It is Christmastime and people are more eager to purchase gifts that have lasting value. For some people, that timeless gift often turns out to be an heirloom piece of jewelry. Grandparents often pass down their jewelry in the hopes that their grandchildren can “sell it one day” when the need arises. I cannot say that it has not crossed my mind. Then again, I find it difficult to sell the ring that my late grandparents have given me.
Buying an original piece of jewelry with a rich history from a family member or a friend can be the middle ground when it comes to heirloom pieces. Nonetheless, jewelry and gold can be a wise investment.
BUY SOMETHING TIMELESS
If you are going to buy jewelry as an investment, ensure that it is something you enjoy keeping and wearing. I recently bought a Nina Ricci necklace, which I plan to pass down to my future daughter. It is delicate, romantic, and simple. She may not be able to sell it, but it can be a part of her beautiful collection.
Avoid overpaying for a piece of jewelry as commissions and fees can be high. It will be difficult for you to break-even, if that happens.
CONSIDER THE VALUE AND PRICE
There are companies willing to buy back your jewelry at the real-time value, less its 10% buyback fee as they will melt it and transform it into a new jewelry. Other companies are willing to offer a price close to the value of the pure metal in your jewelry. Do your research.
There are laws regulating the purity stamp on the metal. It is best to get an appraisal from a reputable jeweler to examine the quality and the design of your gems and precious metals.
ACKNOWLEDGE THE POSITIVE HISTORICAL TREND
Unlike coins and paper currency, gold has managed to increase its value over time. Its price has consistently risen every year since 2001. While gold prices do not shoot up dramatically, the general trends remains to be upward. Hence, have a long-term investment mindset.
KNOW THAT PRICES CAN BE VOLATILE
Much like any other investments, the jewelry’s value can fluctuate wildly. The most obvious difference between a pair of gold earrings and gold bullion is that you cannot wear the latter. Treating jewelry as an investment can get tricky. Profits on the sale of gold and jewelry are taxed.
You might pay a premium for buying jewelry made of pure gold. You see, some buyers prefer if they can wear their gold.
DIVERSIFY YOUR PORTFOLIO
The key to diversification is to find investments that do not closely match each other. History has proven that gold is negatively correlated with stocks and other investment instruments. For instance, stocks boomed in the 1990s, but gold faltered. In 2008, investors migrated to gold while the stocks dropped substantially in value.
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Proper diversification entails combining stocks, bonds, golds, jewelry, and other assets. Producing a diverse portfolio can reduce the overall volatility and risks.