There’s just something so classy and beautiful about gold jewelry pieces, whether it’s your gold engagement ring or the gold earrings you bought recently. While these items are meant to be worn, other people decide to keep or purchase jewelry as a form of investment.
Perhaps you’ve looked over your gold jewelry articles and thought it was time to sell some of these, or maybe you’ve thought of looking for new pieces to buy now and sell later. The question now is, is gold a good investment? Mainly, do gold jewelry pieces make a good investment? We’ll go over some information about gold and the pros and cons of investing in gold products to come up with an answer to these questions.
Brief History of Gold Jewelry
Gold is often associated with wealth and currency, especially in the past, way before we had our paper money and digital wallets. But even before it served its purpose for trading and gold coins were used, the raw metal was heavily used for beauty and the arts. The characteristics of physical gold, specifically its durability, quality, and malleability, allowed it to be one of the best materials for crafting shrines and jewelry.
For these reasons, the use of gold has such a rich history.
The fascination and creation of gold jewelry pieces can be traced back to ancient civilizations. Records show that gold jewelry’s history in society began around 4,000 BC.
Overview of the Current Gold Jewelry
Today, we don’t rely much on gold anymore to back our major currencies worldwide, but the demand for physical gold itself and gold products is still pretty high. For example, in 2020, the demand for gold reached a record high. Although, the market demand does fluctuate because of various factors that can affect the economy (like the pandemic).
The same could be said for the demand for gold jewelry. Last year, the demand fell by around 60 tonnes from 2021. Despite that, a good number of people still invest in and prefer buying gold jewelry. Similarly, there’s still an increase in demand for gold bars and gold coins.
Factors to Consider Before Investing in Gold Jewelry
If you’re considering investing in gold jewelry, you need to consider the following factors to ensure that you’re making a good investment.
Gold and gem quality
You should first consider the material used for your chosen jewelry item. If you’re choosing to buy a gold jewelry piece, invest in authentic pieces instead of synthetic items with low-quality gemstones. It may seem like you’d be able to earn more if you put out money to buy cheaper items or gold derivatives, but this might hurt you in the long run.
Investing in pieces made with authentic and higher-quality materials increases your chances of having a positive return on your investment.
Related: Beginner’s Guide to Jewelry Investment
Jewelry price
That said, the piece’s price is another factor you need to consider. It’s crucial to be sure that you’re paying the right or reasonable amount for the piece you’re investing in. You could ask the jeweler/seller for an appraisal or certification to ensure that you’re buying pieces made of real gold.
The price of what you’re investing in depends on how much you’re willing to put out at the time of investment.
Market preference
The preference of potential buyers at a certain period of time would also affect your chances of selling them, so it’s vital to consider this for your investment. You might be able to find a necklace that’s made of the finest materials. However, if the overall design or style isn’t something people are interested in, you might have a more challenging time selling this at a price you’d want. It’s best to research what kind of jewelry pieces and design appeal to you and your target market the most.
Supply and demand
The simple concept of supply and demand is another factor you should consider when investing in gold. The price of gold may change depending on these two. Basically, as the supply of gold increases and demand decreases/remains the same, the price will decrease. On the other hand, if the demand for gold outweighs the supply, then the price will increase.
For example, let’s say for a certain time period, a gold mining company can acquire millions of gold, but the demand decreases – in this case, the price of gold will fall. Contrastingly, if millions of people want to buy gold bars or other gold supplies, but there’s not enough available, then the price will increase.
This impact on gold prices would then also affect the value of the jewelry and therefore affect how much you can get back from your investment.
Gold ETFs
While very minimal, electronic-traded funds (ETFs) can also slightly affect gold prices. ETFs allow investors to invest in the gold market without necessarily purchasing gold mining stocks. While ETFs aren’t made to move the market for gold, investor behavior and their purchasing activity could also affect the price of gold.
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Pros of Investing in Gold Jewelry
Protection from risks of inflation
A common issue that investors face is inflation risk. During a time of inflation, interest rates tend to increase, while stock market returns could decrease.
Gold, on the other hand, is known to be a great inflation hedge. When the inflation rate rises and the value of money falls, gold’s value remains relatively the same. Sometimes, this value could even increase as the demand increases (because of the lower value of cash). This is the reason why many prefer investing in gold. The same idea will apply if you choose to invest in gold jewelry, regardless of whether you plan on selling it as a whole piece or the raw materials separately.
