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Tuesday, 25 February 2014

Investing in jewelry: The finer points to remember

Jewelry, the word itself conjures up images of well dressed women, accessorising their outfits with stylish ornaments and embellishments. While traditionally in some countries in the Orient, jewelry has long been considered a sound investment, in the West it is a relatively new trend that is catching up today. Jewelry as an investment say many financial analysts is a relatively safe bet, akin to property and assets like antiques and paintings and are thus in the same bracket as these offbeat investments.

Difficulties in jewelry as an investment:

While certain investments are easy to quantify, the main problem with jewelry is that it is a relatively ‘difficult’ investment because of the following factors:

1) Lack of standardisation: Unlike gold or property, jewelry is harder to standardise simply because it uses different alloys, gems and craftsmanship that are more subjective in nature and therefore harder to quantify. One way of overcoming this difficulty is having jewelry made according to a standard that an investor sets and having the raw materials used in the making of the jewelry, individually certified. 

2) Sentimentality: Jewelry is traditionally a sentimental purchase or endowment. The price of the jewelry is often the monetary value of that sentimentality that a seller ascribes to that piece, which may be overpriced. The only way around this is to buy jewelry only from a certified retailer, or bidding on individual pieces of estate jewelry at auctions.

On why jewelry is a safer bet than most other investments:

1) In comparison to gold: Gold is often looked at as the most safe option to invest in. While this may hold true, the acquisition of said gold is a gamble, as the price of the metal fluctuates on a global scale, on an hourly basis. Jewelry on the other hand has a fixed entry point, and as such is a more or less fixed rate of appreciation, which makes it a safer bet than gold.

2) In comparison to share trading: While there is no doubt that share trading has quicker rate of returns, the market risks you eschew makes it a difficult proposition for the more cautious investor. Jewelry in this respect represents a fixed sum, paid in one go and is as such the perfect investment avenue for cautious investors.

3) In comparison to property: Property prices the world over are at an all time high. While this comes as good news to landholders, people wanting to enter this market are put off by these near exorbitant prices. This makes jewelry seem like a smarter bet as jewelry prices while definitely not static, are more affordable and thus less of a risky proposition.

What experts have to say:


Most experts in the post recession world markets are advising people to invest in jewelry. Says Elle Weinstein, a financial adviser with a well known European wealth management firm, “In the post recessionary period, people are looking for more tangible, safe bets that will stay profitable in the long run, and are also appreciable in the interim. Wine, antiques and jewelry, especially jewelry is the way to go. We’re advising our clients to think of jewelry not just as mere baubles or trinkets, but as a safety net when all else fails. The Asian culture has been to invest and treasure jewelry, I think it should be a trend in Western markets too.”

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