Diamonds, no big deal really

Diamonds may be a girl’s best friend but do they hold their value? Is that sparkler your fiancé popped on your finger worth what he paid for it? It is a rare woman who doesn’t love receiving jewellery as a gift and more and more ladies are reported to be taking trips to quality jewellers to treat themselves to the occasional bauble.

It has long been a widely held belief that jewellery is a good investment. Better than money in the bank. But the alarming news is that the majority of it really isn’t. Most jewellery is sold as under the heading “luxury goods”. This means the buyer will expect to be able to select it in sumptuous surroundings. Even if you buy it from a high street chain store it is likely to be bright and attractively fitted, furnished, illuminated and staffed with smart and helpful salespeople.

All this costs money and that can only come from the profits on the jewellery sold. Most consumers expect to be able to pay by credit card or be offered interest free credit. This also costs money and retailers need to recoup the costs from their customers, even if these costs are concealed.

For these and other reasons, the mark-up on jewellery is very high, typically at least 100 per cent. There is also VAT levied on or included in the selling price and it is unlikely to be recovered if you ever decide to sell the piece on. Of course, there are some instances of gold and gemstones making a great investment. This happens when they are of the highest possible quality, made by a top-flight designer or have good provenance – ie were once owned by someone famous, such as the Duchess of Windsor.

In a 1987 auction, the late Duchess of Windsor’s jewellery was sold for £31m – six times the expected figure.

In a buying frenzy about 1,000 bidders and 300 members of the media crowded into a huge tent erected by Sotheby’s next to Lake Geneva for the two-day sale. The buyers desperate to own something that had once been worn by the wife of the former King Edward V111.

Many items went for up to 10 times their expected price. The highest price was nearly £2m for a 31-carat diamond ring by a Japanese jeweller. A plume-shaped diamond brooch, designed in 1935 by the then Prince of Wales for his future bride, was sold for more than £400,000 to actress Elizabeth Taylor.

Ms Taylor, who was a close friend of the Duke and Duchess of Windsor, said she had often admired the brooch when the duchess wore it and bought it for sentimental reasons. “I loved it so much, I had to buy it. It’s the first important jewel I’ve ever bought myself,” said the actress at the time.

Another item, a sapphire pendant, was rumoured to have been bought on behalf of another British actress, Joan Collins.

Before you raid your money bank for a bauble you fancy make sure you will be getting your money’s worth by taking a few precautions.

Buy only from reputable sources. When you buy, get a receipt from the jeweller stating the price, weight and caratage (purity of gold). Keep the receipt and ask for an insurance valuation certificate in case the item is ever lost or stolen.

It is still possible to get jewellery bargains abroad, in some cases tax free, but there are lots of confidence-tricksters out there so, once again, buy only from reputable suppliers.

And make sure the piece of jewellery you have chosen is a design that will retain its appeal and which you will love as much in 50 years time as you do today. Then it will make a cherished gift to pass on to a much-loved relative or friend when the time comes.

But always remember, jewellery is predominantly a pleasure-giving fashion accessory – not a wise investment.

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