How to Buy Modern Jewelry with Return Potential

How to Buy Modern Jewelry with Return Potential
Photo Credit: Marietta Wülfing

I was surfing through Etsy listings the other day when I came across a masterpiece.  It was an opulent Modernist 18 karat gold and sterling silver pendant set with a massive rough peridot gemstone.  The artist who handcrafted this treasure is Marietta Wülfing, a jeweler who owns a boutique atelier called Sinnlích.   Wülfing’s retail operation is located in Buggingen, Germany, a small municipality just a couple miles from the French border that is sandwiched in between the picturesque Rhine River and the famous Black Forest.

But the truly shocking thing about this candy-colored treasure of a pendant was the price – only $876 on Etsy (note that the price fluctuates slightly based on the current dollar/euro exchange rate).

All this got me thinking.  Although I typically gravitate towards vintage or antique jewelry for investment purposes, I will certainly consider a piece of modern jewelry if it has the right attributes.  Much like a different handmade Etsy piece that I highlighted in a previous article, this scintillating peridot pendant hit all the right notes.

The contrast between this magnificent Modernist pendant and the nasty jewelry you’ll typically find in chain stores like Zales or Kay Jewelers couldn’t be more extreme.

First, this gorgeous pendant has a very high intrinsic value to price ratio, which is one of the primary things I look for when buying an investment grade piece of modern jewelry.  A really good piece of jewelry will have component elements – gold, silver, gemstones, etc. – that constitute a significant portion of its value.  Although it can take some searching, it is possible to find modern jewelry selling for no more than twice its intrinsic value.

In other words, for every dollar you invest in a good quality piece of modern jewelry you can expect to immediately “recover” 50 cents or more in melt/scrap value.  This means that if you were forced to panic liquidate your jewelry, it would be possible to literally rip it apart and sell the component metal and jewels for at least a 50% recovery rate.  Of course, we would never want to do this, as a fine piece of jewelry is always worth more than the sum of its parts.  Nonetheless, it is comforting to know that your downside risk is limited in a worst case scenario.

The second attribute I value when shopping for contemporary jewelry is whether the piece is one-of-kind.  We live in an age of mass production.  As a result, I believe that unique, handcrafted jewelry will tend to appreciate in value much more quickly than similar pieces that are factory made.  The handcrafting process really allows a jeweler’s creative artistry to shine through, producing jewelry that is often closer to a miniature work of art than merely a ring or a necklace.

As an added bonus, handmade jewelry is invariably finished to a much higher standard than chain store jewelry.  The artisans who create these masterpieces usually go to incredible lengths to ensure their work is both flawless and visually appealing.  Unlike more pedestrian jewelry, you won’t find pitted metal, sloppily-cut gems or bulky prongs on fine handmade jewelry.

The final hallmark of investment quality modern jewelry is the presence of one or more large gemstones.  Gems are often the most expensive component in a piece of fine jewelry.  Indeed, it isn’t uncommon for a jewelry setting to serve primarily as a vehicle to display a particularly fine gemstone.  In fact, this is undoubtedly the case with the rough peridot pendant pictured above.

But decades of unrelenting consumer demand has steadily sucked up all the fine colored gems the world can produce and then some.  Every 10 to 20 years we discover new gemstone deposits (most recently Ilakaka, Madagascar in 1998 and Mahenge, Tanzania in 2007) that dribble out relatively small quantities of new stones into the gem starved jewelry market.  But in spite of this additional supply, colored gemstone prices have more than doubled over the past 15 years.

Large jewelry manufacturers have compensated for this gem drought by designing settings that use a multitude of small, melee stones instead of a few larger stones.  But make no mistake – this mass-produced jewelry, although impressive at a distance, is absolutely inferior to jewelry mounted with fewer, larger gems.  Modern jewelry set with small stones without a large, central gem is a cost cutting measure that the serious jewelry aficionado should avoid by any means necessary.

 

Hand-Crafted Marietta Wülfing Earrings for Sale on Etsy

(These are affiliate links for which I may be compensated)

 

So when I invest in modern jewelry I focus on artisan jewelers who set their pieces with larger gemstones.  Because of cost constraints, it is rather rare to find jewelry set with any of the big four gems (diamonds, rubies, emeralds and sapphires) at a reasonable price.  Therefore, many of the handmade pieces I gravitate towards use somewhat less expensive second-tier gemstones such as aquamarine, tourmaline, fancy garnet, peridot, spinel, tanzanite, etc.

These stones may not be as famous as the big four, but are nonetheless quite desirable in their own right.  As an added bonus, many of these lesser-known gemstones are all-natural, completely-untreated stones.  Nearly all rubies, sapphires and emeralds found in modern jewelry have been subjected to artificial treatments that can impact their durability and long-term color stability.  Even diamonds, which were largely untreated up until the end of the 20th century, are increasingly lasered or fracture filled to improve their clarity.  Treated stones, regardless of their type, are obviously worth less than comparable untreated gems.

