With the banking crisis of the last couple of years, it seems everybody is being exceptionally prudent with their money and looking for safe stable investments. The price of gold has been on the up for a long time now, and some precious stones are very valuable as well. If you listen to your local high street or independent jeweler, then they may tout the benefits of investing your money in their wares. Make no mistake about it though as this is a sales pitch. You need to weigh everything up carefully before rushing into investing in expensive jewellery as a way of keeping your money safe. Some people make a lot of money buying and selling jewellery and precious stones, but this does not necessarily mean that it is a wise investment for you. Black market diamonds are extremely lucrative, but without the correct paperwork to say where the diamonds originated from, it can be a lot harder to sell them on.
Reason to Invest
There are reasons touted for investing in expensive jewellery which you will hear from people.
- Price of precious Stones is increasing
- Price of precious metals is increasing
- You have something physical
- If your bank goes bust you still have your assets
With the price of especially gold and other precious metals increasing year on year, and precious metal you have in your jewellery is going to increase in value over time. This can be said for precious stones as well, so your investment is going to appreciate over time. Unlike for a lot of your money, you have something physical and tangible which you can hold. This means that if anything happened to your bank such as what has happened recently in Cyprus, you are not going to lose out financially as your money is invested in your jewellery. Hopefully locked away somewhere safe! You will be able to find people selling diamonds in Brisbane, Antwerp, Amsterdam, London and many other cities around the world where there are large diamond houses, people will travel to these places specifically just to invest in precious stones and metals. If you have something which has high quality craftsmanship to it, then this sometimes increases the value as well. The more intricate the piece, the higher the value added to it.
Reasons not to invest
- There can also be argued a lot of reasons not to invest your hard earned money in diamond jewellery as well.
- VAT
- The market is slowing down with prices actually falling
- Jewelers have huge mark ups over the cost value of the goods
- Liquidating your assets
One thing you do need to be aware of is that if you purchase expensive diamond jewellery then you will be liable to VAT. This can increase the cost quite a bit. With the current downturn in spending, especially on higher end luxury items, the cost of finished pieces of jewellery is actually falling due to a lack of demand. As the market picks up and more people buy again, then the price will go up in tandem with the demand. Another thing to keep in mind is that a finished piece of jewellery can often be sold for 250% above the market price of the materials used. This means that if you were to scrap the item, based on the market value, then you would lose quite substantially. This may surprise some people, but the mark up on finished products can be huge. Some pieces do take a lot of man hours and have a high level of craftsmanship, but there is still a lot of room for profit even when you have taken all of the expenses out of the retail price. This is why when it comes to liquidating your assets, if you are selling finished pieces of jewellery, you are not going to get as much for them as you would like. There is something to be said for investing in the raw materials such as gold bullion and also unpolished diamonds as there is money to be made there, but you do need to know what you are doing. Ultimately do not buy your diamond jewellery as an investment, but it because you love it and love the way it makes that special person in your life fell every time that they wear it.
Misty Angel had written this article for Diamonds Queensland, which offers wholesale diamonds. She is a keen collector of jewellery and also enjoys writing her thoughts and ideas down and sharing them through the blogs and articles she writes.
