Gemstones as Investments
- Any investment regardless of its nature, requires access to a viable market in which the initial investment can be liquidated. That is true regardless of whether or not there is a profit. Without the market availability, how does an investor realize his profit or his lose?
- Diamonds, ruby, sapphire, emeralds, have long been used as a pitch for “high financial reward” opportunities. It is only after owning any of the above that you start to realize there is absolutely no way to sell the product.
- There is no wholesale or retail stream, that the small time investor can access. A company involved in this type of trade business in our jewellery sector, his hard earned dollars, invested in a commodity that he will work very hard to maintain. That would be things like having an active and aggressive sales force, maintaining a large inventory.
- Where would a little investor with a couple of stones even begin to go in order to liquidate his investment. Of course, any of the above would look great in a pendent or ring, given to a loved one.
If you think you can buy any gemstone today and sell it in a year or five years or ten years and make a profit on it, you are probably going to lose money.
When you try to sell a stone, it is often very difficult to find a buyer. The gemstone market is highly illiquid when compared to the financial markets, commodities, or even real estate.
Jewellers often sell stones for 2-3 (or more!) times their cost, but they are unlikely to buy stones from the general public for more than half their normal wholesale cost (i.e., they may buy a stone at a regular wholesale cost of $100, sell it at retail for $200-300, but only buy it back from an individual for $50).
Buying & Selling Jewellery
When buying jewellery it is best to make sure for the larger diamonds or gemstones, that there might be some form of independent grading certificate, such as GIA or AGS. Find out what the jewellery store’s policy is in regards to having the grading & value confirmed by an independent appraiser, and if you’re not happy with the independent appraisal, will you be able to get a full refund on your purchase. Do not expect realistically to be getting huge discounts on your jewellery of 60, 70, or 80% – in most cases this is not possible.
When selling your jewellery do not expect to get a price anywhere near what you paid, or what the appraisal value is. Depending on how fast you want to sell it will make a difference on how much you are going to get. If you need to sell the item in a hurry you will get substantially less, than if you were able to take your time. The quickest way to sell your jewellery would be to a sell shop or pawn shop, which would get you the lowest value. By using other means such as selling to people you know or on the internet, you may get more, but that too has its own set or risks & problems. Make sure you take all proper security precautions.
When travelling and all the excitement that comes with it, you might be tempted to purchase jewellery on your vacation. Often when travelling the islands there are lots of jewellery stores selling jewellery at seemingly huge discounts, though this may not be the case. Be weary of over-inflated and over-grading of appraisals. Make sure of the conditions on any returns. After returning home & finding out that the values don’t match what you purchased, returning the items to the store from your country will prove to be much more difficult than you might think.
The advantage of buying from a local jeweller is that it is easy to rectify any problems by simply returning to your local jeweller.
Even though the international jeweller assures you that they will take care of any repairs that might be needed on the item of jewellery, the cost to return it to their country may be much higher than having it fixed locally. It is best to contact the customs office in your country to find out what is involved in returning an item for repairs to another country. If you are going to buy jewellery while travelling as a momentum of your trip, it is always best to spend an amount in the same way that you would if gambling, because in fact you are. It is best to leave large jewellery purchases to your local jewellery store, who will be able to service you more quickly & efficiently.
In terms of buying jewellery online, be aware that all of the risks mentioned above also apply to internet purchases.
Jewellery Judge® Connoisseur's Course
Register for Steven A. Knight’s Gem Connoisseur Course 101. It is an exciting hands-on course teaching you about coloured stones, how they are identified and how they are valued. Have fun handling valuable gemstones under proper lighting with authentic appraisal equipment including gem tweezers and a jeweler’s loupe. When you leave the course you will feel educated about coloured stones and be able to talk knowledgeably about your product. Come out and spend time with Registered Master Valuer and Accredited Appraiser Steven A. Knight, examining stones and learning the theory behind the beauty.