Gems and Jewelry Is Not an Investment Tool

Dear Readers,

Greetings!

?

If you missed reading "Gem and Jewelry: Reimagining as an Investment," part 1 of this article, please take the time to read it. In that write-up, I discussed race, and in this installment, I will present the obstacles that explain why you should not consider gems and other items of jewelry as investments.

?

I won't delve into how I intend to address this, but through this article, I aim to provide you with the utmost clarity on the confusion surrounding the question: "Why are gems and jewelry not suitable for investment despite being considered assets?"

?

True wealth grows while you sleep, and gems and jewelry are among those items whose value appreciates over time without your involvement. However, this value should be easily identifiable at any given point.

?

Consider any other investment instrument: stocks, cryptocurrencies, and real estate. Changes in their values are common topics in local, national, and international news.

On the contrary, even after considerable effort, it is rare to find an increased value for items purchased from jewelers or internationally renowned brands.

Ultimately, your options are limited to selling to a pawnshop or accepting the buy-back offer at a reduced price, or exchanging it for a lesser value from the jeweler itself.

?

Isn't it impractical to create a personal balance sheet by replacing the purchase price with offers as live market price for gems and jewelry?

Given the above reality, why do jewelers promote gems and jewelry as investment tools in the first place? Additionally, how can a diamond exchange function where traders buy and sell paper diamonds? It's indeed puzzling.

?

The value of any item is determined by a consensus among a group of people and becomes tangible and taxable upon realization. When it comes to stocks and cryptocurrencies, traders largely operate within the same context, in other words, traders live in the same bowl.

?

In real estate, there's a distinction between wholesale and retail markets, with the latter primarily dictating property values.

?

However, in the world of gems and jewelry, valuation is fragmented. For instance, a diamond might trade within the range of $1000–$1100 among diamond merchants, but a Jeweler could buy the same diamond for $1200–$1500, and the end consumer might pay $2000–$2500 to own it.

?

Thus, a single gem can have multiple monetary values simultaneously. Unlike stocks, cryptocurrencies, and real estate, where values are relatively standardized, determining the value of gems and jewelry hinges on finding a buyer willing to pay more than what a buyback, exchange, or pawnshop offers.

Moreover, the concept of valuation or appraisal in this context is subjective and limited to the circle of the appraiser.

?

As a retailer, why would I purchase a diamond from you, even in a fast market? I could acquire a diamond of similar quality, albeit at a slightly higher price, from a regular, accommodating diamond merchant who offers long-term credit. The increased cost would still be less than what I previously charged you.

?

The concept of open trading, essential for any investment tool, clashes with the concept of close bargaining while purchasing, making the open valuation almost impossible.

This challenge extends beyond you alone; even diamond merchants question the rationale for buying from retailers when merchants could obtain the same quality at a lower cost from cutters.

?

Similarly, one diamond merchant questions another, "Why should I buy from you when I can buy from cutters?" This dynamic sheds light on the vigorous bargaining that characterizes the gems and jewelry industry.

?

Now, let's get a bit personal

Allow me to remind you of the circumstances, the ambiance, and your emotions when you bought a piece of jewelry. You felt on top of the world.

?

Today, your demeanor is different. You look stunning. I wonder if the jewelry still adds beauty to you or if you're adding value to your surroundings. You step into the jewelry store; the store manager attends to you, and you're captivated. Honestly, observing you, I see an aura comparable to Lara Croft's. The way you hold your glass and your posture suggests affluence.

?

You try on one ring, then another, all the while the salesman extols the beauty of each piece once it's on your finger—a bit of flirting, one might say! Now you're exploring a pair of chandeliers from their new collection, a suggestion that wasn't initially yours but one the salesman successfully persuaded you to consider.?

Two hours have flown by. It's time to make a decision, to choose the piece you initially came for.

?

Oh, you're buying two items: a ring and a necklace! How will you manage your monthly budget?

?

And now… the store manager approaches with a big bouquet of pink and red roses. You're blushing, and I can see why.

?

Oh no! Is he accompanying you to your car? Lucky you! I admit to feeling a twinge of jealousy, but I'm genuinely pleased to witness your sense of special treatment.

?

Let's focus on business!

Can you imagine walking into the same or another store and announcing that you intend to sell the ring and chandeliers at a premium in the future? You might even hesitate to visit a pawn shop or consider multiple offers. After all, you didn't acquire these items as commodities; they were luxurious acquisitions that made you feel exceptional.

?

Trading and investing require the mindset and actions of a savvy investor. This is why gems and jewelry are regarded as consumable products rather than investments. You are a user, not a trader.

?

Another reason to obligate gems and jewelry items as investments is their supply.

In stock and cryptocurrency markets, supply is limited, and you trade with listed items, allowing demand to drive market dynamics and prices. Similarly, in real estate, lands are finite, and buildings in any city number in the hundreds or thousands.

However, the world of gems and jewelry constantly introduces new pieces. While numerous fresh options are available, older pieces are typically considered valuable only if they are antiques. Investing in antiques is a distinct lifestyle choice.

?

Although I previously mentioned in Part 1 that you would receive a scientific analysis report for your gem and jewelry purchases, the accuracy of these reports is questionable.

This isn't due to ill intentions from the providers but rather the challenges posed by counterfeit gems and testing expenses. Moreover, the connection between papers, invoices, and reports can be unreliable.

?

Counterfeiters sometimes remove laser marks from items to quote another item with the same alphanumeric or QR code. If you choose to verify reports prior to purchase, rather than solely relying on the salesperson, you're acting as an informed investor.

?

However, this requires either requesting the Jeweler to resubmit the jewelry to a gem-testing lab or possessing gemmological expertise to authenticate it yourself.

Furthermore, while diamond grading is relatively standardized and accepted globally, this is not the case for other precious gems, as their grading lacks consistent terminology.

?

Let's not limit our consideration to diamonds

Diamonds are the hardest substances on Earth, resistant to external forces without showing signs of wear. The same cannot be said for other gems; even sapphires and rubies, which are nearly as hard as diamonds, might get worn surfaces due to improper handling.

Whereas other gems can easily experience abrasion over time. Therefore, due to their susceptibility to damage, gems and jewelry are not viable investment tools unless they are antiques.

?

Interestingly, although stocks, cryptocurrencies, and buildings are less durable than diamonds, they are still preferable investment options compared to gems and jewelry because they are subject to legal regulations.

Gem durability, however, is beyond the scope of any law.

?

So, the next time you contemplate purchasing gems and jewelry, remember that shopping is not synonymous with investing.

The best approach is to seek added benefits such as discounts, coupons, gifts, and commitments to reduced or eliminated reductions during buybacks and exchanges.

?

But is there a solution or potential for gems, diamonds, in particular, to become accessible investment tools? In today's technologically advanced world, "nothing" is transformed into currency.

?

The answer is yes! Any gem could potentially be regarded as currency thanks to technology and standardization. The possibility exists, and I am actively working on it.

However, the key question is:

Why do gems and jewelry need to possess liquidity instead of just being considered luxurious items?

?

Thank you!

Please subscribe to the?Gleaming Gems Gazette?to conveniently remind yourself immediately, or for later reading, of awakening analysis of the matters that reside in the complex world of gems and jewelry.