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How to Buy Jewelry?

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Celebrating a Special Occasion with Jewelry!

How to Buy Jewelry? (Part II)
Fine jewelry As a Purchase

When you buy even the finest jewelry, you are buying a manufactured item, no matter how handcrafted it is.  The reasons begin with the metal, because precious metal used in jewelry is never pure.

Gold, platinum, and silver are all alloyed for various reasons.  The greater the amount of the alloy, the less value the precious metal. For example, the price gold on the commodities market and the world gold market is based on 24 Karat or 0.9999 Gold.  Thus, the value of gold in jewelry is worth only as much as the percentage of gold used. 22 Karat gold will have more gold than 18 Karat gold, and 18 Karat gold will have more gold than 14 Karat gold, but none has the amount of gold as pure 24 Karat gold.  The same considerations hold true for silver and platinum.

The first reason why jewelry is not an investment, therefore, is that you are buying karat gold, not “pure gold,” and gold is valuable simply because it is gold. Since the world market is based on “pure” gold, the gold in jewelry has less value, depending on the karatage. That value will increase, or decrease, with the price of gold, but will never equal the price of pure gold.

The manufactured metal is further manufactured in jewelry in design and workmanship, both of which add to the cost of the gold. If you buy a fine jewelry, regardless of whether you buy it from the person who made it or from a store (including online store) you are paying for design, workmanship, and exclusivity, all of which add to the price of the gold and may cost more than the gold. If you buy mass-manufactured jewelry, the cost of design and workmanship is spread out among all the pieces of jewelry of that design.  You are also paying for increases in cost along the sales chain until the jewelry reaches you. The manufacturer, the wholesaler, and the jeweler all increase the actual original cost to allow for their overhead, costs, and for their profits.

The same consideration hold true for jewelry with gems.  Jewelry with gems may even be a worse investment than plain gold jewelry.  The price of gems has risen drastically, as have the prices of furs and cars, and just about everything else in recent years as well as the precious metals, but the value of gems is quirky, often depending on fashion and demand, among other factors.

Diamonds are one example.  Prices of diamonds have risen, although the prices have escalated drastically only for certain diamonds. One reason for the rise in general is demand.  The United States alone accounts for more than 50% of the world diamond jewelry market.  Thanks to aggressive advertising campaign, that percentage has held true, regardless of how the market in other parts of world has increased. Thus, the price increases along with the number of people vying to buy diamonds, as soon as the market does not meet the demand.

Another reason is that the market is controlled by DeBeers, through its subsidiaries, DeBeers control sales of 85% of all diamonds from all over Africa, Russia, and elsewhere. Monopolistic as it is argument offered by DeBeers that keep even Russia in line is that diamonds are a luxury item, with an intrinsic value unmatched in any other such item, but the value can be maintained only by strict control. The strategy has worked successfully for every one in the diamond market except consumers.

Jewelry with colored stones is not as tightly controlled internationally as the diamond supply.

Buying jewelry, the first rule is to buy jewelry, with or without gems, because it appeals to you emotionally and you like and can afford it.  Do not buy jewelry purely for the purpose of an investment.  If the past inflation is any indication, you would have to keep the jewelry at least 6 – 10 years just to break even on the purchase price, not allowing for any profit. You may have to take a big loss if you need to sell in a hurry.

Customer Satisfaction is of paramount important to The Jewelry Hut.

Buy with confidence at The Jewelry Hut

 

To Web Masters:

The article above can be used on your web site or newsletter.

When it is published, may I request that you include my name and resource box (the bio, contact and copyright information) that follows the article. I would also appreciate if you could send me an email of notification along with a complimentary copy of the publication.

Copyright 2005 Bijan Aziz.

Bijan Aziz is the owner and Web Master for The Jewelry Hut

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