The Sunday Times: Issue #9

The headline in the jewelry world this week: Gold hit a new high, $3,000 an ounce.

For some context, when I put out my first collection in March of 2020, gold was hovering around $1,500 an ounce. Even then, the thought of working in gold after mostly working in brass and silver was scary. It was difficult to fathom how I would ever be able to stay in business when it required so much money up front to put together a collection. If only I knew then that in 5 short years it would double.

I also got a question from a friend this week regarding a pair of vintage earrings. She wanted to know if I thought they'd be a good investment. I consulted our mutual friend Samantha of Storied Jewels, who works in the vintage jewelry industry, and we had a great conversation around what jewelry is really worth. With the gold price milestone and our timely convo, I thought this would be the perfect topic to explore in this week's issue.

So pour yourself a cup of tea and get comfy.

"Price is what you pay. Value is what you get."

- Warren Buffett

MORE THAN JUST THE INGREDIENTS

(ALTHOUGH THEY'RE IMPORTANT, TOO)

Before I go deep into the intrinsic value of the gold and gemstones that make up jewelry, I want to take a moment to acknowledge something broadly about art. Jewelers, at the end of the day, are artists. We are crafting something to express ourselves. Just like a painter uses a brush, paint, and canvas to declare something to the world, we too use our materials to show our vision of what is beautiful or important. And just like a painting can cost many multitudes more than it cost to purchase said brush, paint, and canvas, so too can our jewelry.

In one of the recent episodes of Acquired, the hosts delve into the brand Rolex. For anyone looking for a masterclass on branding, I highly recommend devoting 5 hours of your life to this episode. In it, they discuss how Rolex survived the age of Quartz (battery operated) and digital watches to remain a whopping 30% of the Swiss Watch Industry as purely mechanical watches. What I took away from that episode is that even though watches are obsolete as a functional item in the age of the smartphone (no one needs a clock anymore), the purchase of a Rolex makes you feel a certain way. It still has very strong value aside from its function. When you buy a Rolex, you are buying unparalleled craftsmanship, a piece of history, and a status symbol. The watch may be made from valuable metal and diamonds, but what you're really buying is something that says something about you and your taste. If it was purely about function and materials, Rolex certainly would not still be the leading brand in this industry.

So to summarize, the value or worth of a piece of jewelry outside of its intrinsic material value could be said to be: the resonance of the art with the viewer (genuine appreciation for the art's beauty), brand equity, craftsmanship, how it makes you feel, and what it says about you when you wear it.

"Gold is the sweat of the sun."

- Incan Proverb

WHY SO EXPENSIVE?

IT'S NOT FOR NOTHING

Gold has been the reigning element for millennia and to explain why that is, we have to consider its properties. Firstly, and most obviously, it's just gorgeous! It's bright, it's shiny, it resembles the sun. But beyond that, it has some incredible attributes.

Gold does not react to any of the other elements in the periodic table. For example, unlike iron and silver that rust and tarnish when exposed to oxygen, gold stays stable. It is also easily portable. Oxygen is incredibly useful and important in our lives, but we don't like to carry around tanks of it. It is also fairly easy to mine compared to other non-gaseous elements. It's also soft enough to be malleable but strong enough to be indestructible. All gold ever mined is still in existence. Combine that with the fact that it melts at a temperature achievable with fire, it makes for a pretty great material to make coins out of.

Let's now consider rarity. For something to be expensive, it can't be found everywhere. It also can't be so rare that it's impossible to find. Gold happens to just be rare enough.

WHY HAS IT SKY ROCKETED?

AND WILL IT CONTINUE TO?

This article from WSJ published this week is a good place to start when it comes to understanding why gold is so high right now. I will attempt to summarize what Ryan Dezember wrote. Basically, gold is seen as a haven asset. "Safe-haven assets" are investments, like gold or government bonds, that tend to retain or even increase in value during periods of economic uncertainty or market instability, serving as a refuge for investors seeking to protect their capital. When the stock market dips or stocks feel tricky (as they do now thanks to tariffs), people tend to divert their money into assets that feel safe and have proven over time to keep or increase in value.

So, if gold price depends on whether or not the world at large (and thus the stock market) feels stable, I think it's reasonable to expect it to climb even higher since a stable world feels like a far off dream right now. Growing instability geopolitically = higher gold price.

I think it's also important to note that our current currency made of paper and base metal only has value because the government says so. It's called "fiat" and since 1973, our coins and bills are only accepted everywhere because they are "legal tender." If the people's confidence in our government as a whole erodes (along with the rest of the world) where does that leave our currency?

IS JEWELRY A GOOD INVESTMENT?

REAL TALK

Let's be honest and establish that I'm biased when it comes to this question. When friends or clients ask me this, I can't ever imagine saying "No." But it's complicated.

Why is it complicated? Because, as we've already discussed, so much more goes into the worth of jewelry beyond its material value. We have to take into account its aesthetic and how popular that particular style is at the current moment in fashion (for example, heavy gold pieces were not popular in say, 2015, when dainty reigned supreme but now it's all anyone wears), its brand and how well-known and powerful the brand equity is (a Tiffany ring will always sell for more than any other ring of the same style, gold weight, and carat), its craftsmanship (how well a piece holds up over time and how much skill is required to make it), its personal effect (how does it make you feel), and the messaging (what does it broadcast to the world), among other things!

Then we must consider the material value. If the piece is made from precious metals, it most certainly will increase in value in at least the near future. If it contains rare gemstones, that adds another layer of expected price increase as mines dry up.

So you might think "OK! Jewelry is a safe investment!" Easy, right? As long as you have a marketplace to sell it. And remember, if you sell it to a third party to sell it for you (a pawn shop, the RealReal, etc) expect to only receive 50% of the total value of the piece. In order to make your full purchase price back and then some, you'll have to sell the piece on your own either through Ebay or another marketplace and many times that requires having an established clientele eager to purchase from you.

I have jewelry from my family that I've inherited. Luckily, I want to keep most of it because I like the style and find it sentimental. But let's say I inherited a 14k chain that I don't love. My mom would have maybe paid $200 for it back in 1970 (when gold was $35.96 an ounce!), and now it's worth $2,000 just in gold weight (and inflation). If it was a name brand, it may be worth even more than that and would sell really easily. I could pawn it for $1,000 or I could try to sell it through a marketplace to get the full $2,000. Because I could make a $1,800 ROI, I'd say that's a good investment. But if it was a style that no one liked right now, I would be hard-pressed to find a buyer that wasn't just going to melt it down for scrap. So it depends!

The good news is, unlike stock, it's never going to be worth nothing. It's very unlikely to tank in price. So it's a good place to park your money, but maybe don't consider it as an investment with the pressure to accumulate value. Instead, think of it as converting either dumb paper bills and base metal coins into something beautiful with inherent value, or similarly, converting digital numbers you can only see on a screen into something you can wear and that brings you joy.

This sapphire ring (along with most of my jewelry) is made with Fairmined Gold, which adds another expense on top of the spot price of gold to my production because purchasing Fairmined Gold pays the miners a fair wage and gives back to the communities where the mine is located. I didn't want to go into too much detail in this issue about Fairmined because it really deserves its own issue. Stay tuned for that!