Why gold bars are the ultimate Valentine's gift

Why gold bars are the ultimate Valentines gift
Jewellery may not be such a good investment since its resale value is poor and demand is also declining.

dubai - Your wealth is better placed in something simple and time-tested such as a bar of gold

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By Jan Skoyles

Published: Sun 12 Feb 2017, 6:58 PM

Last updated: Sun 19 Feb 2017, 9:31 AM

It's February, the month of love, and that means it's beginning to feel like every e-mail, every advert and every phone notification is about Valentine's Day. Valentine's is big business.

Here in the UAE, we are a romantic bunch and relationships are important to us. A report released by the Dubai Statistics Centre (DSC) in 2016 showed that there were just six divorces to every 1,000 marriages - a decline on previous years.

The MasterCard Love Index showed that it was jewellery and meals out, accounting for 23 per cent and 46 per cent respectively, that were the popular choices for those celebrating the 14th of February in the Middle East.

You may be thinking that compared to other items in the potential Valentine's basket, jewellery is win-win. Not only will your loved one be delighted but you will also have made a wise investment.

As much as it breaks my heart to write this, jewellery is actually not a great investment. I would argue that you would be far better investing your money into physical gold bars than something that happens to be made from it. What is more romantic than a gift that has stood the test of time and is able to offer your loved one protection in the toughest of financial times?

My reasons for this are three-fold: first, demand for gold jewellery is declining, second the resale value of jewellery is poor and thirdly, the jewellery industry is under threat.

Is gold jewellery going out of fashion? First of all, there is the demand factor - demand for jewellery, whether as a gift or an investment, is down across the globe.

In a year when gold investment was at a four-year high, gold jewellery sales fell to a seven-year low in 2016, to just 2,041.6 tonnes, according to recent World Gold Council (WGC) data, a fall of 15 per cent worldwide.

The Middle East did not fair well. The WGC explains: "2016 regional demand slowed 16 per cent to a new low of 193.1t. low oil prices, weak tourist demand and salary cuts undermined gold demand in the UAE, which fell to a 19-year low of 43.0t."

You'll not get what you paid for
The price we put on jewellery is not just based on the original price that we paid, but also the sentimental price. The buyer will not consider this. Instead, they only take into account the components of the jewellery rather than the purchase price.

Why not look at a gold purchase in the same way? An average ring will cost $5,200, the same amount it would cost you to buy just over 4oz (according to prices on February 9). A troy ounce is around 31 grams. There is approximately 5g of gold in an engagement ring. So, for the same amount of money, you could buy 130g of gold.

In times of financial difficulty, gold can be the best form of defence. Making an investment in jewellery is a false economy given you won't see a financial return, i.e. no protection from economic upset.

Rise of the machines
But the issue with jewellery is not just about resale value or buying trends. The fact is the jewellery sector is under threat. It isn't just lab-grown diamonds that are threatening the huge industry, 3D printing also poses a threat.

By 2020, 3D printing in jewellery markets is expected to be worth $11 billion. This poses a threat to artisan jewellers and the value of pieces produced by the big name jewellers. There is no longer a need to spend a small fortune on a sparkly number, when the a machine is able to mould and design the perfect item at a fraction of the cost.

So, when it comes to the jewellery industry, we can no longer reassure ourselves that what we buy will hold its value at a time when technology is usurping one of the few things that gave it any value.

No one has cracked alchemy
At the time of writing, one of life's biggest mysteries still remains - how can man make gold? The fact is, we still can't. Gold cannot be created with technology.

Unlike other components of jewellery, gold has remained a safe haven for thousands of years. It has repeatedly shown its value and worth amongst countless financial and geopolitical crises.

What better expression of love than to give something that has stood the test of time, weathered all problems and continues to be desired around the world?

We're not saying that you shouldn't treat the one you love to some jewellery this Valentine's Day, or in fact any day (why the excuse?). But, when it comes to making a big decision, we argue your wealth is better placed is something simple and time-tested such as a bar of gold.

The writer is research executive at GoldCore, a gold investment platform. Views expressed are her own and do not reflect the newspaper's policy.

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