I was talking to some jewelers yesterday and they all seem concerned about the holiday shopping season. They face a double-problem this year. While all retailers face a sluggish economy, the jewelers almost face higher costs primarily from gold prices soaring. While gold prices retreated in the past few weeks, the gold jewelry you are seeing in stores now may have been priced when gold was at a record high price two months ago. And while diamond prices have dropped in recent years because of the recession, diamond sales are sluggish because of the economy.

This may mean that margins on jewelry might be thinner this year than in the past. Jewelers might be willing to wheel and deal a bit more this year.

And you are likely to see more semi-precious stones, and gold plated and gold-filled jewelry this year in department stores. Silver will be more fashionable because silver is only a fraction of the price of gold.

But I have to think back to around 1980-81 when gold prices surged. The surge in gold prices actually led to more gold jewelry sales. Gold became a status symbol, and a fashion statement. Men and women wore gold chains and men wore gold ID bracelets. Could history repeat itself after the recent run-up in gold?

But the difference between 1981 and today is that we had big inflation in 1981 and today's big problem is recession and unemployment.