6 things to look for when investing in jewellery | First State Auctions

6 things to look for when investing in jewellery

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There are many different reasons for investing in jewellery, from a gift or engagement ring to a valuable asset. In many cultures, it’s traditional to buy gold jewellery for weddings as a dowry and store of value.

But when making any investment, it’s wise to know what to look for. We have 6 tips to help you get the most value for your money, and buy fine jewellery that’s beautiful as well as holding its value.

1. Ensure you are buying at market price
Jewellery prices can vary hugely between vendors, so do your homework. Search the internet and be sure you’re comparing apples with apples. Two identically sized diamonds may vary hugely in price due to other aspects of each gem. Bear in mind that when you buy jewellery retail, the jeweller has many overheads that will be included in the price: such as rent, staffing costs and so on.

When goods are being re-sold at auction, they will often sell for a fraction of the retail price paid. So it makes sense to buy at auction if you are looking for value. Auctions frequently have many experts and specialists available, who can help with advice.

2. Cheap does not equal value
Buying something that’s very cheap does not mean you are getting good value, or a "good bargain". The chances of a $10 ring in a junk shop turning out to be the Hope Diamond are vanishingly rare!

Value means you are buying quality for less. Consider why a piece of fine jewellery may be offered at a lower price than normal. Typically, because the vendor wants a speedy sale: perhaps they are a business with excess stock, or police who want to dispose of recovered property, or heirs who want to liquidate a legacy as quickly as possible. Such goods often end up being auctioned for far less than their original retail price.

3. Ensure authenticity
Make sure you are buying authentic products which are guaranteed as described. Reputable jewellery businesses are run by gemmologists who have the expertise to catalogue jewellery correctly. Having well renowned certification, such as GIA reports (Gemological Institute of America), is an advantage.

If you are considering investing in jewellery, you should avoid synthetic gems, low quality gems, poorly made jewellery or silver jewellery. Only invest in natural, high quality gemstones, well-made jewellery and platinum and 18ct gold jewellery. 

4. Be patient: look long term
Investing in fine jewellery is not like the property market, where people "flip" houses within a year of purchase. Jewellery prices aren’t volatile like shares, the value of which can soar or plummet overnight. Be prepared to hold onto jewellery for five years or longer.

Vintage jewellery, such as Art Deco, can gain in historic or rarity value. Classic pieces from renowned brands such as Tiffany and Cartier may become highly sought after by collectors as well as high quality contemporary precious gemstone jewellery. Such jewellery often comes up in estate sales at auction, where it can be appraised by experts.

5. Investing in jewellery is also about enjoyment
Buy something that you love. Property investors are often advised never to buy a house that they couldn’t live in themselves. It’s similar with fine jewellery. Buy something that you love and can enjoy personally.

Part of your "dividend" from investing in fine jewellery is the joy you will get when wearing it. Like art and other collectibles, it has a value in its function as well as its monetary value.

6. Carefully consider sales avenues
Always research your options when it comes to jewellery investment and have an avenue to sell when you need to realise your asset. Cash Converters and other pawn shops will never give you an item’s true worth. A retailer who specialises in antique or vintage jewellery may offer a better deal than pawn shops, but will still have high overheads that will impact the maximum price they can give you.

Using an experienced auctioneer with a track record of specialising in selling jewellery can be a smart way to get a better outcome. Your jewellery will be exposed to a wider audience, with a competitive element driving up prices. While commissions still apply in selling jewellery through auction, these are typically far lower than retailers’ mark-up, and if you have made an astute purchase, you can end up with more money in your pocket.

 

Posted by Gerald Chait