Golden Rules for Investors: What to Look for When Investing in Jewelry
Here's what you need to know when you want to invest in jewelry...
Collecting fancy and trendy accessories is something all of us would wish for anytime. Jewelry is one of the most sought-after items in the world. Buying jewelry as a personal collection differs a lot from buying it as an investment. For the latter, you need to observe different rules to succeed. For if you do, investing in jewelry can be highly lucrative. The profits can run into millions of dollars. So, here are five golden rules that you should know before buying jewelry as an investment:
Does it Look Good?
If the piece of jewelry you want to buy doesn’t impress you as much, then how will it impress the buyer? You need to put yourself in the buyer’s shoe. What do people like? Are they interested in diamond or gold?
It’ll be best if you got jewelry that suits different styles and personalities. Thus, you could always get people that are ready and interested in purchasing. The goal is to bring maximum joy to the buyers, and achieving this means that you’ll have to satisfy individual tastes.
The Value of the Design Vs Material
If you’re getting into this industry as a newbie, then you’ll have to learn a lot about the design vs the material of jewelry. These two aspects determine the value of the precious stone you’re buying.
Different materials cost distinctively. Therefore, it would help if you first decided on this aspect. What type of material are you going for? But at the same time, the design of the precious stone matters a lot. This is what the client will look at when shopping for that engagement or wedding ring.
Volatility of Precious Materials
Prices of precious materials like gold, diamond and silver go up and down all the time. The metals markets are mostly steady, but once in a while undergo crazy volatility periods. Those who’ve been deep into the business can tell you their story of past jewelry roller coasters.
It has been proven throughout history that the average diamond should not be treated as an investment, due to their pseudo rarity and poor resale value. This has driven the popularity of diamond alternatives such as lab grown diamonds to be increasingly accepted among financially savvy millennials.
On purchase timing, you could get really lucky and win big. However, in some other unfortunate times, you could easily fall on the wrong end of a price swing. You might be tempted to believe that these price runs are very unlikely as a newbie. After all, these are precious materials – how bad could it get? The reality is that this has happened several times before, and it’ll keep on happening even in the future.
Like it or not, these rough patches are part of the jewelry industry, and you’ll have to learn how to survive through them. Your response to rapid price runs will make or break your business.
Can You Resell it Easily?
What’s the resale value of the precious metal you just bought? How easy is it to get a client who’ll buy it? Again at this stage, the volatility of prices will determine the resale value. Therefore, check the metals that have a higher chance to go through the rough pricing patches easily.
The resale value is what will keep you in business. It’s what will determine whether you’ll be making profits or losses. Also, to increase your chances of reselling jewelry, try and ensure you have the carat, cut, and purity right. If not, you’ll get a raw deal when reselling the precious stone to your customers.
Some precious stones have a lower resale value than others. As you may already know, diamond is the hardest stone on the planet. Therefore, it isn’t easy to cut and use it again. This is perhaps the reason behind its low resale value. In fact, the situation even gets worse when you purchase a diamond without a certificate. It becomes almost worthless.
According to jewelers, most fraudulent cases of metals take place in silver wares. Therefore, you should only purchase this metal through genuine and certified jewelers. People resell silver based on its weight. Silver is normally melted to be reused, thus, you can easily lose on the making charges. The only type of silver that has a great resale value is the antique variant.
Finally, the demand for gemstones is low, and it’s better to get one with an authenticity certificate. Nonetheless, you are not likely to get more than 85% of the stone’s value when reselling it.
Don’t Forget the Transaction Fees
Often, many tend to forget this aspect when selling jewelry. There’s the price of the precious stone, and then the transaction fee you’ll pay to get it. You should be able to reflect this on the final price you sell the piece.
Wrapping up, investing in a jewelry business can be highly fulfilling and rewarding. However, you need to be sure of certain things even before you start. Lucky for you, we’ve ironed out most of them above. We hope that these tips will help you start and gain success in your jewelry business.
Felix is the co-founder of GrowthBoost, the destination for business owners and marketers to find great software. He also consults with SaaS businesses on how to leverage organic traffic to grow online.