Markets & Tariffs & Gold, Oh My!

by Abe Sherman – CEO, BIG – Buyers Intelligence Group

April 1, 2025

We like steady. We like predictable. When things are not steady or predictable, we get uncomfortable. We get nervous. Recent activities on multiple fronts are taking a toll on consumers, businesses and global trade. The chaotic start to this year may be unsettling, with increasing numbers of jewelers and suppliers calling me, telling me that they are getting nervous and asking how these things are going to impact, X, Y or Z.

The S&P 500 is near ‘correction’ territory, having declined by 9% in a matter of weeks. The tech focused Nasdaq is down 14% from its February highs. Is this having an impact on spending in your market? Some jewelers are telling us that it is.

Tariffs are among the unknowns we are concerned with. Suppliers are scrambling to figure out how to reprice their goods, should the threats of tariffs be applied as stated, removed altogether, or increased by whim. Outside of goods coming from countries that have sanctions, one doesn’t typically have to think too much about the advantages vs. disadvantages of buying merchandise from one company or another regarding country of origin. And just because Country A has sanctions on it, but Country B does not, that could change on a whim by next week.

When stability become instable in markets, they become chaotic, with unpredictable short-term outcomes. It’s not a stretch to say that things have become chaotic and it’s good for you to remember Chaos Theory.

Chaos theory describes the qualities of the point at which stability moves to instability or order moves to disorder. For example, unlike the behavior of a pendulum, which adheres to a predictable pattern, a chaotic system does not settle into a predictable pattern due to its nonlinear processes.

Gold

These rocky roads lead to the volatility we’re seeing in markets and notably for us, the rapid move upward in gold prices. Whether a hedge against inflation or a hedge against global uncertainty and the future value of the US Dollar, gold prices are having an immediate impact on the prices of everything you’re selling, the replacement costs of your inventory and especially the current value of your existing inventory.

By now, some of you are thinking; Thanks for the pep talk, Sparky, but what do we do about it! I’m a big believer in market cycles – we discuss this at our Plexus Performance groups every six-months: Where are we now and what’s the expectation for the next six months? I go around the room asking jewelers for their opinions but it’s always interesting to understand where people feel they are in their own marketplace. There is usually a wide range, from optimism to fearful. Here’s a link to a very concise explanation of business cycles from the Kahn Academy.

Regardless of where you believe we are, consumers have their own realities to deal with that impact how they think of their financial security and, of course, how they spend. Since these cycles repeat, more or less, every seven to ten years, it’s helpful to learn to expect them and prepare for cycle swings.

Here are the steps we discuss to alleviate the stress of market downturns:

1. Build cash

a. Have at least 6 months of operating expenses in a savings account

2. Reprice your old inventory to current prices

3. Reduce your asset inventory, especially aged inventory, to build cash

a. Create realistic goals about where you want your owned inventory to be by the end of this year

b. Track your progress monthly

4. Sell what you own

a. Keep a lid on purchasing new lines

b. Discourage special orders when you can sell from the showcase

c. Explain the costs of each special order to your sales team

5. Work with your suppliers to help manage your inventory

a. Reorder your fast-sellers and core inventory

b. Stock-balance regularly

6. Aggressively Buy Gold

7. Never stop recruiting

a. Store closings are accelerating creating hiring opportunities

8. Reduce memo inventory that competes with your owned inventory

9. Advertise repairs

Stagflation

There is a potential blow to the economy that will impact everyone, and that’s Stagflation. While rare, this happens when a recession occurs at the same time inflation is high. In other words, prices are going up and jobs are being lost. This would have a significant negative impact on consumer sentiment regardless of their position.

This is a good time to do a gut check. How are YOU feeling? Ask your customers about how they are feeling about their short-term prospects and outlook on the economy. Ask your staff about their friends and family – they all make up your community. My stance on being prepared for these business cycles doesn’t change. Good markets, poor markets, I’m in for the long-term and while I’m just as susceptible to the emotions of markets, I’m ready for it. (I hope)

No one has ever made money by panicking. Remember, we’re in this together.