Is jewelry really a bad “investment”?

[verychic555]

Hello all,
This is an educational question. I am interested in adding a bracelet to my jewelry collection. While researching my options, I came across a lot of online articles that basically say that jewelry especially diamond jewelry is a bad investment. Now I don’t really want to buy it for actual investment. I want something nice to wear and enjoy, but would like to have the option of selling if one day I needed some money. I was always raised that jewelry is like wearable money, you wear it enjoy it and could sell it later. But now after moving to the US, I’m finding that the general opinion is that it is a terrible investment and loses money fast.

My dad bought me a gold necklace when I finished high school more than twenty years ago, that now is worth three times the price judging by the price of the gram of gold now, and comparing that to how much my dad paid. So why is jewelry a bad “investment”? I also read that diamonds especially are not worth as much as people think. I mean I understand that if I buy a piece of jewelry now, I’m gonna lose money initially, because you pay for workmanship and store fees and things like that. But don’t gold, diamonds and gemstones remain valuable? I mean even if diamonds aren’t as rare as people think and are “a market scam”, don’t you think that diamonds will always have some value? I mean why is the jewelry business a business that has been around since the beginning of time? Things go up and down I know, but don’t certain things retain inherent value? I don’t think there will come a day when diamonds or gold become “nothing”. People will always want jewelry and this is what will keep jewelry valuable. Thank you for your thoughts!

 

[RT1]

Just as the price of precious metals, (Gold, Platinum, Silver, Rhodium) varies daily, so do the price of diamonds.
The world is awash with diamonds, they advertise their rarity to make people believe that diamonds are rare, thus upping their desirability.
Sure, your jewelry will last for many lifetimes, you can pass it down through the generations, but making a profit from selling it, probably won't happen.
Remember a 14K item is just over 1/2 real gold, 18K is just at 3/4 real gold.
People invest in bullion, coins, bars, etc.
Just MHO.

 

[Bambs]

Hello all,
This is an educational question. I am interested in adding a bracelet to my jewelry collection. While researching my options, I came across a lot of online articles that basically say that jewelry especially diamond jewelry is a bad investment. Now I don’t really want to buy it for actual investment. I want something nice to wear and enjoy, but would like to have the option of selling if one day I needed some money. I was always raised that jewelry is like wearable money, you wear it enjoy it and could sell it later. But now after moving to the US, I’m finding that the general opinion is that it is a terrible investment and loses money fast.

My dad bought me a gold necklace when I finished high school more than twenty years ago, that now is worth three times the price judging by the price of the gram of gold now, and comparing that to how much my dad paid. So why is jewelry a bad “investment”? I also read that diamonds especially are not worth as much as people think. I mean I understand that if I buy a piece of jewelry now, I’m gonna lose money initially, because you pay for workmanship and store fees and things like that. But don’t gold, diamonds and gemstones remain valuable? I mean even if diamonds aren’t as rare as people think and are “a market scam”, don’t you think that diamonds will always have some value? I mean why is the jewelry business a business that has been around since the beginning of time? Things go up and down I know, but don’t certain things retain inherent value? I don’t think there will come a day when diamonds or gold become “nothing”. People will always want jewelry and this is what will keep jewelry valuable. Thank you for your thoughts!

Firstly, I think you should buy whatever jewelry that speaks to you and you will actually wear!

That aside, I will tell you what I was told by my best friend, who is a jeweler. I have been ring shopping for me E-ring lately, and she told me that diamonds are not technically losing their value, but that only triple X cut diamonds are worth buying if I want the value to "increase" - meaning, excellent cut with polish, symmetry, etc. Basically, a "perfectly, flawless" diamond.

Also depends on how much of a mark-up the jeweler is charging you and where you're buying. Are you buying from a local jeweler, wholesaler or retailer, like Kays? B/c certain retailers mark up the actual value quite a bit vs. what the actual value is. So you end up paying $10k for a diamond, when in reality you could have gotten it for maybe $4-$6k... I think that's how people think diamonds "lose their value" quickly.... but that's just my thoughts on it...

Personally, I wouldn't buy jewelry as an "investment," but rather to enjoy and wear with the possibility of passing down later in life I would rather invest my money in stocks and bonds, real property, etc.

 

[Vintage Leather]

I think it depends on how you buy jewelry. Of course, it can only be considered an investment if there is a market for you to sell your items.

