Jewelry trading - fun and a good lesson

My wife and I have done some jewelry trading just for fun. Finally an investment type that it was easy to convince my wife to take part in! J

Before we start; what do you think the value is of this beautiful diamond cocktail ring?

 

 

Ok, I can understand it’s difficult to assess it just by looking at a picture. So, if I give you the following additional information: 18K rose gold, 217 brown diamonds, 158 black diamonds, 68 white diamonds. About 4 carat in total.

Now the case looks more interesting, right..? It must be worth a fortune with so many stones… That’s how my wife and I reasoned at least. And we thought we could make a good deal out of this ring by buying it and reselling it based on the following assumptions:

·         The ring was half off from the original price

·         We would  sell the ring on another market where diamond rings are valued higher

·         The currency exchange rate to the other market was very favorable

·         The ring was very different – unique but still beautiful. Unique rings are often easier to sell since the competition is lower

·         The ring was in mint condition
 

The last statement was also the problem with this ring; we bought the ring brand new and when selling a ring at an auction, which was our plan, the price immediately is much lower than the list price of a new ring. I have heard that 1/3 of the original list price is the rule of thumb of what the ring could sell for at an auction. But end prices at auctions vary a lot so it is a very rough estimate!

We bought the diamond ring for about 5 000 USD. The appraised value at a well-respected auction house on the market where we wanted to resell it was good but with the re-sell fees of the auction house would drive down our profit below the purchase price so we haven’t sold it yet. I could try to sell the ring myself which would keep the sales fee in my own pocket, but it would be difficult to reach out to the right purchase market by doing it myself and the possible doubts of the ring’s authenticity would be out of the question if selling the ring at an established auction house. Another possibility would be to go to another auction house to get another appraisal. I have done that before with other jewelry and both appraisals and re-sell fees can differ quite a bit between auction houses, making a jewelry not profitable to sell an one auction house but profitable at another one…

I have two good take-aways from this investment venture. Firstly, always have a back-up plan for your purchase. If it doesn’t go as planned you really need to be willing to take a loss when reselling it – or you could do what we did… Our back-up plan was that the ring would serve as a future anniversary gift to my wife. So currently the ring lies in a drawer collecting dust, until this special occasion occurs! So in a couple of years, when we value the ring again at another auction house, if the price doesn’t dramatically increase, my wife will happily have a new piece of fine jewelry! I guess I don’t have to tell you that my wife is very happy that the resale of the ring doesn’t seem to work out as planned… It wouldn’t surprise me if she had bribed the person making the price estimate of the ring in order to give us a low evaluation so she could keep the ring… J

Lesson number two: it is difficult to buy a new ring with the purpose to re-sell it immediately. A new ring is like a new car. It drops in value right after you walk out of the store with it. Therefore the next ring we invested in we bought at an estate jewelry auction. That investment was very successful and we also followed an investment method to boost the profit of the sales! You will be able to read about this investment in my upcoming posts, so stay tuned and sign up to my newsletters if you want to know more about this subject!

If you find my blog posts interesting and valuable you can make a small donation as a token of your appreciation. I use all donations to invest and explore interesting alternative investments to give my readers inspiration and new perspectives of opportunities and pitfalls out there!  Click on: https://www.paypal.com/cgi-bin/webscr?cmd=_s-xclick&hosted_button_id=N6T59X7UY5STA. Thanks for your donation. 
/Chris