Is Jewellery a Good Investment? [A Beginners Guide]

Jewellery has been a symbol of wealth, status and social class for generations gone, as well as today.

I remember rolling my eyes inwardly whenever I heard my mother or aunts talk about buying gold, gifting gold or encouraging me to invest in some for myself. ‘It’s JUST jewellery’, I would think, ‘Gold is SO old-fashioned, anyway.’. If you’ve ever shared this experience, have you ever considered if maybe, just MAYBE, your mother was on to something?

Is jewellery a good investment? In short: yes… but there’s more to it.

Your mother was right – investing in jewellery IS a good idea. And it doesn’t just have to be gold – there are lots of other profitable options out there.

According to a report by Knight Frank, ‘investments of passion’ have been growing steadily in 2023, despite the worldwide financial crises and economic worries. Watches, jewellery and coloured diamond have grown by 18%, 16% and 4% respectively. What does this mean to us? It means investing in jewellery is a real and viable investment, with research backing its profitability.

Jewellery has been a prized asset and great investment for centuries. Many pieces are passed on as heirlooms through generations, often through the women of the families, and have been long considered a hedge fund against financial downtimes and a safety net. And it’s no surprise why this is – jewellery is a tangible, liquid asset that can be sold (or pawned) when needed, it’s easily transportable in case of emergencies and it’s increased in value at a faster pace than inflation. (This is why your mother and aunts placed so much emphasis on their gold!)

But not all jewellery is made the same. It isn’t a simple case of just purchasing what catches your fancy and hoping for the best, just because your purchase looks pretty. I always encourage women to think deeper about how they use their money and this is a prime example.

You need to make some serious considerations before taking the plunge to get the best bang out of your buck. Some things you’ll need to consider include:

• The material you’re investing in
• The kind of jewellery piece
• The expected compound annual growth rate
• The purity of what you’re purchasing

What is a compound annual growth rate?

This is a figure for how much your investment has grown, or is predicted to grow, over a specified period. This is a vital figure – we want to invest in jewellery that has a historical track record of healthy CAGR, with predictions of more growth.

Let’s take a deep dive into some of the most popular jewellery investment options on the market now, alongside a breakdown of whether they’re a wise investment for you.

The best types of jewellery to invest in

Gold

Compound annual growth rate: 11%

Gold is traditionally given as a wedding gift to daughters at their weddings in many parts of the world. This is particularly the case in many South Asian, Arab and African cultures. Many women of ethnic backgrounds may have memories of their mothers ‘saving’ or ‘collecting’ gold over the years for their marriage, giving them their own gold, or valuable heirlooms being passed on from generation to generation of females.

They were smart women – they knew the value of having a tangible, valuable asset that can be sold in the future if needs must, particularly in a society where women did not have autonomous access to money and assets aside from jewellery.

To this day, gold is one of the most profitable and ‘safest’ jewellery investments you can make, with a track record of growth that has outpaced inflation.

“When compared to other popular long-term investments, gold has long been considered a reliable option. There are many reasons for this, but primarily because the price of gold rarely decreases and is known to increase in times of economic hardship — unlike most other investments… I predict that if the country does enter a recession which is quite possible gold will rise making it a great investment long term”

Robert Cuomo, Managing Director at Hatton Jewellers.

In the graph I’m sharing below by KFLII (Knight Frank Luxury Investment Index), we can see gold yields better profits than investments in FTSE 100, UK house prices and even prime Central London residential property! How’s that for a safe, impressive investment?!

Platinum

Compound annual growth rate: 5%

Platinum has seen an increase in popularity over the last few years as the middle ground between gold and silver.

Interestingly, during times of economic hardship, platinum tends to be priced twice as high as gold, whereas during periods of economic growth, platinum falls to half the price of gold [Source]. This makes it a riskier, more volatile option than gold, but with potential for high gains if moves are mode at the right times.

Avoid making these jewellery investment mistakes

I’ve shared an overview into the most popular and best yielding jewellery options, but now let’s take a look at jewellery you should avoid investing in. Because all that glitters is not a golden opportunity!

• Always buy your jewellery from an authentic, reliable supplier. Less reputable brands are known to offer gold-plated jewellery whilst labelling it as authentic fine jewellery. This will be easier to do in the UK, US and other countries where jewellery sale is regulated, but will be more difficult if you decide to purchase your jewellery from unregulated markets where the true quality of the jewellery is not disclosed.
  
• Ask for a certificate from the seller. This should detail the criteria of the jewellery to ensure you know what you’re getting.
  
• Gold-plated jewellery is not recommended. Gold-plated jewellery simply has a very thin layer of gold applied to the base metal. It rubs off quickly and thus loses it’s value rapidly. Opt for a high karat gold option instead.
  
• Go for simple, timeless pieces. Intricate patterns and trending designs may look attractive, however you may be spending a lot of money on the cost of craftsmanship and aesthetics. When it’s time to sell, those aspects don’t translate into an investment return.
  
• Consider coins as an investment piece if you won’t be wearing your jewellery. Coins do not require any craftsmanship and can be easily melted down.
  
• Have a plan for keeping your jewellery safe. If you grew up seeing your mother hide her jewellery under her mattress or in a suitcase under her bed, please know that this is not safe. Consider purchasing insurance for your jewellery.

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I’d love to hear your thoughts about jewellery as an investment. Have you ever considered it for yourself before reading this post? Was jewellery a big thing in your family? Did you have any family heirlooms passed on to you? Please leave a comment and share your answers!

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