Gemstones are beautiful to see worn. But are they just as attractive as potential investments?
In some cases, they are, but there are caveats to putting your money in these assets. Understanding the gemstone market can make you more in-the-know about whether or not this investment is right for you.
Two reasons gemstones make a good investment are that they help you diversify your portfolio and that they’re inherently valuable. In some cases, gemstones can also appreciate—especially if you own particularly unique ones such as certain types of diamonds, sapphires, and rubies. Furthermore, in comparison to other assets, gemstones have a high value relative to their carat, which also makes them easy to store and transport. Owning assets that are highly exclusive and are prized for both value and natural beauty is also a plus for investors who want rarity.
Like gold, gemstones also hold their value during times of market volatility. They retain their value even during economic downturns and remain sought-after assets.
The downside to gemstone investment is that it requires a good grasp of the market and established relationships with reputable jewelers. Too often, inexperienced investors become victims of fraudulent deals. Gemstones may be faked (you may think you’re purchasing an emerald, for instance, but are actually coming home with a far less valuable semi-precious stone), and you may be paying more than what’s fair. Not knowing where or who to bring your gemstone purchases to for appraisals may also present a problem. There are jewelers who may not have the knowledge to value your gemstones properly, therefore, they fail to give you accurate information on how much your investments are truly worth. We cannot emphasize enough how important it is to consult a trusted jewelry appraiser, especially a NAJA-certified professional.
Liquidity and sensitivity to market fluctuations are also issues in gemstone ownership. Think about how long you want to have gemstones in your collection. Are you planning on turning them into family heirlooms to be kept for generations, or are you looking to resell to the highest bidder? Finding buyers for gemstones isn’t as simple as selling bonds and stocks, so make sure to consider these factors before getting serious with gemstone investment.
For investors who prefer liquid assets, more traditional portfolios, and may not have the time to navigate the gemstone market, it would be best to skip gemstone purchases.
In spite of the challenges surrounding gemstone investment, gemstones do present attractive yields as a long-term investment. To maximize gemstones, guarantee that all your purchases are from certified sellers, that you yourself do enough research to be able to ask the right questions and spot potential red flags, and that you understand that gemstones’ ROI is not immediate.
If you’d like to have your raw gemstones checked or appraised, work with a professional.
