I have been interested in antique jewelry since the late 1980s. Early during that time I developed an advantageous method of buying undervalued pieces. Antique jewelry is typically highly illiquid and inherently difficult to value. But an easy method of establishing a minimum base valuation is to sum the intrinsic values of each individual component of a piece of jewelry. If you were to add up the bullion value of a piece of jewelry’s precious metals along with the value of all its mounted precious stones, you would have its base intrinsic value. This calculation is both crude and oftentimes low because it completely ignores any collectible or artistic value the piece may have. A truism of antique jewelry is that a genuinely fine piece will always be worth more than the sum of its parts.
My policy was to buy antique jewelry close to its base intrinsic value. This investment philosophy was an excellent way to simultaneously limit risk and maximize potential gain. And it served me well for many years. I especially gravitated towards Art Deco and Edwardian jewelry; I not only liked the look of these styles, but they often possessed high intrinsic value components. The intrinsic value of a quality piece of antique jewelry is usually concentrated in its large, precious stones. Consequently my investment strategy was dependent on finding pieces mounted with sizable, high value gems.
Then the world changed. Starting in the mid 2000s it rapidly became progressively more difficult to find pre-World War II examples that fit my criteria. When you could find them, the prices were oftentimes prohibitively high, erasing the margin of safety I was trying to achieve by purchasing high intrinsic value pieces in the first place. By 2010, it had become nearly impossible to acquire investable antique jewelry in this way. I had to change strategies, but first I had to try to understand what had happened to the previously plentiful supply of high-end antique jewelry.
Upon reflection, I came to believe that part of what drove the sharp price increases for high quality Art Deco, Edwardian and Victorian jewelry was the realization that the rubies, sapphires and emeralds they contain are often exceptional, all-natural, untreated stones. Antique jewelry used to be one of the few ways to acquire these types of coveted gemstones without paying exorbitant prices for certified stones from specialist gem dealers. I think too many people caught onto this strategy and the supply of these pieces was quickly absorbed by the smart money.
In the end, I opted to modify my existing strategy. Instead of exclusively buying pre-World War II pieces, I expanded my criteria to include more recent Retro, Mid-Century and Modernist styles. I even started looking at jewelry from the 1970s and 1980s. After all, these pieces will soon become the antiques of tomorrow. In addition, I relaxed my constraints regarding intrinsic value. I now consider and occasionally purchase pieces that have a higher proportion of connoisseur’s or artistic value.
Choosing high quality jewelry with strongly defined stylistic features is still paramount in my decision making, but now I have a significantly larger investment universe from which to choose. It is possible to argue that my new strategy is higher risk than the old one. While I certainly believe that is true, I don’t think the risks are significantly higher. But by the same token, my old strategy was simply not functional anymore. All the cheap, high intrinsic value, pre-World War II jewelry is gone now, and it is never coming back.
