Sunshine on the horizon
Freydi Neuwirth, vice-president of manufacturing and marketing for Atlantic Engraving, notes the low Canadian dollar is a good thing.
“We need to buy [gold] as we always have,” says Neuwirth, referring to the trade. “Stock and merchandise is needed in order to sell to the consumer, so purchasing is necessary regardless, even with a low Canadian dollar. The real question is, how we can sell our gold?”
One possibility, she says, is an influx of American shoppers and tourists who now enjoy a tremendous exchange rate in their favour. “When people are on vacation, they tend to purchase and their decision is not based on price,” she adds.
Thelma Chuakay, managing director of Umicore Precious Metals Canada, points out that even with a weak Canadian dollar, jewellers are still paying less for gold than they did when it cost $1900 per ounce and our dollar was at par with the U.S. greenback. At the time of this article’s writing, gold cost $1157 US per ounce, or $1475 at the day’s exchange rate.
Exporters really have an opportunity to do well, she points out, as their products will be more competitive in comparison to American goods.
“On the retail side, if they don’t want the volatility, they should look at their inventory and see what is moving and what’s not, and decide whether to refine it, recycle it, or put it in a pool account or a consignment account with a refiner.”
Atef Salama, vice-president of Express Gold Refining in Toronto, says retailers usually have a sufficient margin to absorb the price of the metal fluctuating.
“And if they don’t, they have to consider increasing their margins, looking at predictions for the Canadian dollar, and working that into their baseline price for product,” Salama says.
“The retail world has been struggling, but I see it picking up a bit as the price of gold comes down in relation to the Canadian dollar. I can see it benefiting Canadian companies that export to the United States because the dollar has been so strong in the last few years. For importers dealing in quantities, they should look at hedging as a tool to control price fluctuations. But this is an issue for the whole Canadian economy, not just the jewellery industry”¦ People should know we’re all in the same boat. It’s affecting everybody and everyone should adjust accordingly.”
