Gold has proved historically to be a safe haven during economic turmoil and stock market crashes. It also serves as a hedge against inflation and market volatility, offering investors the chance to earn a handsome profit long-term.
While most people tend to invest in gold bars or gold coins, many wonder if buying jewelry is a wise way to invest in this precious metal. After all, it’s one of the most accessible forms of gold and can be worn proudly on your finger, neck, or wrist. However, investing in gold jewelry does have its drawbacks.
In this article, we’ll answer the question, “Is gold jewelry a good investment?” and give you some practical advice on how to invest in gold.
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What Will I Learn?
- What Is Gold?
- Gold Jewelry Versus Gold Bullion
- Is Gold Jewelry a Good Way to Invest in Gold?
- What Makes Gold a Good Investment?
- The Advantages and Disadvantages of Investing in Gold Jewelry
- What You Should Know Before You Buy Jewelry
- To Profit from a Gold Investment, You Must Be Prepared to Hold on to Your Gold Piece
- The Value of Gold Jewelry Is Affected by a Number of Variables
- Take Note of the Different Types of Gold Jewelry
- Pay Attention to the Gemstones
- The Purity of the Gold
- The Source
- Don’t Buy Gold During the Super Bubble Season
- Unlike Investing in the Stock Market, You’ll Need to Have Somewhere to Store Your Gold Jewelry
- The Verdict - Is Buying Gold Jewelry a Good Way to Invest in Gold?
- Frequently Asked Questions
What Is Gold?
Before we delve into gold as a form of investment, it may be helpful to first understand what gold is and how it came to be such a desirable and valuable commodity. Gold is a lustrous metallic element commonly used to make jewelry, coins, and bars. Because this precious metal is so sought after, it is valuable and tends to rise in value over time.
To learn about this precious metal and its potential as an investment, it is important to consider its origins and historical development.
The History of Gold Jewelry
Gold is, without a doubt, one of the most prized commodities in human history. To acquire just a small portion of the world’s gold, vast civilizations and global leaders have emerged and fallen throughout history.
This precious commodity is a profound and constant symbol of riches, splendor, and immortality because of its great beauty and resistance to degradation. Although it is uncertain when humans first came into contact with gold, the obsession with the metal dates back thousands of years, according to archaeological records.
Before anyone ever mined it in an organized fashion, early human societies would have most certainly discovered gold in caverns or pouring down rivers.
According to history, the first record of gold being used for making jewelry in 3000 B.C. by the Egyptians. They believed that this precious metal was a sign of divine power and used it to construct temples.
However, people soon realized its monetary significance and started using it as a form of currency in 560 B.C. Over time, gold came to be recognized as a highly profitable investment prospect on a global scale.
In many cultures, gold jewelry is worn as a symbol of wealth and prosperity and is given as gifts to show affection. It has also been used as a form of investment because people can easily sell their jewelry when the need arises.
Mining and looking for gold required a tremendous amount of work in early human history. Slave labor and captives were used by civilizations such as the Chinese, Indians, Egyptians, and others to work at mining sites. Even though mining has advanced, the human race is still searching for gold.
Gold Jewelry as a Status Symbol
When you think of gold, you probably envision affluence, wealth, and high status. It should come as no surprise that people still have an intense yearning for gold if you consider how it is used in modern society.
There is something about the precious metal that makes us feel exclusive. This is likely because gold has historically been associated with the world’s most influential people, who frequently flaunt it as a display of their political and social strength.
Related Reading: how you can test gold in your home for quality.
Gold Jewelry Versus Gold Bullion
If you’ve been considering a gold investment for a while now, you probably already know that there are a number of ways to do this. You could purchase jewelry, bullion bars, or coins, but which option is better?
Gold is a soft, malleable metal that can easily be molded and shaped to form intricate designs. However, because it is so soft, it can just as easily bend out of shape when worn as jewelry, so to prevent this, it has to be mixed with an alloy to help it hold its shape. Examples of metal alloys used in gold jewelry include copper, platinum, silver, palladium, and other metals.
Bullion, on the hand, is pure gold with a purity of over 99 percent. It is generally found in the form of bars or coins and is the option of choice when it comes to investing in gold for a profit.
While gold jewelry is acquired for its artistic appeal, gold bullion is sold purely by weight. If you would prefer to buy gold as a wearable investment, gold jewelry is a good option. However, bullion would be the best way to go if your focus is to maximize profits without concern for an artistic appeal.
