Personal and Economic Perspective of Gold Jewelry Investment
Growing up, I remember how my grandmother would quietly collect gold bangles over the years— not for show, but as a form of security. My mother also used to say that real savings didn’t sit in banks; they rested in the jewelry box.
Even at family weddings, the gold on display could probably fund a small startup. This was our gold culture at that time. Known as the backup of tough times. This cultural belief, that gold jewellery is both beautiful and financially wise, runs deep in many parts of the world.
But now, with an economist’s lens and a world of financial instruments at our fingertips, I find myself asking: Is gold jewelry a good investment— or just a glittering illusion?
Understanding Gold as an Asset
We all know that gold holds a unique position. It doesn’t produce income like a business or rental property, and it isn’t backed by a government like currency. Yet for centuries, people have turned to gold during times of financial uncertainty.
Gold is what economists call a “store of value.” This means it holds its worth over time, unlike paper money, which can be eroded by inflation or devalued by central banks.
It’s durable, scarce, and universally recognised. In uncertain times— wars, recessions, or currency collapses, gold tends to become more appealing.
How Gold Jewelry Performs as an Investment
Investment is something you put money into with the expectation of earning a return. That could be:
- Interest (like from a savings account)
- Dividends (from stocks)
- Capital appreciation (something increasing in value over time)
Gold jewelry doesn’t generate any income while you hold it. It sits in a box or a safe, and its return depends entirely on the market price of gold— which, as it turns out, fluctuates a lot.
For example, according to auronum.co.uk, between 2011 and 2015, gold prices fell from over $1,900 per ounce to under $1,100.
That’s a significant loss if you were holding gold as an investment. Since then, gold has seen upward trends, especially during periods of economic uncertainty like the COVID-19 pandemic, the most recent trade uncertainties or rising inflation.
But jewelry doesn’t track the market directly. Even if gold prices rise by 20%, your resale price may only increase by 10% or less, because buyers discount the extra costs of design, impurities, and wear-and-tear.
So why do so many people still see it as a “safe” investment?
The Psychology and Practicality of Gold Jewelry
Despite its inefficiencies, gold jewelry continues to be a popular form of saving, especially in countries where access to banks, investment accounts, or stable currencies is limited. In parts of countries like Türkiye and Southeast Asia, jewelry serves as a physical, wearable savings account.
There’s also the psychological comfort it offers. Unlike stocks or crypto, gold is tangible. You can touch it, wear it, pass it down. For many people— especially those in volatile economies— gold jewelry offers a sense of security that digital numbers on a screen cannot.
Additionally, jewelry can be pawned or sold quickly in emergencies. This liquidity, while not perfect, makes it more accessible than long-term assets like property.
It represents hidden wealth, often passed down across generations or used in dowries and inheritance. While not always reported or taxed, it’s part of the broader financial picture in many regions.
Gold Jewelry vs. Bullion: What's the Difference?
I think this is a critical point to discuss, as I have mentioned previously.
Gold bullion is usually purchased for purity and weight. It’s a direct play on gold prices. When you buy a 1-ounce gold bar, you’re essentially betting that the market value of gold will go up over time. You pay a small premium over the market price (which is called the spot price), and when you sell, you usually get close to that value, depending on the market.
Gold jewelry, however, introduces a few complications. When you buy jewelry, you’re not just paying for the gold. You’re also paying for:
- Design and craftsmanship
- Retail markup
- Brand value (especially if it’s from a luxury label)
- Possibly taxes or import duties, depending on your country
This means the price of a gold necklace may be 20 – 40% higher than the actual value of the gold it contains. So when you go to resell it, you rarely get back what you paid— unless gold prices have risen significantly.
That’s one of the first big lessons: gold jewelry is often emotionally valuable, but economically inefficient compared to bullion. But does it store value?
Of course it does. It’s gold.
Inflation, Currency Risk, and Gold
The good news is, gold jewelry hedges against inflation.
Inflation erodes the purchasing power of money. If inflation is 5%, then $100 today will only buy you $95 worth of goods next year. Over decades, this adds up.
Gold, by contrast, tends to hold its value during high inflation periods. When central banks print more money or when currencies lose trust, gold prices often rise.
This is why gold becomes especially appealing in countries with weak or unstable currencies. Jewelry, although less efficient than bullion, still acts as a store of real value that can outlast inflation or devaluation.
Hidden Costs and Risks
Let’s not forget the risks:
- Purity issues: Many jewelry pieces aren’t 24 karat (pure gold). They’re often mixed with other metals for durability, which lowers resale value.
- Making charges: These are fees for the craftsmanship. You don’t get them back when selling.
- Wear and tear: Used jewelry is less valuable, especially if it’s damaged or unfashionable.
- Theft: Unlike digital assets, gold can be stolen easily if not securely stored.
Limited resale options: Pawnshops and jewelers often pay far below market rates for second-hand pieces.
When Does Gold Jewelry Make Sense?
To be clear, gold jewelry isn’t a bad use of money— it just depends on your goals.
If you’re looking for:
- A flexible savings vehicle in cash-restricted environments
- A way to store generational wealth in a tangible form for a long period(we are talking about 5+ years).
- An emergency reserve that holds value across time
- Something beautiful that also carries some economic weight
Then gold jewelry does have merit. Especially in cultures where gifting gold is part of tradition, the emotional value adds an extra layer of meaning.
