By Ryu Jin
Staff Reporter
Are you thinking about getting your sweetheart something made of gold for Valentine's Day? Or, do you have to buy a gold ring to celebrate the first birthday of a baby? If so, you might have to look to buying something else this time.
Prices for the precious metal on international markets have jumped more than 40 percent since mid-August to a record $900-plus per ounce (1 ounce equals about 28.34 grams). On Friday afternoon, gold was selling at $918.40 per ounce.
A lot of people are now looking to other gifts to celebrate anniversaries amid the recent hike in gold prices. Ahead of Valentine's Day, jewelers also have adopted a different strategy: selling less gold.
Lee Seung-heon, 34, threw a party to celebrate the birthday of his one-year-old son at a Seoul hotel on Jan. 27. Called ``dol'' here, the first birthday of a baby is celebrated by the parents' friends as well as close relatives, who often present gold rings to the baby.
``We got only four this time,'' said Lee, when asked about the number of gold rings they have received at the party. ``We received a dozen rings at the dol banquet for our first daughter two years ago.''
Then, a gold ring for the celebration sold at around 80,000 won (roughly $85 at the current exchange rate). Now it costs more than 120,000 won for the ring, which is usually made of about 3.75 grams of pure gold.
So, a growing number of people are now choosing to give 14-karat gold bracelets or small necklaces made of gold, which are relatively cheaper than a gold ring. Some people even present parents with cash or gift certificates nowadays.
The trend has resulted in a serious blow to local jewelers. South Korea heavily relies on imports for gold. As international gold prices soared, the local prices also mounted and, as a matter of course, the demand fell sharply.
``About a year ago, we used to sell at least one or two rings for the dol celebrations a day,'' said Song, a jeweler in Jongno, downtown Seoul, who requested to be identified only by his surname. ``Now we sell one or two rings a week, at best.''
As part of efforts to survive the changed environment, some jewelry stores have been stocking up on styles that use gold sparingly. The goals are obvious: to keep prices low and to give shoppers alternatives to the sticker shock of gold.
Online retailers, in particular, have been promoting more silver jewelry and pieces that mix gold with pearls or colored gemstones, as affordable alternatives, ahead of the Feb. 14 celebration for couples.
Weeks leading up to Valentine's Day are crucial for jewelers. Adding to the industry's woes, however, are price increases for other precious metals such as platinum and less-costly palladium among others.
While the demand for gold presents has decreased, interest in the precious metal as a means of investment has been increasing. According to local banks, the total volume of gold trade in January almost quadrupled from the first month of last year.
Gold prices have risen as investors have bought the metal as a hedge against inflation and a weak U.S. dollar in addition to the subprime fallout. Gold prices tend to rise when the economy is turbulent since buyers view it as a safe investment.
``We have had a flood of inquiries about gold investment recently,'' Jang Seon-ho of Shinhan Bank said. ``Gold seems to have gained popularity as a means of investment as the financial market has been confused recently.''