Jewelry investment as a RE primer and fear managing tool

[David Breitzmann]

Hello RE friends,

In an effort to move beyond theory (e.g. reading, speculating, postulating) and into practice there was a need to invest in a commodity.

Commerical paper doesn't seem as interesting because it's largely an intangible.

The process of securing a piece is much like RE in that it must satisfy a few things:

1. Have an asset desired by a buying market
2. Acquired at a signficantly discounted spread below retail
3. Hold for appreciation or sell for capital extraction.

Just a few days ago I purchased a bracelet for $745. 10K (not the best) & 5.8 ct. weight of diamonds. I immediately had the piece appraised and was surprised at the mark up above retail ($2,435)

(Great exercise akin to the conversations that take place here about valuations of RE based on BPO and etc. compared to prices absorbed by an end buyer).

Appraisal came in at $2,845. Appraisal fee (just as in RE) $150.
Actually, the labor involved in the appraisal is probably less since it took all of 15 minutes. Inspecting a house is much more time intensive.

Will purchase a few others with an intent to sell during Q1 of 2011. Already placed a beta ad to guage buyers and had many responses at a price of $1,800. Projecting to sell at $2,000 which makes for a 53% cash an cash ($40 insurance) uptick.

Great exercise because walking into the store the emotional part of the transaction was quite palpable. I had doubts which were amplified by the length of time the saleswoman took to finalize the sale. Important to recognize irrational fear when it creeps up as I'm sure it happens when bidding on property.