To wear and to hold

THERE seems to be a glimmer of hope in these uncertain times: after all, the recent precious metal price rally has been relatively stellar compared to the performance of other investments. Smart fashionistas, perhaps with a desire to sport an auspicious shade during the 15-day Chinese New Year period, might find plenty of reasons to load up on bold, gold jewellery this season.

While there's no such thing as a safe investment - gold is a particularly volatile commodity - one could do worse than to treat a gleaming accessory as a stylish hedge against a slowdown, such as buying a supercar or a monogrammed bag that loses its value as soon as it leaves the shop. And unlike bullion, gold jewellery can be appreciated on a daily basis.

"Gold bars are normally locked away in the safe and can never be enjoyed, but you can easily 'wear your wealth' and go anywhere with gold jewellery," says jewellery designer Simone Ng.

"Furthermore, precious gemstones can be set in gold, thereby increasing the value of your jewellery."

Earlier this week, the World Gold Council, the market development organisation for the industry, reported that gold demand reached a two-year high in the last quarter.

To meet the growing demand, one of Europe's largest gold and precious metals retailer, Degussa, opened its first branch outside of Europe here last year, selling a range of bullion such as silver, platinum and gold coins and bars, and also accessories such as watches and jewellery.

Raphael Scherer, chief international officer of Degussa, expects gold prices to be propped up with the prospect of devaluations in renminbi and support from investors in China, adding that gold prices will move towards US$1,400 an ounce this year. It is currently at over US$1,200 an ounce.

You could argue that apart from stashing away gold bars and coins, one could always invest in gold through exchange-traded funds (ETF), precious metals mutual funds, mining stocks and futures for trading gold.

"However, physical gold is actually in your possession and you know it is there, you can move it and it is known and widely accepted as a payment method," said Mr Scherer. "Besides, not all ETFs are sufficiently physically backed by gold."

Despite being an investor's darling at the moment, it might take some convincing for the average consumer to splurge out on gold bling mainly as an investment option.

"I will not buy gold jewellery as an investment because I don't know what to do to get my money back," says accounts manager, Catherine Soh, 35.

"Besides, I don't think yellow gold jewellery is very trendy. Investing in gold jewellery sounds like something that the older generation would do."

According to Mr Scherer, one could trade in gold jewellery for cash based on its weight and the spot price of gold - with a slight deduction in price to cover the cost of melting down the jewellery and returning it to the gold life cycle.

Ms Ng says the perception that yellow gold is more valuable than its white, rose or even purple offshoots, since gold is yellow in its natural state, is in fact incorrect. While coloured gold contains other metallic alloys, its price is tied to its specific karatage, which denotes the amount of gold in an object, not the alloys.

"But keep in mind that with jewellery, you pay some mark up for design, 'form cost' and much more for the brand name," explains Mr Scherer.

"That is why we like to offer our customers gold jewellery at a fair price, not marking it up just because of the brand Degussa."

Goh Shuet-Li, owner of family jewellery business La Putri, is naturally a proponent of investing in beautifully crafted fine jewellery in gold.

"Gold jewellery always holds its value," says Ms Goh, who recently unveiled a new boutique at Capitol Piazza.

"And it is particularly so at current levels, as gold prices are almost at the same level as the precious metal's cost of production. Of course gold bullion holds the same value but you wouldn't enjoy the experience of wearing it."

Besides, with Valentine's Day coming, one cannot ignore the emotional aspect of gifting and owning jewellery. Given so, the possible uptick in gold prices and the ability of gold to hold its value over the long term are just icing on the cake when it comes to donning gorgeous jewels.

"Often, there is a sentimental value attached to gold jewellery,"said Ms Ng.

"It could have been handed down from generations before, worn by a very dear loved one, gifted by someone special and so on. This sentimental value is priceless."

This article was first published on February 13, 2016.
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