HOLIDAY MONEY
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'Tis the season to buy some bling
Attention shoppers: Jewelry may turn out to be one of the holiday season's best deals.
December 1, 2005: 2:10 PM EST
By Grace Wong, CNNMoney.com staff writer
Race for holiday bargains begins
Shoppers flock to stores seeking discounts on Black Friday but will it last? (Full story.)

NEW YORK (CNNMoney.com) - Fine jewelry may shape up to be one of the best bargains of the holiday season as retailers offer deep discounts amid soaring precious metal prices.

The 2005 holiday shopping season has been marked by price cuts across all sectors as nervous retailers have slashed costs to lure shoppers hunting for sweet deals. (Full story.)

Jewelry is always an important holiday category, according to George Whalin, chief executive of San Marcos, Calif.-based Retail Management Consultants.

"The holiday season is a very good time to buy jewelry because of the deals. You have to be knowledgeable about what you want, but there are bargains to be had for consumers," he said.

Several department stores offered big discounts on fine jewelry the day after Thanksgiving, which kicks off the holiday shopping season, according to a research report issued by Goldman Sachs.

Many of J.C. Penny's early bird extra discounts were focused on jewelry and Kohl's also served up big deals, the Goldman Sachs Black Friday Bulletin said. Macy's offered a 30 to 40 percent discount on some items at its jewelry counters.

Zales, the nation's largest specialty jewelry retailer, is advertising a storewide 30 to 60 percent markdown on its Web site, where online shoppers can pick up an 18-inch 14K gold necklace originally priced at $100 for just half the price.

Smart shopping

While holidays sales are crucial for retailers, sometimes accounting for up to 40 percent of an average retail jewelry store's annual sales, not all jewelers are joining in the promotional bonanza.

Most mall-based jewelry stores and lower-end retailers tend to offer heavy discounts to drive customer traffic, but those selling more luxury, high-end items won't slash costs much, industry experts said.

"Most jewelry stores that focus on the quality of merchandise (versus price) probably don't discount deeply at any time of the year," said Clifford Jackson, marketing manager for the industry trade group Jewelers of America.

Blue Nile, an online jewelry retailer that caters to the high-end market, said it doesn't offer any holiday discounts because it gives customers reasonable prices throughout the year. But the e-tailer is offering non-merchandise promotions, such as free shipping on U.S. orders, to woo shoppers.

Steep discounts might appear to be a downright steal, but consumers need to stay sharp, experts said. They need to be knowledgeable what they want and what they're getting in order to get the best value for their money.

Higher prices looming?

Even those shopping in the less discounted end of the market are likely to get good returns on their jewelry purchases this season. That's because precious metal prices are skyrocketing.

"Consumers buying right now are getting good value relative to the price of underlying metals," said Blue Nile CEO Mark Vadon.

Gold prices, which have enjoyed double-digit growth this year, are hovering around $500 an ounce, an 18-year high. Platinum meanwhile exceeded a cool $1,000 an ounce earlier this week.

Holiday shoppers haven't felt this run-up in prices because most retailers bought their holiday inventory earlier in the year when metal prices were lower.

But jewelry manufacturers are already starting to feel the sting of soaring gold prices, according to the World Gold Council, a trade association for the precious metal.

In India, the world's largest consumer of gold jewelry, demand was flat in the third quarter as the market paused for breath and adjusted to the sharp rise in gold, the Council said in a recent report.

Increases in metal prices tend to be absorbed throughout the supply chain -- by manufacturers, wholesalers and retailers -- before being felt by consumers, according to Jackson of the jewelers group.

Although, if precious metal prices keep on their upward track, retail prices could rise in tandem, experts agreed.

"If we continue to see the rise in gold, we certainly will see that in retail prices," said Whalin.

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