First of all, you need to understand what depreciation is before discussing all about gold depreciation. Depreciation is an accounting method of allocating the cost of the tangible asset against its shell life. In other words, it is the decrease in the value of assets. Both tangible and intangible assets can be depreciated. Depreciable property includes vehicles, real estate, computer, office equipment, machinery and many more.

However gold is not a depreciating asset as portrayed. Although sometimes the prices fluctuate and shows an upward trend or downward trend.  Nevertheless, market studies report that gold does depreciate due to market forces.

Does Gold Depreciate?

Gold doesn’t undergo depreciation as other assets do. For instance, like fixed assets such as land and automobiles, gold is not depreciated in accounting. One of the primary reasons for this is, it has an unlimited useful lifespan. But, it can depreciate during market recessions, however, when the economy is stabilized and improves, the demand for this yellow metal substantially gets reduced and eventually, its value depreciates.

Is Gold Jewelry A Good Investment And Does It Depreciate?


Solid gold, bullions, and coins are excellent investments however buying jewelry with stones and gemstones are not regarded as good investments because stones cannot be traded on market value but this is not the case with solid metals. Nevertheless, in some cases, ornaments are an exception. Conventionally first-grade intricate jewelry depreciate at a lower rate than low-quality ornaments such as costume jewelry.

It is a common practice for the insurance companies to use the standard rates of depreciation to assess the gold value however, the antique collections and the intrinsic pieces hold their value over time and as a matter of fact, it grows in value over time. If you want to know the depreciation value of your possessions, you can do that with the purchase price. There are many different methods for calculating depreciation for assets however for jewelry, there are only standard methods that discriminate between first-class ornaments against costume jewelry.

What To Do With Your Gold?

Every one of us will have a cash crunch at some point in time. Many banking and financial institutions offer a fast and convenient way to put cash in your pocket instantaneously. In fact, some private sectors even accept broken gold and give you the best price. You can get the cash for your asset before you leave the store. However, not everyone is interested in selling their gold and find for other ways to meet their financial downtimes.

This is apparently handled by suitable gold loans. Gold loans can rescue anyone during a cash crunch situation. You can use almost all forms of gold that includes jewelry, ornaments and gold bars. Some corporations don’t accept gold coins for pledging but you can use other forms of gold. A customer can borrow a loan of 75% against the gold value. One of the best advantages of borrowing gold loan is, you have flexible repayment options and you will be paying only the interest during the initial period and you will start paying the principal at the end of the tenure.

The gold sits in the account for many long years, however the asset holders can cash whenever they want to. Similarly, you can convert gold to different precious metals, stocks and even bonds. You can also put your gold in investment funds. Doing so, you need not worry about physically handling it.

What Is The Right Period To Sell Your Gold?

If you are thinking about selling your gold, then you should have probably inherited gold coins or jewelry. Or you should have invested in bullions or gold bars. So before you determine where to sell your precious jewels, you should know when is the best time to sell your gold?

The best time to sell your gold is when you are in an emergency financial crisis and look for the complete value of money against gold or don’t need the gold itself.

The Bottom Line

When you are cash-crunched, you may think about selling. Although you could get some value for it yet it is not the right option. The best thing to do is to take gold loans instead.

Historically, gold has played a potential role in the economy of a number of countries. Gone were those days, when it was considered as the primary form of currency, things have changed as the years progressed and civilizations developed. However, until today still, the yellow metal is considered as a long term investment and perhaps a great portfolio addition in the bear market.

Nevertheless investing in commodities like gold or oil aren’t an easy job unlike other forms of investments like stocks or bonds. One of the primary reason for this, stocks and bonds are easily transferrable and can be accessed instantaneously however this is not the case with the former. But, still gold is easily accessible to the average individual in the form of jewelry or ornaments, in fact, you can even purchase bullion from a dealer or a bank.

Let us discuss some of the vital reasons why you need to invest in this expensive metal

Reasons To Invest In Gold

Solid gold, silver and platinum are excellent investments.  However buying jewelry is not regarded as a great investment especially when you buy ornaments with stones, it doesn’t have value when you exchange or replace with other ornaments. Yet, the solid metals can be sold at the market value.

Investors buy gold due to a few specific reasons like the safe haven, direct investment or a hedge. There is a common perception that gold is highly liquid yet a scarce asset which is no one’s liability. Though it is a luxurious goods yet it is one of the best investment, therefore, it plays a vital role in the investment portfolio.

Why you need to invest in gold. Here are the reasons

  • Gold is another popular inflation hedge against the stock crash market. They are effective as against inflation as against deflation.  As a matter of fact, the purchasing power is higher during the deflation period than the inflation period. Rising purchases by China and other emerging markets have driven the price of the gold high up in the bear market.  The experience during the last 50 years suggests gold performs better compared to any other commodities.
  • Gold is safe haven asset which can shine even during inflation and deflation periods. Perhaps, for centuries it is the leading haven because the investors go for gold during inflation times causing the price to increase more in the global markets. Similarly, it also goes higher during deflation. It protects the investors during a possible catastrophe. This is one of the main reasons why many investors want to accumulate gold. Since investors have started accruing gold, the gold prices started to skyrocket and went from $869.75 (2008) to record high of $1,895 (2011)
  • Solid gold comes in various versions such as coins, bullions, medals but still, they are scarce and finite. This is one of the crucial factors why they are valued so much. In addition, there are only fewer gold mines. Moreover, the exploration budget is continuously plummeted due to the rising mining costs. The gold which can be easily mined is mined already. So there is always an increased demand for this precious yellow metal.

Most of the families treasure gold as an asset and is carried over through generations.  Gold bullions offer distinct advantages that you cannot find in any other investment. There are many big advantages of investing in gold

Advantages Of Investing In Gold

  • Gold is superior to currency. Although it is not conventional form of money, yet it serves as a long-term store for value.
  • Gold is perhaps an easy and accessible way to diversify your portfolio
  • Gold bullion doesn’t require any paper contract or counter party to fulfill a contractual obligation.
  • Gold can never go zero and always have value
  • Gold is easy to accumulate and the maintenance of this metal is fairly easy and not unlike other commodities.
  • Like bond or stocks, you don’t require knowledge to invest in gold. Moreover, you need not keep monitoring the market crashes. No special training, knowledge is needed to buy gold bullion.

Conclusion

To summarize, gold offers massive profit potential in the current economic systems. You can subscribe and easily redeem whenever you need.