Top 4 Tips on Buying Gold Jewelry as an Investment

A couple of 14-carat gold wedding rings. Picture taken in Brazil, where 14-carat is the most common kind of gold used in jewelry. (Photo credit: Wikipedia)

While gold coins may look better on paper, for those who want an investment that they can actively enjoy, gold jewelry is an excellent choice. Many people choose gold for women’s and men’s wedding bands, but you don’t need to stop there; gold jewelry can easily supplant the bulk of your costume jewelry as well. Here are four tips on buying gold jewelry as an investment.

Choose a higher karat grade. Gold is a naturally soft metal, and as such it must be alloyed with a harder metal if its intended use is as jewelry that will be worn on a regular basis, such as wedding rings for men or women. Pure gold is 24K, but the most common karat purities seen in gold jewelry are 10K, 14K and 18K; the higher the karat grade, the more pure gold used. To quickly calculate how much pure gold is in a particular karat purity, simply divide the karat grade by 24. For example, 18K gold is 18/24, or 75% pure gold. Needless to say, higher karat grades are more expensive due to the presence of more pure gold.

For gold jewelry that you intend on wearing frequently, 18K is your best bet for both investment and durability purposes. While 10K and 14K gold jewelry may be harder and somewhat more durable due to the increased presence of alloying material, both of these karat purities are significantly less valuable. If purchasing gold jewelry that you intend to wear less frequently, or jewelry that is less likely to acquire any damage through wear (such as earrings or a necklace), you might also consider 22K gold, which is fairly soft but very valuable.

Be discriminating when it comes to alloying material. Not all alloying materials are created equal when it comes to gold jewelry. Higher karat purities of gold like 18K and 22K tend to use higher quality alloys, but you will still want to find out exactly which alloy or alloys was used prior to making a gold jewelry purchase. Alloying material will to some degree depend on the color of gold that you are purchasing; gold is naturally yellow, but other common colors found in gold jewelry include white gold and rose gold. For white gold in particular, the quality of alloying material can vary greatly, from less expensive nickel to high quality precious platinum group metals (PGMs) like platinum and palladium. The quality of the alloying material should ultimately factor into the price that you pay for your gold jewelry.

Buy wholesale. When purchasing gold jewelry as an investment, the last thing you’ll want to do is to pay full price at a high end jewelry store. While some designer brands like Tiffany or Cartier are considered to hold a certain value that is completely independent from the material used, the higher cost of these items may start to detract from the overall investment value.

To get a sense of how much you’re paying for a particular piece of jewelry versus the actual value of the gold that it contains, use the weight of the item and current gold prices to calculate worth versus cost, taking into account that lower karat purities will not have the same value as pure gold. If you are buying an item that you have no immediate intention of selling (such as women’s or men’s wedding bands), do some comparison shopping online to make sure that you are getting the best price for your desired item. 

Watch the market. Part of what makes gold jewelry such a good investment is its consistency in the market, especially when compared to more volatile precious metal commodities like platinum. Nonetheless, gold prices still experience normal market fluctuations, so try to buy gold jewelry whenever there is a dip in gold prices. On the flip side, if you are thinking of selling your gold jewelry, make sure the market favors you before unloading it. In an ideal world, you will be buying wholesale during a dip in the market, and selling retail when the market is high.

Tanya Naouri writes articles on gold men’s wedding rings for men for JustMensRings.com.