Gold has historically been considered a valuable asset and a great investment due to the rarity and scarcity of the metal. Even today, owning gold jewelry is a symbol of status and wealth.
With the impact of the coronavirus pandemic on the global economy, investors are starting to increase their exposure to alternative, more reliable sources of investment. Despite its popularity, is gold jewelry a good investment? In this article, Here are some important tips beginners need to know whether gold jewelry a worthwhile investment and how to succeed.
Why is Gold Jewelry a Good Long-term Investment?
Gold has long been considered a solid choice compared to other popular long-term investments. There are a number of reasons for this, but the main one is that gold prices rarely fall and rise during difficult economic times – unlike most other investments. In times of inflation, gold provides a more stable investment than cash. Because of this, investors often include gold in their portfolios, using the precious metal as a hedge against inflation.
The minimum purchase price for gold jewelry is also significantly lower compared to buying other solid long-term investments such as real estate. For example, the minimum purchase price for real estate is usually around £75,000, and you can buy a solid gold ring for as little as £250.
There must be pros and cons in investing. Gold jewelry as an investment, the corresponding advantages and disadvantages are as follows：
Advantages
- Fluidity. Gld can be easily exchanged for cash anywhere in the world. Beyond actual cash, gold’s liquidity and ubiquity are unmatched.
- Hedging. Gold tends to retain its value over time. Economists believe that even if prices fall, gold’s underlying value won’t change much. This is mainly because gold is a commodity, so its quantity is fixed, while the dollar, which is a fiat currency, has no intrinsic value.
- Universally needed investment. Gold remains a universal commodity. While countries sell their currency futures, treasuries and other securities around the world, unlike gold, they are subject to political chaos.
- Used as an input for the product. Since gold is used in the production of various products including jewelry and electronics, there is a solid demand for further stabilization of the gold price. Additionally, these markets could force gold prices higher when demand increases.
Disadvantages
- When you are not using it, you must physically store it in a safe place.
- Gold does not generate passive income. Other investments, such as stocks and bonds, may gain some value from passive income in the form of interest and dividends. However, the only return you can get on gold is when the value increases and you decide to sell.
- Requires physical storage and insurance. If you choose to buy actual physical gold, you not only need to store it, you also need to insure it. Otherwise, if it’s damaged or stolen, you won’t be able to replace it.
- The rise in the value of gold coincided with the depreciation of the local currency. Many economists believe that gold will only appreciate when the dollar depreciates or inflation is strong. As a result, critics argue that gold does not provide adequate returns in other markets.
Is Gold Jewelry Right for You?
As you can see from the information above, investing in gold jewelry can be a wise decision. However, it’s certainly not for everyone. If you want to make big money fast, you should stay away from gold completely. Gold is often used as a stable investment strategy to hedge against stock market volatility. It can also be a good emergency reserve during uncertain times.
If you can afford a gold necklace or ring and want to show off your status, be sure to visit your local jewelry store. Whether you want to invest in gold jewelry depends entirely on your goals. However, be sure to only buy what you can afford and avoid buying gold jewelry on credit.
How to Buy Gold Jewelry
When you are planning to invest in gold jewelry, it is important that you choose a jewelry that will make your investment profitable. From ensuring authenticity to getting a professional appraisal, here are the most obvious ways to ensure you are buying the right gold jewellery investment.
Consider Authenticity
First and foremost, it is crucial to ensure that you are buying your investment jewelry from authentic and reliable suppliers. Many lesser-known brands are known to offer custom jewelry (i.e. gold plating) while labeling it authentic fine jewelry. Buying inauthentic works is an easy mistake for junior investors to make, and it happens all the time.
Find the Right Supplier
- Once you know what kind of gold you are after, you must find a reputable supplier. If you live in the US, there is probably a reliable gold store somewhere in your town. If you want to be 100% sure your gold is legal, you can go to big commercial suppliers like Tiffany, Cartier and Graff. However, commercial providers usually charge higher premiums.
- You can look for independent dealers, but be sure to check their customer reviews online before buying or selling your gold to them. Any legitimate store will have clear policies and fees, and will charge a reasonable premium.
- Another option is to buy gold jewelry online. While it’s simple and convenient, it also comes with risks. That’s not to say you won’t find quality gold products on the internet. If you do choose to buy gold online, always choose a site that has online reviews. Try to avoid open marketplaces like Craigslist or eBay as you can’t always check for authenticity.
If you are looking for investment jewelry, we generally recommend buying a solid gold chain or bracelet, as these usually require minimal craftsmanship. Gold sovereign coins are also popular because they do not require any crafting and are easy to melt.
Professional Evaluation of Jewelry Value
The first step in buying any investment jewelry is to calculate its value. From here, you can determine how much you should pay for the piece to make it worthwhile. If you’ve ever wondered “how much is my ring worth?”, you’re already on your way to investing in gold jewelry.
Always Secure Your Gold
Getting assessed will allow you to insure your investment jewelry. Many experts recommend keeping your jewelry investment for at least 15-20 years, you never know what to expect during that time, so protecting your assets is important. Skipping insurance is certainly not worth the risk.
Buy Your Favorite Jewelry
Last but not least, we recommend investing only in jewelry that you really like. It’s not just about money. Part of the fun of investing in jewelry is buying fine jewelry that you can wear. If you’re shopping for something you love, you’ll be more patient with the shopping process, and you’re more likely to make a more informed buying decision.
How to Sell Gold Jewelry
As with all investments, you may want to “liquidate” your investment by selling your gold jewelry. Fortunately, since you are invested in gold, you are in a good position to sell your gold no matter where you are or when you want to sell it. This is because gold is a universally recognized asset, so there will always be a market for it to sell.
When selling your gold, you must ensure that you are selling to a reputable source – a buyer with a good reputation. When looking for a gold buyer, you have a few different options: a jeweler, pawnbroker or online buyer should all provide you with a gold offer.
