buy it as inexpensively as they can and then will start hunting for a customer. The price they paid is known as a ‘sunk cost’, meaning that that deal is already done and can’t be changed. The numbers that are unknown is the transaction price when it finally sells and the purchase price of the new one that will replace it in the inventory so that they can remain in the business of selling diamonds while extracting a little money for themselves and their other expenses. If the replacement cost goes up, they HAVE to raise their selling prices or they quickly find themselves out of business. The opposite is also true. If the replacement prices drop, they need to drop their asking prices even if they paid too much for the ones in stock or they will quickly find themselves without buying customers. Asking for the big money is not the same as getting it after all.

It’s entirely possible that their costs are up $100. Is it reasonable that they pass this on to you? Possibly. It depends no the nature of the negotiation. If they’ve already committed to a particular price and you had already agreed to pay it, I think they should stick with their quote. If you still have the opportunity to back out, I think it’s fair that they do to. Last weeks price was last weeks price and they are under no obligation to leave that offer open. You, of course, are under no obligation to accept the new offer.

Neil Beaty
GG(GIA) ICGA(AGS) NAJA
Professional Appraisals in Denver

 

[elmo]

I wondered that, since you are "in negotiations", whether this is part of the negotiations. Either case is plausible.

 

[arabiangoggles]

The dealer came back down to the original price he quoted me for the setting. I think he was just using it as another reason not to budge on his price which is a fair thing to say, but i understand that he may have bought the platinum for this ring 2 years ago when it was only $1000/oz but given that he has to replace it at current market prices, that is what he has to go off of.

Another ? i have is since im buying a diamond and setting from the same jeweler, should i have the diamond sent off separately to be appraised and then the ring sent back to the appraiser for a second appraisal after being set, or should i just send it off to the appraiser after being set once. The problem with the second scenario is that the setting is nonrefundable and once the diamond is in it, i cannot return it.

 

[clipper37]

Just looking at pure heavy metal, since the person brought up prices of platinum to impact the price;

If there is 31.1 grams in a troy ounce, and this was purchased for $1475, a ring requiring 4.5 grams of pure platinum to make the alloy would cost $213

To get a price of one hundred bucks less, one would have to have purchased the platinum for $784 per troy ounce a while back and forgotten to check the prices until midway through your 'negotiations'

On appraisals, I'm in the same scenario, I am opting for having him look at it twice, so i'm just gonna ask to pay for two visits at once~maybe less, since I won't need any paperwork or advice for 2nd one, just a quick look over and to verify it's the same stone he saw two weeks prior.
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[Garry H (Cut Nut)]

It is not quite that simple.
As jewelers we pay the people we buy metals and alloys a margin.
And then when we sell we put on a margin.
A margin on a margin makes $100 quite plausible

 

[clipper37]

absolutely, there are obviously other factors involved, which is more of what I was driving at.

When you go to a nice restaurant the actual meat on your plate costs a fraction of the price you pay, and it should, yet if beef prices double, I can guarantee restaurant owners across the country will be on the news talking about the spiking cost of beef (something they don't control) as responsible for their prices (it's a red herring, since it accounts for only part of the final price).

Price fluxes of plat may play a role, no doubt, but is has become a reflex for individuals to indicate the cost of platinum repeatedly as wholly, or at least mostly, responsible for their price.

I have not once been told the price of a platinum ring costs what it does because their platinumsmith is worth it, yet I'd respect that, the guy or gal has a skill and is probably worth it.
________________________

 

[strmrdr]

Date: 11/9/2007 7:43:05 AM
Author: denverappraiser



One of the key problems for manufacturers is that they must base materials cost on what it will cost them to replace their stock, not what it cost them to buy in the first place. A manufacturing or custom jeweler will have an inventory of platinum and this is effectively a bank account. This is different from more ‘typical’ retail environments and even slightly different from the way records are required for tax compliance. This is true of diamonds as well. When a jeweler buys a diamond for stock they obviously will buy it as inexpensively as they can and then will start hunting for a customer. The price they paid is known as a ‘sunk cost’, meaning that that deal is already done and can’t be changed. The numbers that are unknown is the transaction price when it finally sells and the purchase price of the new one that will replace it in the inventory so that they can remain in the business of selling diamonds while extracting a little money for themselves and their other expenses. If the replacement cost goes up, they HAVE to raise their selling prices or they quickly find themselves out of business. The opposite is also true. If the replacement prices drop, they need to drop their asking prices even if they paid too much for the ones in stock or they will quickly find themselves without buying customers. Asking for the big money is not the same as getting it after all.

It’s entirely possible that their costs are up $100. Is it reasonable that they pass this on to you? Possibly. It depends no the nature of the negotiation. If they’ve already committed to a particular price and you had already agreed to pay it, I think they should stick with their quote. If you still have the opportunity to back out, I think it’s fair that they do to. Last weeks price was last weeks price and they are under no obligation to leave that offer open. You, of course, are under no obligation to accept the new offer.

Neil Beaty
GG(GIA) ICGA(AGS) NAJA
Professional Appraisals in Denver

There is no reason to price plat on a rotating stock basis.
Frankly I wouldnt deal with someone who does.

 

[strmrdr]

Date: 11/10/2007 6:50:42 PM
Author: arabiangoggles
but i understand that he may have bought the platinum for this ring 2 years ago when it was only $1000/oz but given that he has to replace it at current market prices, that is what he has to go off of.

baloney, anything over what the price he paid is pure profit.
The metal itself is a tiny part of the cost that the rotating stock principle should not apply.
With diamonds where the stone is 100% of the transaction I can sorta see it but don't like it.
You can bet that prices wont go down very quick when the price of plat does a correction from the artificial levels it is at.

 

[clipper37]

another option after stone gets set for verification, if the stone has a GIA cert...is one can get it done for free w/GIA, but if you use a setting which conceals much of the stone this prolly won't work, i need to call, but i'm guessing that 4-prongs will be alright?:

Report Verification Service
If you would like to confirm the authenticity of your GIA Diamond Grading Report or Diamond Dossier®, or the information your report contains, you can request a free verification. Simply submit your diamond along with its original report to the GIA Laboratory. The diamond will be re-assessed and the results of the new analysis will be returned to you, along with your diamond and its original report.

Anyone can submit gemstones to GIA for report verification. Although we attempt to perform this service even when diamonds are mounted, in some instances we may have to ask to have the diamond removed from the setting so our gemologists are able to properly perform the verification service. Please note that the results will be returned to you by letter, along with your diamond and its original report.

For more information about this free service, please contact GIA Laboratory Customer Service at 760-603-4500 ext. 7590 in California or 212-221-5858 ext. 3724 in New York; or e-mail [email protected].
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