If you want to buy gold as a long-term investment, you’re probably wondering whether to purchase gold jewelry. Is gold jewelry a good investment, or are you better off investing in gold coins or bullion? The answer is more complex than most people realize, as it depends largely on your personal motivation behind buying jewelry to add to your investment portfolio.
The truth is that, as a wearable item, gold jewelry often does not increase in value the way coins, bullion, or bars do. Instead, jewelry will retain its value over time, unless you have a rare piece of jewelry with some historical or celebrity significance. However, your great-grandmother’s ring with a large opal setting may have more sentimental value than monetary value.
Still, investing in gold jewelry could be a good investment for knowledgeable jewelry buyers. If you’re willing to put in the time and energy to get jewelry appraised and you appreciate wearing your pieces as a collector while you wait for the right buyer to recoup your investment, gold jewelry can be an excellent long-term investment for your portfolio.
What Are the Advantages of Investing in Gold Jewelry?
Investing in gold jewelry has some advantages over other types of investments. While the stock market fluctuates from day to day, the price of gold tends to trend higher or lower with more predictability.
A balanced portfolio of gold investments that includes gold jewelry can hedge your portfolio against market volatility. The valuation of gold jewelry compared to other gold investments is different enough that you can take advantage of other factors besides the price of gold when trying to sell your gold jewelry.
For example, most jewelry pieces aren’t pure gold because gold is extremely soft and prone to damage. Instead, jewelers mix in stronger metals to create gold alloys measured in karats. Jewelry also comes in several shapes and degrees of craftsmanship. A solid gold band ring may contain more gold than a finely braided chain necklace, but the necklace requires a greater degree of skill to make.
Other advantages to adding gold jewelry to your investment portfolio include:
- The popularity of gold jewelry among certain fashion collectors who will pay more for rare pieces
- A global market for gold jewelry and high demand for popular styles or with inset precious stones
- Resistance to tarnishing and easy cleaning for any tarnished jewelry pieces
- Being able to wear your investment to show off your collection of gold jewelry pieces
Many wealthy investors in countries like China and India collect gold jewelry, ranging from vintage and antique collectors’ items, like broaches, choker necklaces, and tennis bracelets, to trendy celebrity jewelry, like heavy gold chains, bulky rings, delicate belly chains, and grills (decorative teeth jewelry).
Are There Any Risks Associated With Investing in Gold Jewelry?
Unless you’re attempting to find a buyer interested specifically in collecting gold jewelry, it’s likely you won’t be able to resell your gold jewelry for much more than what you initially paid for it. Other potential risks associated with choosing to invest in gold jewelry include:
- Maintaining appropriate physical storage space for your gold jewelry when not in use
- Not generating passive income like other investments, such as stock dividends or real estate rental income
- Niche-interest investors may be hard to find when you want to sell your gold jewelry
Factors Influencing the Value of Gold Jewelry
The price of gold and the amount of gold in a piece of jewelry aren’t the only factors that matter when trying to sell your gold jewelry. Unlike bullion, coins, or gold bars, there is a specific intrinsic value in each piece of jewelry in your collection.
So what matters most in evaluating your gold jewelry collection? That depends on how you want to sell it. You can sell it at a pawn shop or jewelry shop based on its weight, purity, and the value of any precious stones in the piece. You can also hold out for another interested jewelry collector to buy or trade on a secondhand market.
Depending on your personal interest in the piece or pieces you want to sell, you may find that the demand for certain pieces, both in the United States and globally, is higher at different times due to trends. For example, if a hip-hop artist who famously wore a specific style of chain necklace passes away, any similar jewelry you can sell will likely increase in value.
But why do these factors matter when attempting to evaluate your gold jewelry?
Gold Purity and Weight
One main way that people determine how much a piece of jewelry is worth is to calculate the gold percentage based on karats and the weight of the piece. For example, 18kt gold contains 75% gold and 25% other metals, usually copper or silver. If you have an 18kt gold ring that weighs 28 grams, it would contain 21 grams of gold.
Many markets for fast sales, like pawn shops or jewelry-buying stores that resell jewelry, would make an offer for the value of the gold in the ring, then mark up the purchase price when they resell it to earn their profit.
Design, Craftsmanship, and Brand Value
If you intend to resell your jewelry to a fellow collector, you’ll want to get your jewelry appraised and authenticated. The brand, design, and overall craftsmanship matter more to collectors than just the gold content. A 60-year-old piece from a longstanding brand will be worth more than a mass-produced piece of jewelry from a newer brand.
Other factors, like whether a piece is handmade or has unique settings, can also increase its value for jewelry collectors who want rare wearable art.
Market Demand and Trends
Current trends and demand in the gold jewelry market see higher demand for gold in markets around China and India, as well as more demand for vintage and antique pieces. If you have an older piece of jewelry, you may find a buyer online from one of these countries willing to pay more for such a rare piece.
Tips for Investing in Gold Jewelry
So is gold jewelry a good investment? It can be if you follow the appropriate steps to verify the quality of your pieces and ensure that you’re buying from legitimate sellers. You also need to know about the potential risks of investing in gold jewelry.
Buy From Reputable Sellers
Any seller you want to purchase gold jewelry from should have good reviews from reliable sources like Trustpilot. Online jewelry retailers should be in Assay Assured’s directory of jewelry retailers. Your best bet is to look for hallmarked gold jewelry that has undergone purity testing to verify its quality.
Verify Authenticity and Quality
Hallmarking and branding include stamping symbols into the piece of jewelry that indicate the manufacturer, country of origin, and purity. Certain brands have a reputation for quality, making pieces made by these brands more desirable for collectors.
Consider Gold Purity
The amount of gold in a jewelry piece can affect its appraisal value. More gold in the piece will give it a higher gold purity and more value as an investment, but it could also lead to scratches due to gold being a soft metal. Defects can reduce the piece’s value when you decide to sell it, making it a delicate balance when choosing the right gold alloy for your jewelry investments.
Evaluate Your Risk Tolerance
If you’re new to investing in precious metals like gold or silver, you might want to start your portfolio with coins, bars, and bullion. These pieces often sell for close to the true value of the metal on the current market. If you’re a more experienced investor who has traded in precious metals before, consider gradually expanding your investment portfolio to include gold jewelry.
How Does Gold Jewelry Compare to Other Gold Investment Options?
The intrinsic and sentimental value of gold jewelry can make it an excellent investment for people who want to expand their precious metal investments and who have a personal interest in collecting gold jewelry. However, if you want to invest in gold and silver as a stable and predictable way to grow your investments, gold jewelry may not be an ideal investment.
Where standardized precious metal investments like coins, bullion, and bars trade at nearly the current price of gold, gold jewelry has other contributing factors that affect its value. If you don’t know the best market to sell your gold jewelry, you could miss out on high-value resales. However, if you understand the jewelry collector’s market, gold jewelry can be an incredible long-term investment.
Can Gold Jewelry Be a Good Long-Term Investment?
If you take the time to do the appropriate research, get qualified appraisals for your jewelry, purchase from a reputable seller, and store your jewelry properly to prevent damage, gold jewelry is one way you can hedge your portfolio against fluctuations in precious metal prices or your stock market investments.