July 16, 2022
The term “recession” has been popping up all over the news and social media recently. What is it?
As per The National Bureau of Economic Research (NBER), recession is “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.” There have been a number of recessions recorded throughout the history of the United States since World War II. The most recent one, which lasted from 2020 to 2021, was due to the global COVID-19 pandemic.
During an economic downturn, almost everything falls in value — currencies, stock markets, real estate, and properties. As a result, people tend to examine their expenditures to weigh out their wants and needs. Luxury goods are typically the first ones to go. And those luxury goods include jewelry!
So, as a reasonable human being, it’s time for you to stop buying jewelry, right? WRONG.
Well, it depends on the type of jewelry. Believe it or not, you might even want to get more of certain jewelry types during a recession. Let me explain.
Go for Gold!
Historically, gold has held its value while other forms of investment have fallen off the cliff. Looking at its performance during the worldwide pandemic, its value even increased, topping at $2,000 per oz in July 2020. This was expected since gold usually surpasses the value of currencies, hedges inflation, and aids during an economic decline.
From an investor’s perspective, gold is the safest way to invest because it’s counter-cyclical and performs well during a crisis. Since it also features high liquidity and can be sold basically anywhere, it has been in steady demand compared to other types of jewelry.
With gold’s ability to maintain its value long term, it would be wise to buy more of it, especially with the looming bad economic times. So, if those gold chains are your guilty pleasure, this is your sign!
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Diamonds Are Forever
Diamonds, just like gold, have also retained their value in the last 50 years. With half a century-long history, diamonds are still strong in demand even in the midst of a crisis. Putting your money on them can assure you a better value in the long run.
However, because diamonds are not created equal, here are the 4 C’s to help you pick the best choice:
Color. Investors are known to look for perfection and rare-colored diamonds. As they have a higher price per carat in the diamond market, these diamonds’ resale value is taken into careful consideration as well.
Clarity.This refers to the absence of blemishes and inclusions. Experts grade a diamond’s clarity based on the size, number, relief, nature, and location of its flaws. Of course, diamonds with higher clarity grades have higher value!
Cut. There are a plethora of diamond cuts you can choose from. But in terms of optimal fire and brilliance, the round brilliant cut is the most ideal. This is the reason why round-cut diamonds are very popular.
Carat. High-carat diamonds would usually hold their value best. Recent trends have shown that even during the unprecedented pandemic, diamonds with higher carat weight were able to set new price records.
As you can see, gold and diamonds are not just gems to ice out your favorite hip-hop chains or watches. They can be great forms of investment, too, because they have always stood their ground even in the worst economic backdrop. And since their value and the demand for them remain strong wherever the economy goes, it’s always a good time to buy them.
Get your next gold and diamond jewelry pieces at Gold Presidents!
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