Scott Gordon Jeweler Gemologist

    If economics is the dismal science, gems and jewelry qualify in the minds of most as the dismal investment. Yet it is one, and with more potential for appreciation than is usually believed for the careful buyer.
    What causes this distrust? Perhaps it is because subtle differences of quality in these small objects often lead to dramatic differences in price, so in the absence of knowledge the fear of fraud fills the vacuum. Although it may be just as much a matter of connoisseurship to determine the provenance of a Picasso as an Art Deco bracelet, something about jewelry seems more mysterious and, ironically, less tangible in these most durable of all objects.
    My father, who spent his lifetime in the jewelry business, used to say these things are midway between art and real estate. Perhaps this is the source of both the fear and the fascination. Could it somehow be this peculiarly human activity, the conversion of these rare natural materials into statements of beauty in highly portable artifacts?
    For fourteen years, gems and jewelry have been included as an “investment of passion” by the World Wealth Report, published by Merrill Lynch/Capgemini. Their 2010 report on “High Net Worth Individuals” (defined as those having investable assets of $1 million or more) found that, in 2009, Jewelry, Gems & Watches slipped ahead of Art as a percentage of all investment dollars on a world-wide scale. (Both still trail Luxury Collectibles, which include automobiles, boats and jets.)
    But despite the reluctance of us in the appraisal profession, and most in the jewelry trade itself, to speak of jewelry as an investment, the reference is unavoidable. Just a couple of weeks ago, WSJ, the monthly magazine of the Wall Street Journal, suggested on the cover that their readers “invest” in gunpowder paintings, secondhand helicopters, estate jewelry, special relationships and a new camel coat.” Although their tone was somewhat arch, what does it really mean to call estate jewelry (or any personal property) an investment?
    In April, an article I wrote entitled “Estate Jewelry – Asset or Investment?” appeared in the bi-annual Gems & Jewelry Newsletter of the American Society of Appraisers. In it, I raised the question this way: “We know that in uncertain times money flees into harder assets. But what would be the means of comparing fine gems or estate jewelry with other potential vehicles for the preservation and growth of wealth?”
    First, it should be understood that gems and jewelry, although not “real” property (as in real estate), definitely represent real wealth. Re-sale (“secondary”) markets for reverting them to cash are idiosyncratic – ask any auction or estate sale patron — and sporadic, but they do exist. For years, my principal business has been to sell them on behalf of owners, who have used the proceeds to help fund new businesses, home purchases and their children’s educations. Gold is known as the first form of money, and today it has become the second.
    Yes, gems and jewelry are assets; but are they inevitably, as most investors in this country believe, ones that decline in value? The answer is partly cultural. In the Middle East and most of Asia, the understanding of jewelry as a primary wealth vehicle is centuries old; but Europe, too, has a much longer history of respect for the intrinsic worth of fine jewelry than do we in the United States. As the growth in the economies of China and India continues, one may expect an increase in the materials they value most, such as jade in the former and diamonds in the latter (where the first diamonds were discovered).
    In the current world economy, those countries have a predilection to value the most desirable jewelry – that with the signatures of prestige or artistic makers, such as Cartier or contemporary designer JAR, or that which stand as fine representatives of their eras, meaning Victorian, Edwardian, Art Nouveau, Art Deco, Retro, the Cocktail and Moderne of the 1950s, and, now, on into the Sixties and Seventies. But also in the other nations where economic growth has been greatest, Russia and Brazil, and even in more established ones such as Germany, the idea of estate and collectible jewelry as legitimate investment is quite strongly enough entrenched to generate new demand in the field, where supply is by definition limited. It is reasonable to expect that these assets will increasingly flow to these parts of the world, according to their specific tastes, but, overall, adding value.
    While buying pieces of distinction in retail venues may make problematic the time it takes for appreciation to overcome the prices paid for them, the investment environment towards tangible long-term value was sufficient late last year and early this to create the Emotional Assets Fund and Dazzling Capital, both in London, each of which specializes in period and collectible jewelry for investors. It remains to be seen whether these firms will achieve their goals of double-digit returns.
    What is undoubted is that, when bought for quality and at the right price, estate and collectible jewelry can result in capital growth over time.
    The Wall Street Journal supplement chronicles the birth of the modern estate and collectible jewelry market, which began one April day in 1987 with the sale at Sothebys in Geneva of the late Duchess of Windsor’s jewelry collection. Although most pieces do not carry the cachet of her ownership, enough quality and quantity exist to make caring choices of the finest available a viable way to invest in this wearable art.