Investing in Luxury Jewellery - Not Just Girl Math.
Girl math is a term coined to describe the unique and sometimes illogical mathematical reasoning applied by women to justify their purchases. We’ve all been guilty of it; “it’s an investment”, “if I use it every day, it’s basically free”. But what if there was a loophole that justifies purchasing beautiful things as a real investment?
Gold is one of the most malleable, ductile, dense, conductive, non-destructive, brilliant, and beautiful metals. Its unique set of qualities has made it a coveted object for centuries, and there have been active gold markets for over 6,000 years. It is one of the oldest ways to store wealth and is recognized as a safe haven by financial professionals today.
Most of the gold ever mined is still in existence and new gold supply is small relative to its existing stock at about 1 percent annually. New gold is supplied to the market from two main sources: mining and scrap. Gold can also be released to the market through official central bank sales. Overall, the supply of gold onto the market is stable relative to other investment options such as stocks, bonds, real estate and cryptocurrencies.
Contrastingly, the demand for gold has been increasing overtime. With stable supply and increasing demand, the price of gold is on the rise.
The demand for gold mainly comes from investment demand and jewellery production, with jewellery production being the most stable long-term source of demand for gold. Following the Global Financial Crisis in 2008, the demand and price of physical gold holdings increased because investors viewed gold as a safe investment relative to other investments at that time. Investors can purchase gold in two forms, physical gold and paper gold. In 2003, the first gold Exchange Traded Fund (ETF) was created. Gold ETFs are considered paper gold. The Gold Bullion Securities ETF was backed by the World Gold Council and created a new source of investment demand for gold allowing smaller investors to purchase gold more easily. It seems to have been at least partially responsible for the consistent rise in gold prices from about this time.
So, which is a better investment, physical gold or paper gold? The research indicates that physical gold is a better and safer store of wealth than paper gold. The main reason gold is a good investment idea is to hedge against risk and to diversify your investment portfolio. Research finds that there is practically no relationship between stocks and gold. This means that if there is a recession and the stock market is badly affected, the price of gold will remain stable. This allows gold to be a successful diversifying asset to your investment portfolio. This is only the case with physical gold holdings, while adding gold stocks is found to increase risk and return because gold ETFs and gold stocks behave similarly to other stocks on the market.
To get the most out of your investment it is recommended that you hold approximately 10 percent of your portfolio in gold. Ie if you have €1000 in investments you should hold €100 worth of gold, if you have €100,000 in investments you should hold €10,000 worth of gold etc.
Of course, you can hold gold bars in a safe in the bank, but where’s the fun in that? Instead, invest in luxury jewellery without any guilt because remember, it’s an investment!!