Is Gold Jewelry A Good Investment?
Are you considering buying gold jewelry as part of an investment opportunity? What do you need to know before taking that step? In this blog we will take a look at investing in gold jewelry as part of your investment portfolio. We will also look at what types of gold jewelry would be viewed as good investment options.
Financial Considerations for Gold Jewelry Investments
The question of whether gold jewelry is a good investment depends on several key factors. When buying gold jewelry as an investment, here are some things for you to consider, whether for short term or long term investment.
Financial Investment Perspective
Gold jewelry can be considered a form of investment because it retains value over time, and gold’s price often increases during times of economic uncertainty or inflation. It is not necessarily the most efficient way to invest in gold, unlike popular physical gold forms such as gold bars, gold coins, gold pieces, gold bullion, etc. But, it can be a good investment if you know what’s important when choosing fine pieces of jewelry.
Fine jewelry can be a good type of investment for a diversified investment portfolio. Keep in mind that gold jewelry has other factors for you to consider when deciding to invest. You will need a good understanding of things like gold purity, craftsmanship costs, store markup, and potential resale value. Having a realistic awareness of these factors will help you make a more informed choice.
If you need some investments that have the potential to offer liquidity, having gold jewelry as an investment will provide you with that. Unlike an investment such as real estate, selling gold jewelry is a good way to raise cash quickly.
Market Fluctuations
The spot price of gold is constantly fluctuating based on various factors to include supply and demand for gold, economic conditions, and geopolitical events. Gold is a relatively stable asset compared to others, but the value of gold is still subject to stock market volatility.
Global Jewelry Market
There is notable cultural significance for gold jewelry consumption in India and China. Gold jewelry in these countries is considered a form of savings and investment. These two countries make up a dominant and sizable portion of the global demand for gold jewelry.
The cultural significance of gold in the United States is not as prominent as that of China and India, but it still remains an important market for gold jewelry consumption and investment. The U.S. is ranked third globally for its gold consumption.
In the U.S., gold jewelry is often purchased for its aesthetic appeal and as a luxury item. Additionally, gold jewelry is known for its enduring and historical value, leading some American investors to see gold investment as a safe-haven asset.
What Type of Gold Jewelry Makes a Great Investment?
When considering gold jewelry as an investment, there are certain types of fine jewelry that may offer better potential for appreciation and resale value. It is highly recommended to develop awareness and knowledge in the following areas.
Precious Metals
Silver, platinum, and gold are used in the making of high quality jewelry. All three of these precious metals are available, but the supply of them is not unlimited, which increases their value. Sterling silver is often used in jewelry because it is durable and pairs well with most gemstones. We now see more platinum being used in jewelry because platinum has gained popularity for its durability. Gold has a long history of being used to create fine jewelry.
High Purity Gold
The gold content of your piece of jewelry will impact its resale value. The amount of gold in jewelry varies. For example, in yellow gold, hIgher karat numbers like 24 karat (which is 99.9% pure) or 22 karat (91.7%) contain a higher purity amount of gold and will have greater value and greater weight compared to a lower karat gold like 14 karat (58.3% pure). Pure gold is more valuable by weight than precious metals that are mixed with alloys. When people choose to sell their jewelry as scrap gold, it is sold by weight.
Investment-Grade or Bullion Jewelry
Gold jewelry that is specifically marketed as investment grade or bullion jewelry is typically sold based on the gold content and weight, rather than for ornamental value. These pieces are simpler in design and are generally more cost effective for investment purposes. Shown below is a gold bullion pendant and gold bar necklace.
Antique or Vintage Pieces
Vintage gold jewelry and antique brooches, bracelets, rings, etc., can appreciate in value over time, especially if it’s rare or in high demand from collectors. You will need to have a good knowledge about this type of jewelry or get help from an expert to assure that you are buying an authentic piece that is valuable. Featured below are a vintage bracelet, an art deco necklace, and a vintage art deco ring.
Custom or Artisanal Pieces
Artisanal and custom designed pieces of jewelry involve skilled craftsmanship and attention to detail. However they are also tailored to individual preferences which may not align with the preferences of potential buyers. Pricing may be influenced by design complexity, materials used, and the reputation of the artisan. Examples of two custom designed rings are below.
Classic and Designer Jewelry
Gold jewelry with classic and timeless designs tend to retain their value over time. Reputable designer brands can also command higher prices due to brand recognition, craftsmanship, and perceived quality. However, resale value may be impacted if the market is saturated with these types of jewelry. Engagement rings are shown below by two well-known designers, Gabriel & Co and Vera Wang.
Gemstones
Having gemstones in your fine jewelry can also impact the value of gold jewelry. You can find gorgeous gemstones in earrings, rings, and necklaces. Diamonds are one of the most sought after gemstones. Rare and colored diamonds make them sought after by collectors and investors. High quality rubies, sapphires (shown in blue & orange), and emeralds also have great resale value. The gemstone carat size and quality ratings will also influence the value of the jewelry.
Limited Edition or Collectible Pieces
Gold jewelry that is released to commemorate special events may appreciate in value due to their rarity and collectibility like the featured 1904 Liberty coin. Some brands like Patek Phillippe and Rolex have great resale value due to their high quality craftsmanship and limited editions that are produced.
Where Can I Sell My Jewelry Investment?
There are several options to consider when selling your gold jewelry. Here are some possibilities you can check out.
Pawnshops
We do not recommend selling your gold to a pawnshop. This type of establishment may offer quick cash, but they will pay lower prices compared to other buyers due to the associated risks and overhead costs.
Gold Buyers and Dealers
Always do your research to find a reputable buyer. A buyer will assess your jewelry for resale, refining, or recycling. These establishments deal primarily with gold bars, coins, and scrap gold.
Auction Houses
Auction houses specialize in selling high-end jewelry and collectibles. Consigning your gold jewelry to a reputable auction house will increase the pool of buyers and collectors for bids, but the auction house will charge fees or commissions for their services.
Gold Refiners
Gold refiners purchase gold jewelry for scrap purposes to melt down and recycle the gold. They may offer competitive prices, but they generally will not consider factors such as design, craftsmanship, or resale value.
Local Jewelry Stores
You can find reputable jewelers who buy gold jewelry from individuals. They will also offer immediate payment. Some jewelry stores will specialize in purchasing pre-owned jewelry, while others may offer trade-in or consignment options. You can find a wide assortment of fine jewelry in the form of necklaces, rings, and bracelets at local jewelry stores.
Final Thoughts
Gold jewelry can be a good investment opportunity that will provide you with both stability and diversification for your portfolio. Before you invest, you have learned it is important to do some research to gain knowledge about jewelry’s purity, design, brand reputation, craftsmanship, certifications, market demand, current gold market prices, and preferences of potential buyers.
Conducting thorough research, seeking advice from the experts in the field, and making informed decisions will help you through the process, whether you plan on buying gold jewelry for its aesthetics, for investing, or both reasons. We recommend you find a local jeweler with a good reputation, good reviews, and transparent practices.
If you are in the Scottsdale or Chandler area, our experts at The Estate Watch and Jewelry Company would be happy to help you, whether you decide to invest in gold jewelry or buy it for your own personal enjoyment. Our professional staff can answer questions you might have.