The Investor's Guidebook to Alternative Investments by Stuart R. Veale

Author:Stuart R. Veale [Veale, Stuart R.]
Language: eng
Format: epub
ISBN: 9781101633670
Publisher: Penguin Group US
Published: 2013-09-30T16:00:00+00:00

JEWELRY

Some investors prefer gold jewelry to coins or bullion. They like to get “double duty” out of their gold investments—being able to wear it while it stores their wealth and appreciates. The type of jewelry that appreciates the most falls into one of two categories:

Bullion in disguise

Masterpieces of a goldsmith’s artistry

There are numerous manufacturers that make necklaces and bracelets that are thinly disguised bullion investments. In this case, the beads or bars are 24K or 22K yellow or white gold. One manufacturer allows buyers to choose whether the gold beads that comprise their necklace contain one-quarter, one-half, or one ounce of 22K gold. The buyer can specify how long the necklace should be. Because this jewelry requires a minimum amount of labor, it is priced at a slight premium over bullion, both when it is bought and when it is sold.

The second category is jewelry that is a masterpiece of goldsmith’s artistry, such as the trademark panther bracelets by Cartier. Masterpieces of design that only employ the best materials and jewels should always hold their value in downturns and enjoy great appreciation over the long term.

Avoid jewelry that requires many man-hours of labor but that doesn’t rise to the level of a masterpiece. Their resale value can fall sharply after purchase and take decades to recover.

By far the biggest market for gold jewelry is India. From the poor to the very rich, the people of India put a large portion of their savings into gold jewelry. Historically, Indians have had little opportunity to invest in stocks or bonds. The distrust between the people and the government has caused people to prefer hard assets. The traditionally high rate of inflation has also caused people to favor holding gold as an inflation hedge. Figure 9.12 shows the number of grams of gold held per unit of GDP in a variety of countries around the world.

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