Buying precious metals for a percentage over the melt price (aka, going to a gold souk or a pawn shop and buying your jewelry for 120% of the melt value of the gold) is an investment in the commodities market. It has been a historically stable investment (one ounce of gold can buy a nice outfit and good dinner - and it could do so since the times of the Romans) although a harder one to secure (banks are insured, gold requires a special (expensive!) policy)

Buying name branded jewelry can be considered "passion investing," similar to collecting wine or cars. Most financial analyst recommend that you invest less than 10% of your portfolio in "passion investing." These items will have value only if the market continues to express an interest in the item. For example, right now the VCA Alhambra collection is incredibly popular, with pieces on the resale market selling between 80% of retail and 200% of retail (depending on rarity and popularity). Should you go out and purchase a few VCA pieces for your retirement income?
Not so fast! Thirty years ago, the Bulgari coin collection had a similar popularity and similar resale value (although there is a larger number of resale opportunities today). The retail price for that collection has increased significantly (The pair of cufflinks my father purchased in 1982 for $600 are now $4000), the resale of a modern piece is between 30% to 75% of retail. While my father's cufflinks are worth twice as much as he paid for them ($1200 resale value), had he invested that same amount in an index fund, it would be worth $24,000 (or 40x). And to keep this in jewelry perspective - an ounce of gold is worth 17x as much as it was then. So unless you love the piece and are planning on holding onto it - and hope that it retains some level of popularity - and that the brand continues to hold prestige over thirty years - and are able to sell it in the future - it's not a great investment, although it does provide a better rate of return than clothing or handbags.

You mentioned diamonds. Diamond value is driven by rarity and, yes, marketing. There are factors that affect the value of diamonds, including the 4 C's, but also, how trusted the seller is. For example, right now, Old Mine and European cuts are having a bit of a renaissance. Ten years ago, those cuts were not as popular. Diamond dealers in my city would pay you about $25 for a quarter carat Old Mine diamond. At the same time, Pricescope was selling those same diamonds for about $270. While I haven't bought any loose diamonds from a dealer in the last five years, I don't think the market has changed that much. A loose diamond loses about 90% of its value when it is sold by someone who isn't a certified expert (either a jeweler or an auction house.) A branded diamond or one with papers fairs better - but you're still taking a major loss.

Gold is easy to change and easy to test. Diamonds are harder, require specialized equipment, and more knowledge.

It's easy to convert gold to cash; most jewelry stores and pawn shops will gladly give you between 70 to 80% of the current melt value. Diamonds are harder.

 

[resplendent]

Overall, you're right in that if your pieces are high quality and attractive, they will usually retain some value. But most of it we shouldn't really call investments because most will not appreciate in value higher than what was spent. If by default, they were, then there shouldn't be a separate category called "investment-grade gemstones."

Diamonds are not particularly scarce; it is essentially a type of carbon-based crystal and carbon is common. Diamonds can also be synthesized quite well.

As far as I have read, investment-grade diamonds must have immaculate cut & clarity, color (colorless white, or fancy yellow, pink, red, blue, etc.), and relatively large/rare size. Most average consumers are not buying the hundred-thousand-dollar or million-dollar diamonds. The little sparklies we buy aren't rare.

Actual rare gemstones are high-quality naturally mined jade, tanzanite (the deep purple ones), alexandrites, and a couple others I can't remember...

Gold is a more complicated question. Ages ago it was the basis of some of the largest economies; the value of major currencies and global trade was linked to the fluctuating price of gold. However, a number of economies--the big one being the USA--switched to fiat currency in the 1970s onward...meaning loosely that the value of US dollars, representative of the US economy and also a significant unit of global trade...is no longer tied to gold (and vice versa.) Investors often still use gold on the stock markets as one stabilizing element in a portfolio when there is uncertainty (such as today) but it's not as powerful or influential as before.

Most of the time, when we buy gold or diamond jewelry, we are paying premiums multiple times the value of the raw material.

Sometimes branded consumer jewelry from such as Cartier, VCA, Bvlgari, Tiffany & co. will retain decent value as long as other people are willing to also pay extra for the branding or style. In most cases, however, resale results in some losses.

