Is Buying Gold Jewellery An Investment?

Category: Investment


Do you buy gold jewellery because you want to? Or because you think it will  make as good of an investment as buying paper or physical gold?

First, you need to understand that there is a difference when you invest in paper or physical gold and gold jewellery. If you think gold jewellery is a 2-in-1 investment because it works as a wearable and also as an investment, you may have been misguided and here’s why.


Resale value

It is not as easy to sell gold jewellery and even less likely to make a large profit when you do decide to sell it. The reason behind that is because the process can actually be quite tricky, including where to sell your jewellery.  You may think finding a buyer for your gold jewellery is a no-brainer, but finding a reputable buyer who won’t shortchange you may cause you to  scratch your head.

To ensure you get the most value when you want to sell it, there are various things you have to take note of:

  • You will need to have an understanding of its worth and this will also include the purity of the gold. A karat of gold is the indication of its purity. The higher the karat, the purer the gold content in the jewellery
  • There are various types of gold jewellery and their value differs accordingly. From 18k gold to rose gold and pink gold, it can get confusing. You might end up being tricked into how much your gold ornament is actually worth when trying to sell it.
  • Thinking of selling that gold piece of adornment which was passed down to you? Antique or older gold jewellery pieces are usually worth more, and craftsmanship of the gold will also increase its value.

But guess what? You’ll most often actually have to do without earning money from the cost of craftsmanship when you resell your gold adornment. When buying gold jewellery, part of the price includes the craftsmanship but when you sell it, sometimes the buyer won’t take into consideration the cost of craftsmanship. This means you’ll already be at the losing end to the buyer!

Even if you do know how much it should be worth, deciding on the final price can be difficult because you’ll then have to navigate between how much the buyer is actually willing to buy it for. So really, you will be at the mercy of the buyer. Breaking even on your gold jewellery “investment” will already be hard enough, so you can imagine how hard it will be to actually make a profit out of it.


Yellow Gold vs White Gold

As we have pointed out, investing in gold jewellery is not exactly the best kind of investment, but it’s even worse if you invest in white gold. White gold has a lower resale value than yellow gold. White gold gets its distinctive “white” colour from the mixture of pure gold with alloy. The reason white gold is worth less than yellow gold is because alloy cost less but it also means the purity (karat) of your gold jewellery is diluted. Another big no-no is to invest in white gold. Buy it if you like it and can afford it, but not to invest in it.


High Risk

Chances are you will wear gold jewellery instead of keeping it in a safe place. However, if you invest in gold jewellery it comes with a higher risk because there are chances of theft, or even losing it to catastrophic events. For example, compared to investing in a unit trust, it is stored away. With gold jewellery, once it’s stolen or lost, there goes your “investment”.

Gold jewellery tends to have more sentimental value, and in our culture, it is also usually passed down between generations. It isn’t something you would actually want to sell because of its sentimental value, so the risk of losing it because of another buyer or from theft is something money cannot buy or replace

What Should You Invest In?

Why not consider putting your money into more profitable types of investment. For example, you can invest in fixed deposits, unit trust or even the stock market. But if you would still like to invest in gold, do so but don’t invest in gold jewellery! Investing in solid gold such as bullion (gold bars) or even gold coins would be a better option.

Aside from that, look into proper ways to invest in gold such as through gold investment accounts. In Malaysia, you can do so through CIMB Gold Investment Account, Kuwait Finance House Gold Account-i and Maybank Gold Investment Account.

See also: The Beginners Guide To Investing in Malaysia