So let’s put everything together that we’ve learned in order to analyze the Marietta Wülfing peridot pendant pictured at the top of this article.

The rough peridot used in the piece is a top gem quality specimen from Pakistan (a classic location for high grade peridot).  In addition, it is a huge stone, measuring 27 mm across by 18 mm high and weighing 28.3 carats.  As a result, I’m willing to assign a value of around $5 per carat to the gem – about $141.  If this peridot was given to a knowledgeable gem cutter, you could expect it to realistically yield two to three faceted stones totaling somewhere from 6 to 10 carats.

Although the item description doesn’t state how much gold was used in this fine piece of modern jewelry, I’m going to take a guess that it has perhaps 8 grams – just over 1/4 of a troy ounce – of 18 karat gold.  I’m guessing fairly high here because 18 karat gold is very high density stuff (about 15.5 gm/cm3), so it doesn’t take a lot of volume in order to have quite a bit of weight.

In any case, according to this estimate there is $284 worth of gold in the pendant (with spot gold trading at $1,470 an ounce).  I would also estimate the piece contains about $5 worth of sterling silver (which isn’t visible in the photo, as it is used to back the gemstone).  If you were really interested in purchasing this pendant, it would make sense to contact Marietta and ask her for the weight of the metals used in order to derive a more accurate intrinsic value calculation.

If we total all of these individual components together we get the following:

Peridot ($141) + 18K Gold ($284) + Sterling Silver ($5) = $430 Total Intrinsic Value

Our result gives us an estimated intrinsic value equal to almost 50% of the $876 cost of the piece.  This is an excellent result, especially considering that the typical piece of modern jewelry will have an intrinsic value of only 5% to 20% of its cost – even for diamond encrusted engagement rings!

Our handmade peridot pendant also eschews small accent stones in favor of a single, huge primary gem.  This is exactly what we want to see.  And while large peridot gemstones are rather common, it is still somewhat unusual to find such a gigantic specimen of such fine color and clarity.

Finally, it is obvious that Marietta Wülfing is a master jeweler who has taken great pains to ensure that this handcrafted pendant is immaculately finished.  Seriously, this thing is utterly superb in terms of its workmanship.  In addition, this piece is a breathtaking example of Modernist design, which has been the dominant style used in fine handmade jewelry (as opposed to mass-produced factory jewelry) since the 1960s.

All in all, this peridot pendant is a great example of investable modern jewelry.  It is the kind of piece that you can feel good about spending hundreds of dollars on because you know it is worth hundreds of dollars.  In another 50 to 100 years, jewelry like this will find a ready market among vintage jewelry aficionados as superlative antiques.

 

Hand-Crafted Marietta Wülfing Rings for Sale on Etsy

(These are affiliate links for which I may be compensated)

 

Read more thought-provoking Antique Sage gems & jewelry articles here.

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Read in-depth Antique Sage vintage jewelry investment guides here.

French Art Deco Silver Plaque, Circa 1930

French Art Deco Silver Plaque, Circa 1930
Photo Credit: LeBonheurDuJour

French Art Deco Silver Plaque, Circa 1930

Asking Price: $74.81 (price as of 2019; item no longer available)

Pros:

-This marvelous 1930s French Art Deco silver plaque by Édouard Fraisse depicts the personification of industry pointing a youth towards the future.

-This French art medal is rectangular in form and measures 55 mm (2.17 inches) wide by 49 mm (1.93 inches) tall by 2 mm (0.08 inches) thick.  This is quite large for an antique medal, which boosts its desirability.

-This beautiful Art Deco silver plaque was originally awarded in 1930 to a French engineering graduate from the city of Angers named “Roger Maillard”.

-The obverse of the plaque has the inscription “Ecole Nationale D’Arts et Métiers – D’Angers 1930”, which translates as “National School of Arts and Crafts – Angers 1930”.

-The mid-sized French city of Angers is located on the Maine River about 50 miles upstream from France’s western Atlantic coast.  In the early 20th century, Angers was known for its production of distilled liqueurs (primarily Cointreau), sparkling wines, and other agricultural products, along with slate roofing tiles and steel cables and wires.

-The reverse of the medal is engraved with the phrase “Ministère de L’Instruction Publique et des Beaux-Arts – Enseignement Technique”, which reads in English as “Ministry of Education and Fine Arts – Technical Education”.

-This fine Art Deco silver plaque comes in its original, felt-lined fitted box.  This is fairly unusual as most of these cases have been lost over time.  So it is always a joy to find an antique medal still paired with its original box!

