Revenue and profits fell considerably at moissanite gemstone manufacturer Charles & Colvard, which is suffering from a depressed jewelry market and a glut of inventory at retail outlets. Moissanite sales at the retail level increased in the fourth quarter that included the holiday shopping season, said Dennis Reed, president and chief marketing officer. But that sales bump wasn't large enough to compensate for the excess inventory that retailers have accumulated.

The high price of gold -- on Thursday it hit an all-time high of more than $950 an ounce -- also is driving up the price of all fine jewelry, including jewelry that incorporates moissanite, Thomas said. Moissanite gems resemble diamonds but sell for much less.

A 1-carat moissanite pendant that retailers sold for $499 in fall 2005 sells for $729 today because of the soaring price of gold, Thomas said. The company's fourth-quarter revenue fell 35 percent to $7.9 million.