US silver jewelry consumption in 2020 report

Overviewed US Silver market 2020

Silver Jewelry Report overviewed US Silver market 2020. Any review of the US silver jewelry market in 2020 is inevitably dominated by the depth of the trough as the Covid pandemic took hold and then the speed of the recovery as lockdowns were eased and the economy came back to life. 

In this regard, we can point to the data from the US Department of Commerce on sales (by value) of all jewelry and watches. This shows a dramatic slump to losses of -51% y/y in April and a strong recovery to +2% in June (making for an indicative -25% for Q2 as a whole). 

Our contacts inform us, however, that recent sales include an element of pent-up demand, as more consumers are at last able to leave their homes, and so called “revenge shopping” (the latter being shopping as remedy to the general gloom of recent months). As a result, it is far from guaranteed that the modest gain seen in June continues. 

This would be doubly certain if infection rates fail to fall materially, if unemployment were to rise and consumer sentiment to falter as furlough schemes and other forms of government support are unwound. We can neither ignore the US presidential election, which traditionally puts a brake on sales of discretionary goods due to uncertainty surrounding the outcome. 

The above refers to the whole jewelry market and so it is important to look at silver in isolation. So far, information from trade contacts suggests that silver has fared slightly worse than gold among retailers with a fair offering of both due to the ongoing popularity of the, yellow look. 

Specialty and independents have also tended to see greater sales losses than generalist retailers who include jewelry in their product range. As the former two tend to have a greater skew to silver, this may have also acted as a drag on silver sales. 

For instance, Pandora saw losses in Q2, 20 of 35% y/y. That said, imports of silver jewelry have fared better than gold, with a year-to-date (to end-July) drop of 25% in comparison to gold’s -38%. As a result, we expect US silver jewelry consumption in 2020 to fall by 10%. While steep, that is smaller than the 16% decline we expect for the fabrication of silver jewelry (and a larger fall in silver jewelry imports) as the year has been characterized by heavy destocking and only cautious inventory replacement as retailing comes back to life. 

The greatest contrast, however, is with expectations at the start of the year; then we were expecting the US silver jewelry market to grow by 2%, largely as the drag of previous years’ substitution to gold faded.