With the price of gold and platinum around $1250 per ounce, it may be tempting to consider investing in jewelry. Let’s discuss this.
To realize a profit on a piece of fine jewelry, it must appreciate (increase) from its original purchase value to a value greater than the retail price paid. But we buy jewelry at retail and when we sell it, it’s on the secondary market typically at a discounted price.
In other words, you cannot expect to pay retail and sell at wholesale to make a profit… . The likelihood of this happening in the short term is slim to none!
But Gold/Platinum prices look Good Now…
Of course, precious metals and precious stones (diamond, sapphire, ruby) or semi-precious stones (amethyst, aquamarine) or pearls are used in the manufacture of fine jewelry. Over the past decades, they have increased in value. Note the word, ‘decades.’
The reality is that sellers of jewelry typically receive ONLY the value of the metal. Unless there are individual stones of high quality and grade and at least 2 carat weight, the value received will generally NOT include the stones.
When the Jewelry Judge Ben Gordon values an item, he weighs and measures it and grades the stones using scientific instruments. He identifies the style, manufacturer and craftsmanship of the setting. Looks for manufacturing and proof stamps such as 14k, 18k, and designer hallmarks. As well as, researches comparable sales of identical or equivalent items and determines if the item is commonly available or rare.
Studying these specifics allows the Jewelry Judge to arrive at a total replacement value. This is what you would want to receive from an insurer if the item were lost or stolen – but not likely what you would receive if it were sold.
Over the long term though, buying fine jewelry is often considered a way to preserve wealth, generally over decades. In the form of jewelry, wealth can be passed down through generations maintaining monetary, artistic and sentimental value. Fine jewelry means all of these things, but perhaps least of all “the potential for profit.”
Beware the Sales Zealot
When showing a piece of jewelry we have heard enthusiastic sales people say, “This would be an investment piece”. Perhaps what is meant is that it will be worth enjoying for years to come. Perhaps this means it is of a quality that will hold its value; perhaps it means it’s not a fad item, but a classic, for example a brilliant cut solitaire engagement ring. Perhaps it means commitment to the future. But this statement should certainly not be interpreted as “buy today, sell tomorrow at a profit.”
Yes, a diamond CAN become an investment ….. if a fair price has been paid at the outset and given a l-o-n-g enough time horizon….. and if just the right buyer comes along at the time an owner wishes to sell… and if the size is larger than an olive and if the cut, color and grade are excellent… and if….. and if….
Wear it! Enjoy it!
Our true opinion?… . the Jewelry Judge never recommends buying jewelry solely for investment. Be aware that buying fine jewelry is not the same as investing in gold or platinum. Buy precious metal mutual funds, ETFs or bullion for your portfolio, but buy jewelry to give as a gift or to wear.
If you must think of jewelry as an investment, think of it more as a Certificate of Deposit and not a Growth proposition.
Jewelry should be bought to enjoy now; to be worn and displayed with pride. The pleasure you’ll derive over the years from owning fine jewelry will be priceless!
Should you need to sell jewelry, be sure to ask for a consultation so you know what value to expect and where to go to obtain a fair price.