The case for 22 and 24 karat gold jewelry

Let me introduce myself. My name is Steven Feldman and with my wife, Gina, I co-founded Auvere. I am often asked why Gina and I started Auvere. While we live in a country that celebrates entrepreneurship, creating a new business from scratch is not easy and should never be taken lightly. Moreover, there is no shortage of large and small jewelry companies in the marketplace; so, from a certain perspective, it is easy to wonder why one would create yet another jewelry brand. We started Auvere because we realized that the jewelry industry was (and still is) undergoing a major transition and we wanted to play a meaningful role in bringing something different to the market.

Why buy hight karat gold jewelry

Before we created Auvere, neither 22 karat gold jewelry nor 24 karat gold jewelry were easy to find in the United States. The majority of fine gold jewelry sold in the United States is crafted from 10 karat gold, 14 karat gold and 18 karat gold. The knock on 22 and 24 karat gold jewelry is that because these purer forms of gold contains little to no alloys, they are softer and not as wearable than the more heavily alloyed 14 and 18 karat gold jewelry. As admirers and collectors of high karat gold jewelry, we found those claims to be exaggerated. In fact, it was the true nature of these purer forms of gold that Gina and I found attractive. Indeed, jewelers in many parts of the world, including Greece, Turkey, India, China and the Persian Gulf have used high karat gold to create jewelry for centuries and continue to do so today.

I was already in the gold business. As the co-founder of a financial technology company focused on alternative investments, including physical gold, I have been a long-time proponent of the value of physical gold in a diversified investment portfolio. Gina, previously a real estate attorney, had finally quit the law to focus on her long-time passion for design and had recently launched a collection of fine leather goods. Passionate about jewelry and accessories, she had a small collection of high karat gold jewelry that she acquired during her travels.

We merged our respective areas of expertise to create Auvere — a company that offers well designed jewelry crafted from investment grade gold at prices that are meaningfully less than the cost of a similar piece of jewelry crafted from 18 and even 14 karat gold. Why does this matter? Gold jewelry retains its value over time — especially when you purchase directly from us without the standard middle-man markup. This cannot be said about that bright red sports car, designer clothing or costume jewelry.

Why buy hight karat gold jewelry

Let us break down Auvere’s value proposition a little bit more.

  • Gold jewelry vs non-gold jewelry. If we compare any type of fine gold jewelry, whether high karat or low karat, to non-gold jewelry, gold jewelry triumphs in terms of value. Why is this the case?

    • First, gold is scarce. By comparison, natural diamonds are plentiful and the addition of man-made diamonds to the market place has added to the glut of diamonds available for sale.
    • Second, unlike diamonds and gemstones, gold has an easily discovered global market price, which means the gold can be converted to money.
    • Third, gold has a history of increasing in value over time.
  • High karat gold vs. low karat gold. When you purchase 22 karat gold jewelry or 24 karat gold jewelry, you are buying pieces that contain more gold than 10, 14 and 18 karat gold jewelry. Since we add more gold to any given item of jewelry than most other jewelers, it makes sense that a consumer should pay more for our high karat gold pieces compared to similar pieces made from less gold. So how do we maintain prices that are typically lower than gold jewelry containing less gold and some pieces of designer costume jewelry? The answer is in markups and models (business models, that is). We employ a business model that is 100% direct-to-consumer (“DTC”). Auvere jewelry may only be purchased on auvere.com at prices that eliminate the middleman markups associated with a wholesale model. Moreover, because we sell online, we have none of the operational costs associated with a bricks and mortar store. Let’s break this down even further.
  • Wholesale vs. DTC.
    • The wholesale model. The traditional wholesale model of selling fine jewelry to a consumer involves the following participants: (i) a maker, (ii) a retailer and sometimes (iii) a third-party wholesaler. Typically, maker has its own in-house sales team, which identifies and negotiates wholesale transactions between the maker and the retailer. Once the retailer purchases the jewelry from the maker, it adds a markup between 180 to 300% to arrive at the price at which it will sell the jewelry to the public. Sometimes, there’s an additional player, the third-patry wholesaler, which adds yet another cost to the ultimate price paid by the consumer. Makers without an inhouse sales team will use a third-party wholesaler to identify the appropriate retailers for the maker, and for that service, the wholesaler charges a separate fee, which is ultimately added to the cost of the wholesale cost of goods. The retailer then applies its markup.
    • The DTC model. Conversely, the DTC model eliminates the wholesale transactions by selling directly to the public. The obvious benefit of employing sometimes a DTC model is that Auvere can offer prices for higher karat gold jewelry that are lower than the prices offered for 18 karat gold jewelry (and even 14 karat gold jewelry) sold through a wholesale model.

In short, Auvere offers a wide range of high karat gold jewelry containing more gold that is priced the same or less than similar pieces sold through a wholesale model containing less gold.

Why buy hight karat gold jewelry

Gold does not need much promotion. The history of gold speaks for itself. Gold has enticed and mesmerized the human race for more than 3,000 years. Empires and kingdoms have been built and destroyed over gold. Gold ended up not only in temples, churches and the coffers of kingdoms and empires, but also adorned the arms, ears, fingers, necks and heads of kings and queens. And when gold wasn’t fashioned into jewelry for royalty, it was used as a universal form of money. Even now, gold is still coveted as jewelry and, at the same time, is owned by every major central bank, and convertible into every single currency on the planet.

Since we are talking about money, it’s important to note that until the summer of 1971, every dollar bill printed by the government of the United States was backed by gold. The demise of the Gold Standard allowed the US government to “print” dollars — something that was politically much easier than raising taxes. Over the course of the last 50 years, the government has reduced taxes and made up the difference by printing more dollars to cover its deficits. This freedom to print bills backed solely by the good faith and credit of the United States has contributed to a national debt well in excess of annual GDP.

Since the US government prints dollars at a much faster pace than the addition of new gold to the existing supply, it should come as no surprise that the price of gold has appreciated from $35 per ounce in the early 1970’s to around $1,800 per ounce (as of July 21, 2021). In fact, during the 21st century, gold has the best performing large asset class and has outperformed both stocks and bonds. If you purchased 22 and 24K gold jewelry in the 1970’s, you have something very valuable to hand to your children.

No one can predict the gold price on any given day, but what remains constant is that the relationship between humans and gold is as strong as it was thousands of years ago. And that augurs well for the continued increase in the value of gold over time.

Jul 22nd 2021