Part One: Where is silver going?

We don't know if you've noticed the direction silver has traveled on the commodities scale but when you own a sterling silver business, you notice. Even if we didn't watch the daily fluctuations of the traded commodity, you can't help but notice when the amount you pay to build up inventory increases each month you purchase stock from the previous month on every piece in your entire inventory.  In fact, that's been the continued trend silver has taken since we began our business in 2006. Just look at the chart copied from www.kitco.com and you'll see the directional change has been consistent in the time line presented beginning with January 2000 where silver traded below $5.00 and stretching to over $29.00 in January 2011.

Maybe being owners of a company that sells the subject commodity may not qualify us as experts, but it does at the very least give us a credible critic's title. To answer the question, "where is silver going?" we would have to provide the response based on our experience which is unquestionably, "up, way up". In just the past year, silver has increased over 93% as represented in the chart to the right.
While silver has obviously increased in price, this final chart reflects the not so obvious decrease in the value of our U.S. Dollar over the past two years.

What does all this mean for a sterling silver business? It means that the items provided to customers cost us more every month and are purchased with a currency that is worth increasing less. In English: It creates an upside-down profit margin in a printed catalog venue where prices remain fixed.

To reflect the over 93% increase in silver from last year, here's an example of what should be happening: A bracelet that sold in our catalog for $119 last year should have doubled in price to cover the increased cost to the supplier and to provide the same profit for Inspiranza and our consultants. We said should in the previous example but that's not what happened. Instead we determined that the increased cost to us would not result in doubling prices. If we weren't going to increase the price we had to determine where the additional cost would be applied. We decided not to reduce consultant commissions and we stood on that decision with unwavering resolve and opted instead to reduce our profit margins in most cases to zero rather than reducing commissions and increasing prices for customers in hopes that the silver market would turn bearish and the situation would resolve.

While that may work for a short time, a very short time, we knew that we and other sterling silver companies would have to do something to remain in business. To continue offering sterling these companies would need to do this: increase the cost of the pieces and decrease the amount of silver used in them. This fix didn't originate with us and has been adopted by other sterling silver jewelry companies over the past two years as they switched and introduced cords and threads in necklaces to reduce the overall amount of sterling in their pieces while dramatically increasing their prices.

It has always been our goal to provide affordable jewelry for women, and doubling the cost of our pieces is not within the shopping budget of the "everyday woman" like "us". And, because we've kept our ears to the silver cost predictions, you'll be amazed to hear where it is forecasted to go. We've heard figures from as low as $50 an ounce by the end of 2011 to as high as $600 an ounce and higher within the next several years. Adhering to carry only sterling silver products would mean that the catalog would consist of items priced the same as gold products. That's not something that direct sales distributors would find a great deal of success in selling.

Part Two: What are we going to do about it?

Because this is a sterling silver industry issue and not an Inspiranza issue we know we can work around it! That brings us to the later portion of our titled question "what are we going to do about it?" Well we've come up with several possible solutions:

1) run screaming;
2) double the price of the catalog pieces every year going forward; or
3) introduce the same high quality selection that you are accustomed to seeing with Inspiranza Designs including alternative metals

There's only one solution that we find acceptable and that's one that we've already initiated with our 2011 Spring Collection. You'll see in that collection that we introduced new pieces consisting of three metals; sterling silver, stainless steel and white copper. The reaction we received from the new collection reinforced our determination to continue to carry only beautiful affordable pieces that reflect our commitment to providing our consultants with items that their customers love.

So after reading all the above are you wondering if Inspiranza is going to continue carrying sterling silver as our main product line? The answer is --- we will continue to carry as much sterling silver as the market permits for as long as it permits. We are a jewelry company and you can continue to expect to see beautiful sterling silver jewelry pieces in conjunction with a variety of other metals to meet the needs of our customers and consultants. We commit to providing the tools required to shine in this market - in style!

See, the former things have taken place, and new things I declare; before they spring into being I announce them to you." Isaiah 42:9

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