1 Fusion, July 2007 - Rio Grande

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SUMMER 2007PAGE 2e Rising Price of SilverFor most of the decade after Mitsubishiintroduced Precious MetalClay in 1996, its price remainedstable. As any jewelry maker workingwith PMC well knows, all thatchanged in 2006. Mitsubishi issueda half-dozen pricing schedules in2006 alone, causing many people towonder what was going on.What was going on, in short, isthat the price of silver is much morevolatile now than it was 10 yearsago, said Kevin Whitmore, productmanager for Rio Grande, the NewMexico-based supplier of PMC andother jewelry materials, includingsheet and wire products. With theprice of silver on the rise, so too isthe cost of PMC.“People who buy PMC fromRio Grande pay a price that isdirectly derived from the price ofsilver on the world market. We designeda system that calculates theintrinsic value per gram of silver, towhich we add a set fabrication fee,”Whitmore said.“Generally, once we set afabrication schedule, we try not toconstantly adjust it. So, only thevalue of silver should cause theprices to vary.”at reality should serve as areminder to people who use PMCthat the material truly is a preciousmetal – and that they might be wiseto start paying close attention toglobal metal markets. In the earlyyears of PMC, when the materialwas new, some jewelry designerslooked on with skepticism and suspicion.As the material has becomemore mainstream and viewed morewidely as an accepted material,some of that reticence is ebbing,Whitmore said.“In this context, selling PMCbased on the silver price does makemore sense to those traditionalistswho are beginning to open up toPMC,” he said.When considering this issue,Whitmore advised people in thebusiness to keep in mind how stablethe price of PMC was for manyyears. During that time, prices forsilver always fluctuated, but not somuch to cause major shifts in thecost to manufacture PMC, he said.But with the inflationary spiralthat began in 2004, the cost keptinching up. Previously, the cost ofsilver stayed at values at or below $6per troy ounce. In 2004 and 2005,the average price was closer to $7 to$8 per troy ounce. e silver marketheated up in 2006, with prices startingthe year at about $10 per troyounce and spiking at $15 per troyounce by May. Since then, silver hasbounced between $12 and $15 pertroy ounce.e future? Whitmore can onlyguess.“My hunch is that world silverprices are going to keep going upover time,” he said. Whitmore shedlight on Rio Grande’s pricing structurefor PMC. All its silver products– chain, wire, findings, PMC, etc..
JOURNAL OF THE PMC GUILD– are based on the price of silver onthe world market. He offered thisexample of a 16-gram package ofPMC3:If silver is $13 per troy ounce,Rio Grande divides it by 31 to getthe value of silver per gram. In thiscase, it works out to $0.41935 pergram. at is multiplied by the 16grams of silver in the package, fora subtotal of $6.70968. at is thenrounded up to $6.71, to which afabrication charge is then added.Rio Grande’s fabrication chargevaries by volume. A certified artisanwho buys fewer than 10 packagespays a $14 fabrication charge, or$20.71. A certified artisan whobuys more than 10 packages paysa $13 fabrication charge. ere’s anU S D o l l a r s151413121110987654Jan Feb March April Mayadditional price break for certifiedartisans who buy 100 packages ormore of PMC.Rio Grande assesses a higherfabrication charge for non-certifiedcustomers. In the previous example,the fabrication fee for a non-certifiedcustomer would be $20.50, or$27.21 as a starting price.“Rio Grande believes havingthis spread in price is important,”Whitmore said. “We know manycertified artisans lead classes andwish to resell PMC. Rio Grandeneeds to price PMC at prices thattraditional jewelers (who are noteligible for the certified prices) canconsider a purchase. At the sametime, we recognize we need to havepublic prices that allow teachers toresell PMC fora profit. I’ve designedour pricemodel with thehope of meetingboth of theseneeds.”is chart showsthe significant risein price in the spotprice of silver, andalso compares theroller coaster changesof the last year to thegentle terrain of adecade ago.Source: Kitco.comPAGE 3
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1 Fusion, July 2007 - Rio Grande

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