Is Gold Jewelry a Good Way to Invest in Gold?
Although it should come as no surprise that we enjoy donning gold on our bodies, can gold jewelry serve a purpose beyond mere fashion? Is having gold jewelry a wise investment move given how valuable gold is?
Even when the stock market is volatile, this precious metal seems to hold its value over time. However, if you want to sell your gold jewelry, you’d need to spend money on an expensive piece to make any significant profit. Although purchasing gold jewelry is a kind of gold investment, it is not the most effective approach if you’re hoping to diversify your investment portfolio.
Owning gold jewelry is still a wise choice, though. Many people in eastern countries such as India and China have substantial collections of gold jewelry. An extensive collection of gold pieces might serve as a rainy-day emergency fund.
In addition to being a great strategy to protect against market volatility, gold also serves as an untraceable commodity that you can use in place of traditional fiat currency.
What Makes Gold a Good Investment?
In the section below, we’ll discuss why gold makes a great investment.
Gold Has Held Its Value Over Time
Unlike fiat currency or other assets, gold has endured the test of time and preserved its worth. In fact, it is often seen as a way for people to preserve and pass on their fortune to the next generation. Because gold is a malleable metal that can be molded and shaped with a gas flame, it is easy to use for creating coins.
Additionally, no other pure metal has the distinctive and exquisite hue that gold does. According to Einstein’s theory of relativity, gold atoms can absorb some light since they are denser and have a larger mass.
Growing Demand for Gold
In the past, rising affluence in developing market countries has fueled the demand for gold. Many of these countries’ traditions have a strong connection to the precious metal. Moreover, in China, where gold bars are a popular method of preserving wealth, the demand for the metal has remained constant.
Additionally, there has been an increased demand from investors. Many people today believe that one should invest money in commodities, especially gold, as a class of financial assets. Interestingly, since 2019, the SPDR Gold Trust has been the biggest and one of the most widely used ETFs globally.
A Limited Supply Contributes to Gold’s Price
Since the 1990s, a significant amount of the gold reserves on the market have come from the vaults of various banks throughout the world. International central banks started to sell at a slower pace in 2008.
Moreover, the number of new gold mines has also been dropping since 2000. According to BullionVault.com, yearly gold mining output declined from over 2,500 metric tons in 2000 to just 2,400 metric tons in 2007. A reduced supply makes gold rare, which increases the demand for the commodity.
Protection Against Deflation
Deflation, which has not been experienced internationally since the Great Depression in the 1930s, is a period when prices decrease, and a country’s economy declines and is burdened by consumer debt.
Gold’s buying power increased during the Great Depression while the majority of other prices fell sharply. This occurred because people opted to hoard cash, and at the time, gold was the safest way to store wealth.
A Hedge Against Inflation
Due to its tendency to increase in value as the cost-of-living increases, gold has historically served as a fantastic hedge against inflation. Investors have witnessed rising gold prices during periods of high inflation and falling stock market prices.
Because this precious metal is typically valued in fiat currency, which depreciates because of inflation, its price rises along with the rest of the market. Additionally, when people think the value of their national currency is decreasing, they may be motivated to purchase gold. This is especially popular among gold IRA investors.
The Crisis Commodity
In times of geopolitical and economic unrest, gold retains its value. It is often referred to as the “crisis commodity” because people turn to it in times of political tension, as it usually outperforms other types of investments.
A Weak U.S. Dollar
The U.S. dollar, one of the most significant currencies in the world, has a significant impact on gold’s price. People turn to the precious metal for protection when the value of the U.S. dollar declines, just as it did between 1998 and 2008. Gold prices then rise as a result of the increasing demand. The following factors could cause the value of the U.S. dollar to drop:
The nation’s significant budget and trade deficits
An increased supply of the currency
A Gold Investment Is a Great Way to Diversify Your Investment Portfolio
Finding investments that don’t closely correlate with one another is a crucial aspect when it comes to diversifying your portfolio. History has shown that there is a negative correlation between gold, stocks, and other financial instruments.
Stocks performed badly in the 1970s, but gold had a great decade. In the 1980s and 1990s, stocks soared while gold struggled. Consumers switched to gold in 2008 when stock prices sharply declined. Stocks, bonds, and gold must be properly combined to produce a portfolio with a lower overall risk.