-This vintage French medal is hallmarked “ARGENT” (silver) on its rim, indicating that it is made from solid silver.

-Although the seller does not disclose the plaque’s weight, we can estimate it from the dimensions given.  First we derive the medal’s volume: 5.5 cm x 4.9 cm x 0.2 cm = 5.39 cm3.  Then we multiply this value by the density of a typical silver alloy (we’ll use 90% coin silver at 10.31 g/cm3).  This gives us an inferred weight of 5.39 cm3 x 10.31 g/cm3 = 55.6 grams or 1.78 troy ounces, which is exceptionally heavy for an art medal.

-Vintage art medals are one of the few segments of the antiques market where you can still find legitimate investment grade pieces for less than $100.  This 1930s French Art Deco silver plaque is a great example of this phenomenon at only $75.  With such a low price, you should not hesitate to add it to your collection.

 

Other Vintage French Items for Sale on Etsy

(These are affiliate links for which I may be compensated)

 

Cons:

-The value of antique art medals varies according to subject matter.  The theme of industry found in this medal runs in the middle of the pack in terms of desirability, below subjects such as planes and cars.  But this is really nitpicking.

 

Read more fascinating Antique Sage numismatic spotlight posts here.

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Read in-depth Antique Sage investment guides here.

The U.S. Dollar and the Coming Monetary Reset

The U.S. Dollar and the Coming Monetary Reset

We live in interesting financial times.  That’s a kind way of saying that the global monetary authorities are in the process of trashing the U.S. dollar (along with every other fiat currency out there).  Over the past decade plus our central bankers have imposed just about every form of financial repression/money printing known to man (and a few additional types they just developed especially for the occasion).

What’s the upshot of this rant?  There is an impending global monetary reset coming, and it will change all the existing rules about saving, investing and wealth.

What is a monetary reset?  Simply put, it is the long-overdue realignment of the value of fiat currency in our financial system vis-a-vis gold, silver and other tangible assets.

The first indicator that we are careening towards a monetary reset is the rapidly deteriorating U.S. budget deficit.  Now I would like to state upfront that I’m not a fiscal hardliner.  I don’t believe that a country must run budget surpluses in order to enjoy a stable and sustainable fiscal position (although it does help).  No, all a country needs to do in order not to blow itself up, fiscally speaking, is to grow its economy at a faster rate than it grows its outstanding sovereign debt.

Unfortunately, the United States (along with nearly every other developed nation in the world) hasn’t been able to do this.  Instead, U.S. spending has spiraled out of control over the past decade.  At first this overspending was in response to the Great Financial Crisis of 2008-2009.  But a funny thing happened as that financial crisis faded into the rear view mirror – the U.S. government kept on spending!

Indeed, the economy has needed an almost never ending parade of stimulus measures in order to keep its head above water.  Most recently, the 2017 Trump tax cut goosed the economy by slashing income tax rates for corporations and many households.  But it did so at the cost of a ballooning budget deficit, which surpassed -$1 trillion in both 2018 and 2019.

Surprisingly, I am not terribly concerned by our current fiscal profligacy.  Instead, I am much more worried about what comes afterwards in the 2020s.

Social Security is one of our most obvious impending fiscal disasters, but one that will only fully unfold over the next decade.  This bedrock U.S. entitlement program will devolve from a relatively modest -$80 billion negative annual cashflow position in 2019 to a staggering -$400 billion annual deficit by the early 2030s.  Of course, this Social Security-specific deficit will end up being rolled into the general budget, putting even greater pressure on U.S. government finances.

But the real coup de grâce will come when the economy next enters recession.  You see, it has been more than 12 years since the last recession hit and we are overdue for another one.  When it finally arrives, all the negative trends currently in place will be supercharged into a perfect financial storm.

A recession would cause tax revenue to plummet at the same time that government expenditures explode.  In fact, it is probable that government deficits will blow out to -$2 or -$3 trillion dollars per annum in such a scenario.  At that point, deficits of only -$1 trillion a year like we have today will seem like a sweet, distant dream.

That would be bad enough by itself, but there will be other ugly economic dynamics at work as well.  For instance, the market value of stocks and bonds will plunge during a recession, revealing most corporate, state and local government pension funds to be woefully underfunded.  Many of these pensions will subsequently fail, with their obligations absorbed by the Pension Benefit Guaranty Corporation.  As you might have already guessed, the U.S. taxpayer will ultimately be on the hook for making good on these unrealistic promises.

But perhaps the greatest contributor to a future monetary reset will be the eradication of the profitless prosperity sector in the next recession.  Uber, Netflix, WeWork and Tesla are just a handful of well known profitless prosperity mega-companies.  Most of these corporations don’t make any profits, while the few that do only possess the illusion of profitability.

