Did you ever think of your jewelry as part of your financial portfolio? Chances are you haven’t. After all, jewelry is color, design, style, fun. It is part of the fashion department, not the boring finance department.
Well, think again.
I did a brief analysis of gold prices, diamond prices and the performance of the top stock market indexes – the SP 500 for the NY Stock Exchange and the Euro Stoxx 50 for the Eurozone stock market – and do you want to know what I found?
Take a look at these growth rates:
Had you bought gold five years ago, you would have a total increase in your asset value of 161%, while your SP 500 index funds were on the negative side of flat, with a -1.3% variation. For the past year, the comparison is similar: gold had a positive growth of 24% whereas the SP 500 only grew 3.7% (and I am rounding up).
The comparison is even more dramatic for the European investor: the Euro Stoxx 50 had a negative performance for both periods, -10.4% for the past year and -36.8% for the past five years, while gold prices in Euro yielded the same positive returns as in USD. This means that if you had 100€ invested in a Euro Stoxx 50 index fund in February 2007, today you should have about 63€. The same money used to buy gold is now worth 161€.
Diamonds have been following the gold price trends and also had nice growth rates for the past 5 years: +46.8%.
Why am I talking about this, you ask?
If you doubt what I am saying, take a look at recent jewelry auctions’ results. And don’t forget to get back to me: let me know, were you surprised?