In Iceland which appears on the verge of collapse due to the global financial and economic crisis the only field seemed to be left intact is trading in expensive watches.
According to Le Temps, a Swiss daily, the Icelanders in search of safe haven assets rushed to buy not bullions, but exclusive watches, mainly Rolex, which they deem as one of the rare investment instruments in crisis time.
However, this idea is not new in itself. In crisis periods gem jewelry and watches posing no problems for transportation were always in great demand. In this case the pleasant and useful mixed: women bought the jewelry they craved for while men purchased their watches, which in both cases was a far-sighted investment.
But is it true that reality fits into such an idyllic pattern so busily embellished by concerned professionals?
In long term, jewelry has one substantial flaw: it is fast to go out of fashion. Thus, the cut and color of gems in current demand will not be able to meet future requirements after some decades.
Rare jewelry pieces of the 18th century as well as those made in the 19th century today do not attract any interest. As for the past century, with the exception of the latest jewelry pieces it is only Art nouveau or Art deco can stir up any demand.
As a rule, jewelry re-selling is fraught with evaluating a jewelry piece by its gold weight plus the value of gems if there are any.
In case of re-selling only the hallmarks of such famous jewelry houses as Cartier, Tiffany, Van Cleef & Arpels and some others may guarantee a significant value bonus.
As for premium watches, along with modern models there is demand for watches with bracelets manufactured since 1925 and afterwards.
Nevertheless, in this crisis time auction sales of collection watches decreased by 15%, while retail sales of new watches slumped double during the recent months.
May valuable things compete with gold in short term as anti-crisis safe-haven assets?
As experts say, only some chunky valuables like for instance chains and cigarette cases are lately rated the same way as the yellow metal.
The crisis has generated a situation where the most expensive jewelry pieces, which as a rule contain gems, are valued at a much lower price.
Diamonds in Antwerp are going down in price and according to experts no one expects any improvement in short term despite the decreased output of rough diamonds.
So, as the experts say, the current deep crisis is not at all in favor of jewelry.
Meanwhile, growing inflation is pushing jewelry prices up. In 1970-1980, there happened a literal price blow-up for jewelry and prices for some gems rocketed ten times and more.
However, one should know what to buy taking into account the fact that actually there is an abyss between the price for a new jewelry piece and its price at re-sale. It will usually lose from 50% to 75% of its initial cost.
And all this despite the expanding low-cost distribution networks and growing online sales.
This is why, the experts say, financially in this period of global crisis it is gold, which is the least risky investment.
Nevertheless, it should be kept in mind that valuables and watches tend to preserve at least some part of their value due to their attractiveness not lost in time.
Alex Shishlo, Rough&Polished European Bureau Editor in Brussels