Read More: Investing in Jewelry: Does Jewelry Depreciate?
Retained quality over time
Even if you keep your gold pieces with you over time, their quality won’t deteriorate. This means that you won’t have to worry if its monetary value will decrease because of its state by the time you choose to sell it. In fact, if you own jewelry pieces considered historical or antique, their value most likely would increase as time passes.
For example, if you own a gold ring that’s at least a hundred years old, you might be able to sell it for a higher price after five years instead of selling it within that five-year period.
Good savings option
Compared to investing in other more pricey items, like real estate, investing in gold pieces can help you save more money for the future. You won’t have to spend a considerable amount when investing in a piece of jewelry, and there’s a big chance that you’ll at least get a return on investment or profit after some time.
Some family people also like passing down jewelry pieces as part of a family tradition. Similarly, since the quality of gold also does not decrease, you can also pass down jewelry pieces to your family members so that they can use them as a form of investment.
Plenty of options for buying and selling
Since the demand for gold and gold jewelry remains fairly stable in the market, buying and selling your pieces won’t be that hard. Just ensure that you’re buying from a reliable source and that you consider the best avenue and method for selling.
Read More: How and Where to Sell Estate Jewelry
Cons of Investing in Gold Jewelry
Inconsistent price
While it’s true that the demand for gold and jewelry remains relatively stable compared to other things you can invest in, its price, like other forms of investment, can still be inconsistent. Depending on certain political and economic conditions that affect gold and the demand for jewelry in general, there’s still a particular risk to investing in gold jewelry items. For example, war can change the pace of inflation and demand for gold jewelry or the physical metal itself. These factors could lower the price you can sell your jewelry.
No passive income
Compared to other investments like an estate that you can rent out or stocks where you get dividends, you won’t get passive income from investing in jewelry pieces. Instead, you’ll only get to appreciate your investment once you make a sale entirely.
Additional costs
To ensure that your pieces remain of good quality, you’d need to maintain their safety and overall condition. Unfortunately, doing so means you’ll have to spend more money on other services, like having any necessary repairs, getting it cleaned, finding a good storage place, and getting your pieces insured.
Final Thoughts
Like other types of investment, investing in gold jewelry has benefits and downsides. With how unstable the market is and how the rate of inflation tends to fluctuate, many people find that investing in physical gold or gold products is a brilliant idea. But, on the other hand, it might not be the best choice for investors looking to put their money into something that they can benefit from in the short term.
There’s no single answer to whether investing in gold jewelry is a good investment, as this depends on a number of factors and your current situation and priorities. The best thing to do is to weigh its pros and cons before deciding.
Frequently Asked Questions
Which Karat of gold is the cheapest?
10K gold is the least expensive one. It’s made of 10 out of 24 parts gold, making it the least pure. It is the most durable form used for jewelry, but the main concern with pieces made of 10K gold is that it’s known to cause skin irritation.
Is 18k gold pawnable?
Yes! Gold is a precious metal, and 18K gold is comprised of 75% pure gold. Several pawnshops accept gold, so there’s a high chance you’ll be able to pawn your piece.
Before you invest in your piece, get a jewelry appraisal from Willyn Villarica Jewelry
Are you thinking of investing in your gold jewelry? Find out more information about your piece and decide whether it’s a good investment for you by getting an appraisal from Willyn Villarica Jewelry. With our experts’ professional and educational background, you’ll have your questions about your pieces answered. Willyn Villarica is your trusted partner for gold jewelry appraisal services, catering to clients around the globe. Our expertise and commitment to excellence ensure accurate and reliable assessments of your precious gemstones. It’s important to note that while we offer our services worldwide, clients are responsible for covering all travel expenses. Don’t miss out on the opportunity to have your diamonds expertly graded by Willyn Villarica.
Please don’t hesitate to reach out via email at admin@willynvillaricajewelry.com for inquiries or appointment bookings. Additionally, you’re welcome to engage with us through our official Facebook (Willyn Villarica Jewelry) and Instagram (@willynvillarica_jewelry) accounts. For other assistance, we are available for direct communication at +63279497547.
