Is it worth buying jewellery as an investment?
Jewellery is often admired for its beauty, sentimental value, and cultural significance. For centuries, people have treasured gold, diamonds, and gemstones as symbols of wealth and status. However, the idea of jewellery as a financial investment is a topic that demands scrutiny. Despite its allure, buying jewellery with the expectation of generating a significant financial return is fraught with challenges. Upon closer examination, it becomes clear that buying jewellery as an investment is rarely a wise financial decision.
The harsh reality of selling jewellery
One of the major deterrents to viewing jewellery as an investment is the way secondhand jewellers approach buying it back. When selling jewellery, you often face a stark reality. Secondhand jewellery shops assess its value based on the scrap value of its raw materials like gold & Platinum rather than its original purchase price or design. They even fail to add much to the offer even if there are gemstones set into the piece. This harsh practice results in significantly lower offers than what you might expect.
But secondhand jewellers need to make a profit – right?
Obviously, secondhand jewellers have to make a profit but it’s not just allowing for this that makes the resale value so low. If they bought based on the prices a ring could be made for there would still be enough margin. Instead, they buy for the melt value which is lower than even the price of new material costs like a piece of Gold wire or casting grain. This all means that they buy jewellery at a fraction of its market value. Sellers are often shocked to find that pieces they spent thousands on might fetch only a few hundred pounds in return. The sentimental or artistic value of the item, so important to the original buyer, is usually disregarded. Even if the price of gold or diamonds has risen since your purchase, the profit margin you paid initially will not be recouped.
Labour costs: Paid for but never recovered
When purchasing jewellery, a portion of the price understandably reflects the labour involved in crafting it. Skilled artisans invest time and effort into designing and creating intricate pieces, and this craftsmanship is reflected in the price paid. However, when it comes to selling that jewellery, the labour value is completely disregarded.
Secondhand buyers evaluate the item as a collection of raw materials rather than a finished product. Whether it is a finely detailed bracelet or a broken old gold chain, the price offered will be based solely on the intrinsic value of the materials, such as the scrap value of the gold weight. This leaves sellers unable to recover the cost of the craftsmanship that initially made the jewellery so valuable and appealing.
Jewellery’s fashion value vs. Its commodity value
Another fundamental issue with investing in jewellery is the disparity between its fashion value at purchase and its commodity value at resale. When you buy jewellery, you are not just paying for the materials; you’re buying an elegant piece of jewellery. Unfortunately, the fashion value vanishes when you try to sell the piece. Secondhand buyers are uninterested in the item’s style, brand, or fashion significance. They buy as if they are going to strip the jewellery down to its core components – even if they don’t! Even pieces from prestigious brands like Cartier or Tiffany & Co. do not fetch a price anywhere near what was paid for them, let alone over. The only exception being when a piece is decades old. This can sometimes rise in value but rarely over what was paid. This shift from fashion value to commodity value underscores why jewellery should not be viewed as a sound investment.
Jewellery is a sentimental, not financial, asset
While jewellery holds immense sentimental and cultural value, it is not a prudent financial investment. The harsh buying practices of secondhand jewellers, the disregard for labour costs, the shift from fashion value to commodity value, and the loss of retailer profit margins all contribute to a significant depreciation in value when you attempt to sell jewellery.
For those considering jewellery purchases, it is important to approach them as expressions of personal style, heirlooms, or tokens of affection – not as reliable financial assets. Jewellery, for all its beauty, is best appreciated for what it represents in the moment rather than what it might yield in the future.
