Is Jewellery a Good Investment?
If you’re biting your nails and asking yourself whether or not you should invest in jewellery, you’re in luck.
With so much uncertainty across global markets, knowing how to hedge inflation and protect money has been quite the mystery. While the stock markets remain unstable, commodities like gold have given light to investors with the price of gold reaching an all time high. If you’re biting your nails and asking yourself whether or not you should invest in jewellery, you’re in luck. Here we’ll discuss everything you need to know about the volatility of investing in jewellery and what you should know before you invest.
Historically, gold has always been a highly sought, rare commodity and it's no surprise that it offers a sound choice of investment. But did you know that it can help you to make a tidy profit during periods of economic downturn? During the 2008 financial crisis, the precious metal saw sharp rises in its value and has proven to be as lucrative during the course of the current global pandemic, with the price of a single gram of gold rising from £37 to £47. This is due its ability to hedge against inflation during times where the value of paper currency is known to erode. The same can be said for its less known sister silver, however, it has been known to be more volatile than gold due to demand fluctuations outside of a recession.
Investing in Diamonds
While diamonds may be forever, the same can’t be said for diamonds as an investment choice, which is why we take full responsibility in stating that we do not endorse the purchase of diamonds for the sole purpose of investing. Sadly, they don’t offer the greatest prospects for yielding a great investment for three main reasons.
Reason 1: Newly purchased diamonds lose 50% of their value.
Unfortunate, we know. The last thing that you want to be told after splurging on your new rock is that it's already lost half of its value by simply walking out of the store with you. But the truth is, while a valuable commodity, diamonds take a great deal of time to generate any significant return. This is why we suggest you always find a piece of jewellery that you truly love and won’t mind holding on to for a little longer than you’d hoped to avoid any potential disappointment.
Reason 2: Diamonds fashion statements subject to trends
Just as fashion trends switch from season to season, diamonds do too, making it difficult to determine what is or isn’t a good investment. However, in recent years, naturally coloured or “fancy” diamonds have been in high demand over the fascination in their rarity. These are natural diamonds that come in bold colours such as green, red, pink and blue, highlighting a trend which defies diamond grading principles that regard clear, colourless diamonds as more valuable. In 2017, the most expensive diamond to be sold was a 59.6 carat fancy pink diamond for £55.4 at auction in Hong Kong, demonstrating just how it's heavily swayed by consumer trends.
Reason 3: Diamonds are very complex to value as an investment piece.
Unlike gold jewellery, diamonds are quite the challenge to value. There are no set calculations that can be used to determine the worth of a diamond or standard unit of measurement such as a gram. Instead, diamonds are valued according to 4 principles known as the 4c’s (colour, cut, clarity and carat) which are used by skilled appraisers to judge their value. This makes it difficult when choosing to invest in a diamond as the varying degrees of importance and combination of colour, cut, clarity and carat also mean that no diamond of the same size is of the same value. However, by purchasing from a well reputed jeweller’s like Diamond Heaven, you can be assured that we will guide you every step of the way in your diamond education process. With the help of our highly skilled appraisers you will be certain of the value of your purchase.
Insurance and Protecting The Value Of Your Investment
The great thing about investing in jewellery is that you can flaunt it but as with all fine jewellery, wear and tear, theft and loss are possibilities. Therefore if you do intend to invest in jewellery, we highly recommend taking out an insurance policy to protect its value. It’s often overlooked and deemed as being unnecessary but reduces the risk of losing your precious jewellery pieces. A simple fix for some added piece of mind.
Craft Your Own Diamond To Maximise Value
Now knowing everything that you do about investing in jewellery, you can take your new learnings and create your own jewellery to invest in. At Diamond Heaven, we offer a ”design your own engagement ring” service to allow you to create your own bespoke jewellery designs. Did you know it also serves as a tool to ensure that you can generate as much return as possible from your purchases? Add your choice of fancy diamond or precious metal to your ring using the service and explore how you can customise your favourite pieces from the Diamond Heaven collections.
As a long term investment, jewellery is worth considering if you’re already in the market for a new piece of jewellery. The most important thing to consider is your own personal satisfaction, as more often than not if your jewellery contains diamonds you will need to wait some time before you are able to yield a return from your diamonds.
For this reason, we suggest investing in gold if a profit is what you are aiming for. It also has the benefit of a lower minimum cost of investment which can be as little as £250, significantly lower than that needed to purchase real estate. Please also be mindful of the costs of maintaining the value of your jewellery, as it is also recommended that you protect your jewellery with a level of cover to minimise the risk of potential loss, theft or accidental damage, which can all cut into your potential return.
Whether you’re looking for a long term investment or a short term solution to curb the current climate, we at Diamond Heaven can help you to make a well informed choice. With over 10 years of experience and a team of specialist jewellery appraisers, contact us today to arrange your free consultation.