The Advantages and Disadvantages of Investing in Gold Jewelry
To further explore whether gold jewelry is a suitable investment, let’s look briefly at some of the pros and cons of this type of investment.
Gold jewelry is available in several colors and is rust resistant
Unlike gold bullion that is locked away in vaults, gold jewelry is a wearable gold investment
There is a global demand for this type of jewelry
Gold doesn’t tarnish, unlike many other precious metals
It can be liquidated in times of crisis
The precious metal has a wide range of industrial applications, so it can be melted and used in a variety of ways
Gold is always fashionable, so you won’t have to worry about not being able to resell it
It is a wearable investment that you can see and enjoy every day
You cannot use a gold jewelry investment to earn passive income
While it could make a good emergency fund, a gold piece may not sell as well as bullion, so you may not get the price you paid for it
You’ll have to find somewhere to store these assets safely
Gold jewelry doesn’t offer the same purity as gold bullion and is often combined with alloys
What You Should Know Before You Buy Jewelry
Suppose you’re still deciding whether gold jewelry is a good investment. In that case, here are a few things you’ll need to remember before you buy gold.
To Profit from a Gold Investment, You Must Be Prepared to Hold on to Your Gold Piece
The truth is that the price of gold fluctuates, and to determine how much it is worth at a given time, you will need to check the spot price per troy ounce. Because gold typically rises gradually, you will have to buy jewelry and hold on to it for several years if you want to make a profit.
The Value of Gold Jewelry Is Affected by a Number of Variables
Another thing to keep in mind is that various factors, including craftsmanship, purity, market preferences, quality, and the cost of the pure metal and gemstones, among others, impact the value of a gold piece.
Jewelry does not appreciate at the same rate throughout time. You must pay great attention to the elements that will determine whether the product will appreciate in value or whether it will remain merely a flashy accessory.
The secret is understanding where to buy jewelry. You must only make purchases from reputable, experienced sources. There are innumerable jewelers, but only a few are genuine experts in their fields.
Take Note of the Different Types of Gold Jewelry
Gold jewelry is available in a number of different colors:
1. Yellow Gold
The most prevalent type of gold used for jewelry is yellow gold. Yellow gold is frequently used to make necklaces, bracelets, rings, and other accessories and has a honey-like hue.
2. White Gold
Platinum jewelry is one of the most expensive pieces you can buy. Compared to gold, platinum is a far more valuable metal, and white gold was created to imitate jewelry made of platinum. Although it resembles silver in appearance, it is slightly brighter and more robust.
To create this type of platinum jewelry, gold is combined with platinum, but it can also be made using other metal alloys, such as nickel, zinc, silver, manganese, or palladium, to give it a white hue.
3. Rose Gold
This popular metal is made using pure gold and copper as an alloy. The addition of copper changes the color of the metal and affects its value in terms of karats. Most rose gold contains 75 percent pure gold with 25 percent copper, making it 18 karat gold.
4. Green Gold Jewelry
Green gold is rare. It has an emerald tinge and finding it in conventional jewelry stores is challenging. As you might have guessed, green gold is costly and is typically created in labs by adding copper, zinc, and silver to yellow gold. Because this metal is so rare, these gold pieces are more expensive than most other metals.
Pay Attention to the Gemstones
When buying new jewelry, you should also check the value and authenticity of the gemstones. The quality and craftsmanship of the jewels should be examined because they have an impact on their prospective worth. Diamonds are popular, and well-loved gemstones used to compliment gold jewelry.
We advise obtaining a certificate from one of the world’s leading gemological organizations to better your chances of reselling it for a profit. The right piece of gold jewelry can prove to be a wise purchase. It may even progress to becoming a significant and priceless family heirloom. Gold jewelry can also serve as a reliable backup plan in an emergency because you can quickly pawn it.
The Purity of the Gold
Gold’s purity is measured in karats, and it’s crucial to keep in mind that the phrase “24-karat gold” refers to more than just an object composed of pure gold. Gold with a 24-karat purity rating is almost 100 percent pure.
Certain gold coins may also include nickel or copper, for example. The more karats a piece of gold possesses, the finer and purer the precious metal is, and the most common karats are 9, 10, 14, 18, 22, and 24. Moreover, 24-karat gold pieces are more expensive because they have higher level of purity.