This is because a decade of Fed-driven easy money policies has fundamentally reordered our economy into a bubble-addled monster.  It only works as long as investors – speculators, really – are willing to throw nearly unlimited amounts of free money into capital-burning ventures.  The moment they stop, however, the wheels will come off the magic school bus we call an economy.

But the governments and central banks of the world will not stand idly by while the financial world burns down around them.  Instead, they will crank up the printing press and spew trillions of new dollars, yen, pounds and euros into the world in an ill-fated attempt to avoid the natural consequences of earlier bad policy decisions.

In other words they will print a lot of money, devaluing the currency in the process.

In fact, they’ve already started.  The Federal Reserve recently announced that it will purchase $60 billion of Treasury bills every month until Q2 2020.  They have also assured the markets that this does not represent quantitative easing (aka money printing), even though the operations look to be more or less identical.  How much do you want to bet that when the time comes to wind down the operation in 2020, they will find an improbable reason to just keep going?  That has been their modus operandi so far and it is unlikely to change now.

In any case, it is pretty obvious that a monetary reset is coming.  This means the economy will be rocked by widespread debt defaults, a universal debt jubilee or oodles of helicopter money thrown to the masses – and possibly even all three!

This is bad because in our financial system one person’s debt is another person’s asset.  If you want to erase a bunch of debt, which our overleveraged economy desperately needs, then it also means writing down a lot of assets to zero.  Printing money and handing it out to people so that they can pay their debts might preserve the nominal value of many assets, but only does so at the cost of widespread inflation that will destroy the real value of those same assets.  To paraphrase former President Franklin D. Roosevelt, this generation has a date with monetary destiny.

The real question is what should you do about this impending disaster?

I think that answer is pretty easy: buy bullion, antiques, gemstones and fine art.  In a monetary reset scenario, conventional assets like stocks and bonds won’t perform very well.  If you are really concerned with protecting your wealth, it will be necessary to diversify into hard assets that can’t be printed by incompetent central bankers.

I have a soft spot for U.S. 90% junk silver coins because they are readily available, highly liquid and also sell for low premiums over spot.  But of course, there are many other hard assets that would do wonders for your portfolio as well.  For example, antiques such as vintage mechanical wristwatches, antique sterling silverware and fine estate jewelry would all effectively inoculate you against the coming monetary reset.  Plan accordingly.

 

Read more thought-provoking Antique Sage investing articles here.

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Read in-depth Antique Sage investment guides here.

Natural 4.2 Gram Californian Gold Nugget

Natural 4.2 Gram Californian Gold Nugget
Photo Credit: Estates Consignments

Natural 4.2 Gram Californian Gold Nugget

Buy It Now Price: $375 (price as of 2019; item no longer available)

Pros:

-This compact, 4.2 gram Californian gold nugget conjures up images of grizzled prospectors in the American Old West wading into ice-cold streams in search of treasure.

-This Californian gold nugget measures 12.8 mm (0.50 inches) long by 9.3 mm (0.37 inches) wide.  Although this is a fairly sizable nugget at 4.2 grams (0.1350 troy ounces) in weight, it is actually smaller than a dime due to gold’s incredibly high density!

-California has a longstanding association with gold, with deposits of the glittering yellow metal found scattered throughout the state.  But it is best known for the California Gold Rush, which lasted from 1848 to 1855.  Some men struck gold and made fortunes during this time, although most found little or no precious metal.

-California rivals Australia in producing some of the purest gold nuggets on the planet.  The purity of Californian gold nuggets generally ranges from about 90% fine on the low end all the way up to 99% pure.  So the seller may be low-balling this nugget’s fineness by saying it is only 22 karat (91.67%) gold!

-Almost all gold nuggets found throughout history have been indiscriminately melted down for their metal content.  It is only within the past 30 years or so that collector demand has prompted miners and prospectors to save some of their finer specimens.  As a result, gold nuggets of any size are quite scarce today.

-Because gold has been mined in California for over 160 years, most of the state’s primary mines and placer deposits were worked out long ago.  This makes Californian gold nuggets much rarer (and more expensive) than similarly sized nuggets from Australia or Alaska (which are already rare to begin with).

-This genuine Californian gold nugget would make a great gift for the mineral collector or gold bug in your life at a price of just $375, or $89 a gram.  I find it amazing that for only a few hundred dollars you can buy the very thing that 19th century prospectors struggled so hard to find!

 

Cons:

-Because of their greater rarity, Californian gold nuggets are more expensive than Alaskan, British Columbian or Australian gold nuggets on a per-gram basis.  So if you want the absolute largest nugget possible for your money, this isn’t the one for you.  Instead, this nugget would be a good fit for a Western mining buff or Old West history aficionado.

 

Read more fascinating Antique Sage bullion spotlight posts here.

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Read in-depth Antique Sage bullion & gemstone investment guides here.