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© RIA Novosti. Ekaterina Chesnokova

Gold en pointe

by Nathan Gray at 24/12/2012 21:06

Celebrating one of Russia’s greatest cultural traditions, the Sasonko jewelry house introduced a new collection based on ballet in the appropriate setting of the Bolshoi Theater on Dec. 5.

Designed by artist Tatyana Khromoseyeva, the rings, pendants, necklaces, earrings and bracelets in “Images of the Russian Ballet” evoke the movement of dancers in the depiction of a ballerina’s tutu in full performance.

The ballet theme, however, was not Sasonko’s first intention, Khromoseyeva told The Moscow News in e-mailed comments. Instead, in an idea of the firm’s president, Mikhail Sasonko, the collection was to be dedicated to music. Khromoseyeva was listening a lot to Antonio Vivaldi’s “The Four Seasons,” and had already created two of a series of rings she had designed.

“But, plunging myself into the world of classical music, I was inspired by a different great composition – ‘Swan Lake,’ by Peter Tchaikovsky,” she said. “This is how the idea of a collection dedicated to ballet was born.”

A valuable resource

Jewelry is perhaps an odd item for economists. On the one hand, being more of a luxury product, it is less of a broad economic indicator than more common consumer goods, say, gasoline or groceries. On the other hand, one of its main components – gold – is as important as oil to understanding the world economy, due to its reputation as a safe haven.

This last aspect especially came to light in the aftermath of 2008’s economic crisis, which began a “supertrend” in the price of gold, said Aton analyst Ilya Makarov. From December 2007, the price climbed from $790.80 to a high of $1,895 in September 2011, according to the World Gold Council. Bloomberg reported a price of $1,665.50 on Monday afternoon.

It was not the crisis itself, however, but governments’ responses – in the form of stimuli through printing money, the familiar “quantitative easing” – that contributed to the continuing rise. “If you look at 2008-2009, the post-crisis period, stock markets rallied at the time, but central banks around the world started to stimulate economies, they pumped a lot of money into the system,” Makarov said.

“If you look at, for instance, aggregates of this quantitative money in the system, and plot this picture on a graph, and you add a gold price chart, you clearly find there is a 1:1 relationship. Money printing is reflected in a higher gold price, [since] investors are more scared by high inflation rather than recessionary expectations.”

The end of the supertrend, however, does not necessarily mean a recovery, but an uncertainty among investors as to the future direction of gold.

“It’s clear that the growth is decelerating definitely, meaning that this supergrowth trend that we witnessed in 2008-2011, for almost four years, has stopped, and now we’re in uncertain territory where investors question whether this trend will be sustainable or we’re at risk to go down,” Makarov said.

The jewelry question

Gold’s ambiguity is reinforced by the fact that its price as an investment equals its price as raw material for jewelry production, so a jeweler pays more for what he needs to make his products, then either has to raise his prices to make up for the difference or reduce his profit.

The price has remained high, however, due to investor and industrial demand, Makarov said, even as retail and jeweler demand has fallen because of the high prices.

Consumers, meanwhile, have sought ways to get around the high prices and take advantage of technology that allows production from cheaper materials, the St. Petersburg-based magazine Yuvelirnaya Rossia and the analytical agency RosYuvelirExpert found.

“The trend, determined by the economic situation, is a bias on the side of cheaper jewelry, but larger, to give the impression of being expensive,” the two organizations told The Moscow News in an e-mailed statement. Expanding on their comments, they said that the use of lower grades of gold and hollow or artificial stones are features of the cheaper products.

Still, in a survey of Moscow jewelry customers that they conducted in September, the split is 50-50 between the lower-spending categories (4 percent, up to 1,000 rubles; 16 percent, up to 5,000 rubles; 30 percent, up to 10,000 rubles) and the higher-spending (22 percent, up to 30,000 rubles; 18 percent, up to 50,000 rubles; and 10 percent, above 50,000 rubles).

Defying fashion

A salient feature of the jewelry market is the focus on tradition and durability of the products, a mainstay of the ethos of long-existing houses of Russian heritage, such as Faberge, and newer arrivals on the market, such as Yekaterinburg’s Tulupov (see story, pages 12-13).

In line with this, the Moscow survey found that buyers considered fashion trends only in 5 percent of purchases, with a possible seasonal exception: brighter models appear more in demand in the summer, and more classical models in the winter.

That is not to say, however, that image does not play a role, as the survey found that women and men equally consider the reputation of the producer when purchasing jewelry, though women focus on design and price more often than men – a margin of 81.8 percent to 28.8 percent.

Sasonko, meanwhile, looks to have strong designs in the future, as Khromoseyeva is gearing up for a new work.

“I have developed an idea for a new collection, dedicated to Retrofuturism,” she said. “For me, this is not simply an aspect of representational art, it is a whole layer of culture, bringing together painting, architecture and music. I’ve already made sketches of this collection and, I think, it will soon come into being.”

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