Tuesday, November 25, 2008

Investing in Gold Jewelry

By: Sherry Rashad

Anyone well versed in economic theory can profess that gold can be an ideal long-term investment vehicle, not just as safe-haven investments. This is so because unlike fiat money, gold is not backed by credit, gold has value as is. But in terms of bulkiness and portability, gold in the form of bullion, leaves much to be desired as a “popular” investment medium. Gold jewelry or other objet d’art not only has an inherent sexiness factor which make it as a great conversation piece, but they also serve also as an excellent investment vehicle that is as good as gold bullion, bricks, or what have you.

I probably started my own peer-to-peer gold jewelry retail business back in 1999, when gold prices were at an all-time low. Gold was only worth 200 US dollars or so an ounce back then. Plus jewelry stores were selling gold items at almost fire sale prices at a rate like they are going out of fashion. Given that I still had the good fortune of having wads of dosh burning a hole in my pocket, I chose to invest it wisely by purchasing discounted gold jewelry and slowly selling it when gold prices go up. In which gold prices as always often tend to go up.

Even if the gold jewelry I bought at a discounted price be resold at their pre-discount levels, a profit margin of 8 to 10 percent is not uncommon. While an 18 to 25 percent profit margin can be possible if you manage to find a jewelry store desperate to sell. Remember that back in 1999, there’s a mini-recession that’s spreading across Asia that despite of 10 US dollar a barrel crude oil prices and gold at an all-time low of 200 US dollars an ounce. Almost all people are extremely weary of making extravagant retail purchases because of the then localized SE Asian mini-recession.

But my decision to invest in gold – even in jewelry form – was born out of my concerns over the long-term profitability of the “dot com” boom. Plus, the antitrust lawsuit of Microsoft CEO Bill Gates - which seems to be getting 24/7 coverage - could push almost anyone to seek for safe-haven investment tools. Even though I didn’t ride my “dot com” stocks to their absolute peak back then, at least I got off before their value became irretrievably lost. Using the money I earned selling them as a sort of start-up capital for my peer-to-peer jewelry business. Which even till now still has inventory that dates back to 1999 even though I made a killing in profits. Gold is indeed an ideal investment vehicle.

1 comment:

Kirk said...

I know that peer-to-peer gold jewelry trading can be very lucrative. I've been into it for several years now. But beware of unscrupulous "taxmen". Your local government taxation laws can be as criminal as the ones who are armed to the teeth. Maybe you should check out gold ETF s. They have a somewhat equitable tax structure.