It’s also essential to ensure that you buy gold jewelry from a reputable source. There are a number of sellers that offer low-quality gold jewelry, so it is important to pay attention to the company you’re buying from.
Moreover, it might be a good idea to read customer reviews online to determine whether buying jewelry from this source would make a good investment, especially if you’re making an online purchase.
If you live in the U.S., there is probably a trustworthy gold store near you. Suppose you want to be certain that the gold you are buying is real. In that case, you can go to large-scale commercial suppliers such as Tiffany’s, Graff, and Cartier.
Because gold is sold by weight, it is also important to consider the weight of a piece before making a purchase. The greater the weight, the higher the potential profit.
Don’t Buy Gold During the Super Bubble Season
Avoid buying gold during the super-bubble season at any costs. People are buying gold because they are worried about a potential market crash. Sadly, corporate regulations require price increases to keep up with high demand. As a result, you get less for more.
When it comes time to sell your piece, you may be horrified to discover that the numbers don’t add up. Expensive gold doesn’t always equal valuable gold.
Unlike Investing in the Stock Market, You’ll Need to Have Somewhere to Store Your Gold Jewelry
Because investing in gold jewelry involves investing in a tangible object, you’ll need to consider storage. Because gold jewelry has a high value and is highly sought after, you’ll need to find a secure place to store it. When it comes to storage, you have three options, each with its own pros and cons. They are:
- Storing it at home – this makes your jewelry more accessible
- Bank safety deposit box – keep in mind that you will have to rent the safety deposit box if you choose this method
- Secure vault – this method offers the highest level of protection and might be a good option if you have an extensive collection of jewelry
The Verdict - Is Buying Gold Jewelry a Good Way to Invest in Gold?
There is no doubt that investing in gold is a fantastic choice. It is an accessible type of investment that everyone from ordinary people to financial institutions can profit from. Moreover, gold investments are frequently used as a reliable hedge against market volatility. It can also serve as a reliable emergency reserve during troubling times.
Gold has a vast history and has proved to be one of the most popular precious metals, attracting investors from all walks of life, but is gold jewelry the best way to invest in gold?
From the facts provided above, you can see that buying gold jewelry can be a smart move. However, it may not be the right choice for everybody. It’s generally best to avoid gold entirely if you want to make a lot of money quickly.
Go to your neighborhood jewelry shop if you can afford a gold necklace or bracelet and want to show off your wealth. Only your objectives will determine whether an investment in gold jewelry is the right choice for you. Ensure that you buy real gold and purchase what you can afford.
If you found this article helpful and are curious about other types of gold investments and financial instruments, please browse our website for more!
Frequently Asked Questions
In the section below, we’ll take a look at some of the most commonly asked questions about gold jewelry investments.
1. Should I Buy Gold Jewelry?
The answer to this question will vary from one person to another. You will need to consider your risk tolerance, storage options, budget, and preferences when investing in gold jewelry.
2. What Are Other Ways to Invest in Gold?
If buying gold jewelry simply isn’t for you, then there are other ways to profit from this precious metal. Keep in mind that each of these options comes with its own benefits and drawbacks. Here are some other ways to make money with gold:
Buy and sell gold bars or coins. Gold bullion may have greater value than gold jewelry, so this could be a more reliable way to profit from this precious commodity.
Invest in gold futures. This involves speculating on the value of gold. It offers a greater leverage than many of the other options on this list.
Gold ETFs. If you prefer not to buy and sell the actual commodity, you can invest in an exchange-traded fund (ETF) that tracks the performance of gold.
Mining stocks. You can also choose to invest in mining companies to profit from gold.
3. Is 18k Gold Jewelry a Good Investment?
Despite containing 25 percent metal alloy to make them more durable, 18k gold jewelry is 75 percent pure gold, making it an excellent gold investment. Investing in 18k gold jewelry is a smart move because gold keeps its value over time.
4. Where Can I Buy Gold Jewelry from?
Gold jewelry is available in jewelry stores and online retailers. You could also buy gold pieces from a supplier.
5. What Jewelry Has the Highest Resale Value?
When it comes time to sell your gold jewelry, you’ll want to get the best possible price for it, so choosing a brand that offers high resale value is essential. The top brand that you can choose if you want to sell your pieces someday is Cartier.
6. What Type of Jewelry Sells the Most?
Because jewelry is an accessory, it might be helpful to buy gold jewelry that people will want to wear. Currently, the most popular accessory is earrings.