It is difficult for a person or company whose work is related to investment precious metals not to receive a professional or personal query about the possible sale value that “grandma’s jewelry” may have. Some pieces that the interested party has treasured with care for decades with the aim of being able to get a return on them.
“How much do you think you can give me for this bracelet and these earrings that belonged to my great-grandmother?”
Surely anyone who has some relationship with the gold market has heard this question on more than one occasion, even though their activity, like ours, has more to do with investment gold than with pawn shops, popularly known as ‘I buy gold’ .
Usually, the answer that the professionals in the field, the aforementioned ‘I buy gold’, usually give to the potential client, they are not usually satisfied. “It’s that they are made of gold” , he will answer indignantly. “Yes, but 9 carats; that is hardly worth anything” , the potential buyer will specify.
That is precisely the key to the matter: the carats. In them lies the difference between valuable investment gold and not so valuable gold used in jewelry.
Jewelry, the world’s largest consumer of gold
According to data from the Gold Demand Trends 2019 report , from the World Gold Council , the demand for gold jewelry was 2,107 tons in 2019, 6% less than the 2,240.2 tons in 2018.
The jewelry sector is, together with the investment sector, the one that consumes the largest amount of gold extracted from the mines. Although its percentage has decreased in recent decades, due to the strength of sectors such as technology, the jewelry sector still accounts for more than 50% of the total demand for gold .
By region, China and India, the two largest global consumers of gold, are also those who demand the most metal for the manufacture of jewelry
“Investment” jewelry
Investment gold has characteristics of purity and shape that are defined, in the case of the European Union, by tax regulations, which establish that only bars and coins that meet certain conditions will be considered as such and, therefore, will be exempt from value added tax .
But the world does not end in the European Union, nor in Western countries. In Asia, gold has a special relevance. And in countries like India or China, jewelry is also considered, in a certain way, as investment gold. In India , for example, gold jewelry is the patrimony of women who marry. Hence, in the weddings that are celebrated in this country, the brides carry a large amount of gold on them.
In addition, in the rural areas of the country, which are poorly banked and dependent on agriculture, the inhabitants allocate the surplus of the crops, in good years, to acquire pieces of gold, usually jewelry, which constitute their insurance against any accident or medical need.
Hence, one of the factors that influences the price of gold in the country is the level of rainfall that is recorded in the monsoon season. The higher it is, the more abundant the harvests will be and, therefore, the higher the sales expectations of the jewelery merchants.
The same thing happens in China : in celebrations like the New Year, it is traditional to give jewelry and pieces of gold, a symbol that attracts good luck.
If this is the case in these countries, why is it that the Western world does not usually invest in jewelry?
The explanation is in the carats . These are a unit of measurement for the purity of metals (not to be confused with the carats of precious stones, which are a unit of weight).
Gold is one of the most ductile and malleable metals that exist. This means that its low hardness allows it to take multiple forms, and be stretched into a thread thinner than a human hair, or crushed into a sheet of microns thick.
This quality, which has allowed it to be easily worked by artisans for many centuries, is also one of its weaknesses. Therefore, to be used in jewelry, gold has to be alloyed with other metals, which give it greater hardness and resistance to wear.
What does this mean?
That the jewels, especially those that were made years ago, usually have a very low caratage (18, at most), so the amount of gold they contain is lower than the client imagines.
To this we must add that the value of the pieces of jewelry lies not only in the amount of precious metal they contain, but also in other variables such as design, the difficulty of craftsmanship, etc.
In short, that a jewel that cost a fortune at the time and that the heir hoards with the hope of getting a good return in times of lean times, ends up being priced very low , because it has less gold than was supposed.