 

[Mairaculi]

Gold is mainly a good investment because everyone thinks it is. Yes, it does have industry applications but most still goes for jewelry and investment. When buying it for investment, it does not generate value, but we speculate on higher market prices. It is possible that it continues to rise, but everything can happen. 25% of gold demand falls on pure investment purchases - if these people fear the gold price will fall and sell their gold, it will fall in fact. Of course, gold made into jewelry is often way over the material price due to labor & overhead expenses. If the gold resale value is 50% of the price you paid, that's a good deal - so the price has to at least double before you make a profit selling. Tip to increase this ratio: buy second hand gold jewelry.
I'd say be cautious with counting diamonds as investment, the resale value is low and I personally think it will decline further (except for stones of exceptional quality) due to lab grown diamonds. Upcoming generations of diamond buyers have a different mindset and most likely don't count man made stones as inferior but as equally worthy or even better because of sustainability and ethical reasons. Production could get easier or cheaper. I personally would not get a standard newly mined diamond at this point in time for investment purposes. But it could turn out differently, who knows.
I hold it like this with jewelry: I buy what I like and can afford/want to spend without the intention to ever sell it. If I later choose or have to sell it, and I get a good price, it's a good thing.

 

[Deleted 698298]

I’d say jewellery can end up as an investment but it’s pretty much a ‘chance’. Eg. if you happened to buy VCA pieces years ago, they could be worth more today as the company remains expensive ‘luxury’, same with Cartier if it was something special maybe even high jewellery. When it comes to jewellery I buy mostly new but if I choose pre-loved route it’s precisely because of lower than the retail prices.

In terms of sure investment (and in reference to your wish for a bracelet), if you got 24 karat gold or 24k gold and quality diamond bracelet, you would most likely get a return in a few years. That’s why Mene is getting more popular.

Like others said, buy jewellery to enjoy it.... a future profit is a gamble.

 

[Hurrem1001]

I think jewellery should be bought to be enjoyed, not bought on the assumption that later on it will be worth the value originally paid, or more.
Generally speaking, jewellery is not worth the value you pay for it. I had to sell a lot of jewellery eight years ago. When originally bought, it had been worth a lot of money - When I sold it out of sheer desperation, what I got for it was a pittance. You get scrap value.
Having said that, the price of gold has shot through the roof this summer, and the same 14K gold bracelet that I bought last year is now being offered for double the price it was when I purchased mine, purely because of the gold price increase. That said, I didn’t buy it for investment, I bought it to enjoy and wear.
I say buy your bracelet and enjoy it. Don’t worry about the potential value of it, it simply isn’t worth it (pardon the pun!).

 

[ShimmerDreamz]

This is my favourite article to explain why diamonds are a thing to be enjoyed and not an investment in the financial sense:

Have You Ever Tried to Sell a Diamond?

An unruly market may undo the work of a giant cartel and of an inspired, decades-long ad campaign

www.theatlantic.com

Ultimately we place value on something because someone else does as well. Otherwise that $5 bill is just a piece of paper. And gold is just a lump of shiny rock. It just happens some things have more consistent value than others, such as gold. But with jewelery there is a markup due to the labour cost and branding associated, in addition to the material cost. So typically secondhand resell value is lower than new unless inflation happens, or others covet it enough to pay more.

 

[zowye]

I will not say is a bad investment nor a good investment. In a pinch, you may or may not get your worth for the piece of jewelry but in a situation where it merits to sell it because you absolutely need to out, it might be seen as a backup. Other than that, I will just buy it to wear and not for investment.

 

[Gimmethebag]

Jewelry is mostly a poor investment and that’s why I want to buy it second hand, with a few exceptions.

I bought my 2 ct diamond hoops off The Real Real for $1000 (with a bonus $250 credit I used later for a Cartier Trinity ring, also a steal) but they originally retailed for about $4K. The person selling them also had to give TRR a commission cut too.

We bought my Tiffany & Co. engagement ring second hand and paid a fraction of what it retails for. It worked out great for me. I got what I wanted. My ring is gorgeous, and we saved about $15,000 that we used towards the wedding.

The only time I purchased a piece of jewelry that ended up becoming a crazy good investment was when we bought an Argyle pink diamond eternity band for our anniversary. Turns out that mine is retired and now Argyle pink diamonds are very rare. I cracked one stone and lost one, and the repair cost me $700. I paid about $1500 for the ring and now it’s worth closer to $7000.

 

[opensesame]

I think it’s a poor investment unless you purchase ultra rare multimillion dollar diamond. However, I do think designer pieces transcends time. Some of my friends never had to buy staple designer jewelry pieces because they’ve inherited them. Good investment in a sense, no?

 

[880]

Jewelry, even luxury brands, is not an investment. buy it to wear and bc it makes you happy