Gold And Silver Jewelry Investments

May 15th, 2012
in gold

How to store your wealth?  In previous articles I have discussed owning gold and gold-jewelrySMALLsilver bullion, stocks and coins.   Another store of wealth that has stood the test of time is gold and silver jewelry.  Not usually thought of in the same light as other gold and silver investments, still it does have its advantages.  Often overlooked, jewelry has some major benefits as an investment, listed below.

For larger picture of gold jewelry, click on image.

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Major benefits:

  • Easily transportable.
  • International
  • Physical Control
  • Possible Appreciation Depending On Metal Content
  • Can enjoy wearing it
  • Few Restrictions On Owning And Selling
  • Easily Converted To Cash

Silver and Gold are often used in fine jewelry, as well as costume jewelry.  Scrap gold is anything that has gold content..and generally fashioned into rings, necklaces, bracelets and pendants.  The amount and purity of metal determines the value.  24 karat gold (pure gold) is more valuable than 14 karat gold – a higher karat number means the item contains more gold. Of course you can buy from reputable jewelry stores, (markups can be as much as 300% over bullion prices) but bargains can be had by finding estate sales and pawn shops.

According to a April 2012 survey by GFMS Ltd., a precious metals research consultancy company, they expect gold investment demand to reach record highes in 2012.  Jewelry fabrication did decline 2.2% in 2011 thought to be due to large increases in the price of the metal, but they expect demand to stay above 2009's historically depressed level.  World Gold Council stats show jewelry accounts for approximately 75%  of the world's demand for gold.

Thanks to Frank Holmes of the Daily Reckoning for the chart below.

Although the consumption per capita is not on the high end of the chart for India and China, their sheer numbers make them the elephant in the room.  As their economies continue to develop, their demand should rise causing a continuing rise in gold and silver prices.  Recently,  India was the top purchaser of jewelry at 745 tons.  China at around 400 tons was second, with the US third at around 128 tons.  Gold used in jewelry continues to be at high levels worldwide.

Historical Gold/Silver Ratio Chart

Silver jewelry may be a better investment than gold jewelry at the moment.  For example, since 1975 the ratio of silver to gold has varied from 14 to 100.  This shows how many ounces of silver it takes to buy one ounce of gold.  A down trend for the ratio is good for silver in that it takes less silver to buy an ounce of gold.  Conversly, when it is trending up, it takes more silver to buy an ounce of gold.  The current ratio is 54:1and trending up. You can see if the silver to gold ratio rises back to around 60 which has been the average over the last 30 years, and both metals continue to go up in value, there is the potential to make more money investing in silver, as it would take more silver to buy an ounce of gold in the future.

Approx 90% of all silver is made to the standard of 92.5% pure.   Impurities are added like copper or bronze, in order to sell it cheaply. Be sure to purchase 98% pure silver from a reputable source. Designer marked jewelry is usually high in silver content since the designer has a reputation to protect.  Silver can always be melted down and resold. Wear your jewelry and sell when the price increases to a nice profit.

In conclusion, when you compare investments, you must consider that jewelry is real wealth, not a certificate.  In difficult times,  money flows into hard assets.  If you buy quality jewelry at the right price, your investment should increase over time.  Buying prestige jewelry, with designer names like Cartier or Tiffany,  can inhance the value over metal content price.

When you decide to sell your jewelry there is always EBay, or you can bring your jewelry to a  scrap gold buyer who will determine what it’s worth and the type of gold or other metal in the item.  If you go to a pawn shop, they will weigh the piece and tell you the percent of metal in the item – although pawn shops will give you a lower return than companies devoted to purchasing scrap gold. [Scrap gold can also be found in dental bridgework and crowns. ]

Jewelry as an investment can be both lucrative, fashionable, and your wife will think you are a genius.


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