How to Invest in Jewelry

Today's diamond necklace may lose value by tomorrow.

Today's diamond necklace may lose value by tomorrow.

Jewelry can be an expression of love, a demonstration of wealth and can pay a king’s ransom. Throughout many centuries, refugees fleeing wars and political turmoil could save their lives and buy food by selling their jewelry. Cultures worldwide regard jewelry as currencies and dowries. The conclusion is that an attractive arrangement of gems and precious metals is a safer investment option that cash, securities or real estate. The problem with this reasoning from an investor’s standpoint is that many kinds of jewelry lose their value over the long term.

Retail Margins

Jewelry bought from a retailer, whether high street or luxury, loses its value immediately. The retailer marks up a wholesaler’s price by 100 percent. The wholesaler makes the same mark up on a manufacturer’s price. A large proportion of these margins pay for the sumptuous shops that retailers need to market their goods. An item that costs $300 one day will sell for only $100 the next. It could take more than 30 years to recoup its original value.

Fashion

Investors must be cautious about jewelry with contemporary designer labels. It may be just a marketing tool for a new season’s fashion designs. Such jewelry may lose both its cachet and its value even faster than high street goods. But attractive and original pieces by young and upcoming jewelry designers who have low production and marketing costs could be an interesting investment option.

Vintage

Some of the most sought after jewelry for investors today are Art Deco, dated back to1920 to 1935, pieces in designs that feel contemporary today, especially if they carry the top names of Cartier or Van Cleef and Arpels. They usually incorporate diamonds, rubies, emeralds and sapphires set in platinum. The Duchess of Windsor’s collection, given to her by her husband, the former British King Edward VIII, is an example of jewelry increasing in value because of design and a famous former owner. Items in this collection increased in value further after they were bought by the late Elizabeth Taylor.

Antique

An item can be considered an antique if it is more than 100 years old. Furniture can increase in value as it gets older, but jewelry may not. Victorian jewelry is fussy for modern tastes. Original stones may have been damaged, or removed and replaced with paste stones. Edwardian and Georgian jewelry, the first three decades of the 20th century, have a simpler design and worth considering as a long-term investment.

Quality

Top quality materials are durable and will maintain value. It’s important to obtain second or even third opinions about precious stones and the metal in which they are set. European dealers do not regard gold of lower quality than 18 carat as a precious metal, even though 8-, 9-, 10- and 14-carat gold may be the choice for many American buyers. Pearls will look dull over time as perfume damages their surface.

About the Author

Based in London, Maria Kielmas worked in earthquake engineering and international petroleum exploration before entering journalism in 1986. She has written for the "Financial Times," "Barron's," "Christian Science Monitor," and "Rheinischer Merkur" as well as specialist publications on the energy and financial industries and the European, Middle Eastern, African, Asian and Latin American regions. She has a Bachelor of Science in physics and geology from Manchester University and a Master of Science in marine geotechnics from the University of Wales School of Ocean Sciences.

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