Today, I spent a delightful afternoon with my 5-year-old daughter at a shopping mall in Tbilisi. Our mission was to find the perfect gold necklace, bracelet, or earrings as birthday gift to my partner. After browsing through various options, we ended up purchasing a beautiful gold ring. As a seasoned investor in tokenized gold (PAXG), I found it interesting to compare the prices of real gold versus gold in jewelry.
When it comes to gold jewelry, it's essential to understand the differences in gold purity and how it affects pricing. For example, 14K gold contains 58.5% pure gold, while 18K gold has 75% pure gold. Another term I encountered today was "Russian gold," which is related to 585 gold or pink gold, known for its unique hue.
The gold ring I bought today cost GEL 802 (USD 284) and contained 1.91 grams of gold. With the current gold price at $74.12 per gram, the gold content in the ring is valued at $141.56. This means I paid about twice the intrinsic value of the gold itself. Surprisingly, this isn't as high as some might expect when buying jewelry, which can sometimes carry markups as high as 10 times the gold's market value.
Gold Jewelry: An Investment?
While gold jewelry can be a beautiful and sentimental gift, it’s not typically seen as a wise investment. The additional costs involved in the craftsmanship, design, and retail markup make it a less attractive option for those looking to invest in gold. The resale value of gold jewelry also tends to be significantly lower than its purchase price, especially for 585 gold, which is less pure and less valuable.
In contrast, investing in spot gold or tokenized gold like PAXG offers a more straightforward approach to owning gold. Spot gold is purchased at the current market price without the added costs associated with jewelry. Tokenized gold provides the added benefit of digital ownership, making it easy to trade and store securely. Each PAXG token represents one fine troy ounce of gold stored in professional vault facilities.
While gold jewelry serves well as a gift and a piece of adornment, it falls short as a solid investment. The additional costs and lower resale value make it less appealing compared to investing in spot gold or tokenized gold. For those looking to invest in gold purely for its financial benefits, spot gold or tokenized gold offers a more practical and cost-effective option. However, understanding the intrinsic value of gold jewelry can help buyers make more informed decisions and appreciate the true worth of their purchases.
Interested to learn more? At TerraMatris crypto hedge fund we invest in different kind of assets, including tokenized gold.