Gold Jewelry as an Investment
Humanity’s love of gold stretches as far back as documented human history. It was worn by pharaohs and kings to denote their status. Truly luxurious homes utilize it in everything from candle holders to light fixtures and accessories. Even all these years later, gold jewelry serves as the peacock feathers of the rich and famous. It’s also now used to back many capitalistic systems. In short, gold’s importance cannot be overstated.
As a non-renewable resource, the value of this precious metal only grows with time. Because of this, it’s rated as a Class A investment with many of the world’s central banks, and considered the third safest investment after stocks and bonds. This leads many people–especially those in the Eastern world–to include gold jewelry in their inheritances and retirement portfolios. But is this the best way to take advantage of its value? In this post, we’ll discuss the wisdom of buying gold jewelry as an investment and provide a jeweler’s perspective on doing it right.
Something to Keep In Mind About Gold Jewelry Versus Gold Coins or Bars
When it comes to investing in gold jewelry, it’s important to think of it more like fine art than a government bond or bullion. This means that the initial cost of the product is often much higher than its melt-down value. This added cost comes from the labor and time put into creating each piece. The brand name also plays a substantial role in how much a given piece is worth. But, like art, it can take a while for a piece to become desirably.
The biggest difference between investing in jewelry and retirement accounts or stocks, however, is the utility of the former. So, while it may take 20 or 30 years for your jewelry investment to mature, you’ll have more to show for it than a piece of paper.
The Advantages of Buying Gold Jewelry For Investment
For many people, investing in gold jewelry is a wise way to build wealth and protect themselves against a rainy day. Some upsides of including it in your portfolio include:
- It’s Recession Resistance: Watching the ebb and flow of the stock market is enough to give you motion sickness. And, more often than not, these changes have no bearings on the real success of a given company. But, when things go wrong, your portfolio feels it. Gold jewelry, however, is less susceptible to short-term market changes. This drives many people to turn to it in times of economic hardship.
- Gold is Inflation Proof: Gold prices tend to keep pace with inflation. This allows it to hold its value over time much better than your typical savings account. Since the amount of gold on Earth is limited, it is also all but guaranteed to increase in value over time.
- You Can Wear It: While the filigree on that stock certificate is lovely, it’s not something one can show off. At best, it’s something gathering dust in your office. Gold jewelry, meanwhile, is designed to be worn and displayed. And, since gold jewelry comes in numerous styles and colors, it also gives your portfolio some personal flavor.
- Ease of Entry: You don’t need thousands of dollars or a financial consultant to start a gold jewelry collection. For many people, it just takes $200 or $300 to set themselves on the road to future returns.
- Easy to Liquidate: Need cash for a down payment? Looking for help paying for that new roof? In cases of personal emergencies, gold jewelry can be bartered and sold. Unlike other liquidated assets, doing so doesn’t come with any real regulatory headaches, either.
The Downsides of Pegging Your Retirement on a Gold Bracelet
While investing in gold is an excellent way to diversify a portfolio, jewelry is not the most efficient way of doing so. It’s also not a great choice if you want to be an overnight billionaire. For these reasons, many financial experts recommend capping your investment jewelry portfolio at 10 percent. But, if utility is your goal, a few things can match it. Just keep in mind the following if you’re banking your life savings on earrings or pendants:
- Storage and Transportation Costs: Though not an issue with smaller jewelry collections, more extensive ones will require a wall safe or safety deposit box. If you move, you must also consider the safest way to bring your gold investment jewelry with you.
- Lack of Passive Income: Unlike a rental property or IRA, gold jewelry doesn’t provide regular profit. It only recoups value when it’s sold. For many who add it to their portfolio, however, its ability to be worn more than makes up for penny-ante profits other options provide.
- Sales Difficulty: If you don’t intend to melt your piece down, finding the right buyer can be tough. Like with fine art, jewelry collectors often have a particular aesthetic that may or may not match what you’re selling. This issue can often be offset by investing in pieces from well-known brands or opting for something timeless and classic.
6 Pieces of Advice For Buying Gold Jewelry as an Investment
Now that you know the why of gold jewelry investing, it’s time to talk shop. In addition to getting your jewelry from a reputable supplier (one with hundreds of happy customers), you’ll want to:
- Educate Yourself About Gold Jewelry: Google is a wealth of information when it comes to jewelry. Take time to read up on this information and equip yourself with an understanding of the market. This will help you better evaluate and select your items.
- Buy High-Purity Pieces: While 10 and 14 karat pieces are suitable for everyday wear, they’re not ideal for gold investing. We suggest keeping investment pieces to 18K or higher. Though 24 karat retains its value best, it’s fragile and prone to bending.
- Carry the Proper Insurance: If your gold jewelry collection is worth more than $3000 or $4000, you’ll want to reach out to your insurance company about coverage. Some will cover theft of your items with just a receipt on file. Others, meanwhile, require sign-off from a certified appraiser. Because its impact on valuation is limited, we suggest keeping appraisal to specialized, luxury items.
- Consider Going Pre-Owned: The markup on new jewelry can sting. To avoid that pain, we encourage you to consider second-hand pieces from reputable suppliers. As long as the item is relatively undamaged, prior use has no real impact on value. If aiming for something with a well-established brand name, purchasing it second-hand is a great way to avoid depreciation.
- Find a Reliable Jeweler: While mentioned briefly above, this point bears repeating. Be sure to get your products from a supplier with numerous certifications and a history of customer satisfaction. Also, make sure that–like Jahda–they’re certified to deal in precious metals and (if going with something used) secondhand goods. For an example of what a truly dedicated online jewelry store looks like, check out our Google reviews.
- Avoid Complicated Showpieces: The labor markup on jewelry can be rather steep–especially for complex pieces. To avoid taking a hit when it comes time to sell, it’s best to opt for something heavy and simple. If you have a lot of scrap gold, you may want to consider melting it down and reforming it into one, oversized investment piece. While we do not stock any pieces specifically made for investment purposes, we’re happy to make one for you. Just contact us!
- Buy Something You Like: If you’re going to be wearing it for 30 years, you better grab a piece you’re proud of. Since weight is often the deciding factor when it comes to the value of an investment piece, be sure to go for a hefty item rather than a lightweigh onet.
The Long and Short of Investing in Gold Jewelry
You should now better understand the ins and outs of gold jewelry investment. In terms of advantage, gold jewelry boasts unrivaled utility and resistance to marketing volatility. It also gives you an untraceable, private way to stash extra cash. While it can be a wise choice for many, it’s poorly suited to those looking to get rich quickly. But to make the best use of gold’s power as a vehicle of wealth, you’ve got to keep your wits about you and make sure you purchase the right piece.
If you’re looking to add some real gold jewelry to your portfolio, reach out to us by phone or form! Jahda has been making high-quality pieces for almost a decade now and knows how to create a piece that retains its value over time. We also back all of our pieces with a real gold and gold weight guarantee. That means you get what you pay for, never something worth substantially less. Furthermore, if you’re looking for something heirloom-worthy or second-hand, browse our catalog of one-of-a-kind estate pieces.
With gold jewelry being a popular choice for those looking to add some luxury and timelessness, there are still many questions about the product that plague our minds. To get answers from all your queries with just one blog post.
