As the baby boomer generation reaches retirement and millennials and Gen Z take over as the larger population group, the shift has disrupted a number of asset classes. Millennials in many instances prefer renting over owning homes. They also invest differently through platforms like Robinhood. But another asset class that is poised for significant disruption driven by generational shift has so far garnered less attention: jewelry, especially fine jewelry.
The shift is driven by a number of factors. Younger generations have shown to be less interested than previous generations in owning luxury goods– leading to an uptick in those seeking to sell luxury pieces that may have been inherited from family members, especially to cover financial needs. Also more significantly, as baby boomers face increasing economic uncertainty in retirement and also look to provide at least some financial help to millennial or Gen Z offspring, it’s leading many to turn to their fine jewelry as a low-risk avenue for raising cash, as opposed to home equity or credit cards.
The confluence of these factors has led to what Diamond Banc has coined the “Epic Jewelry Transfer”. As one of the leading buyers of fine jewelry and diamonds, and one of the few with a fully digital process for appraising and liquidating high end pieces, they have seen a surge in boomer jewelry hitting the market– with far reaching implications on the future of jewelry as well as pricing of gold and diamonds. We caught up with Diamond Banc’s CEO, Mills Menser, for a look into the transfer of wealth that is taking place within fine jewelry.
What are the economic factors that you believe are leading to a rise in jewelry being liquidated?
Mills Menser: There are a variety of economic and social factors that are contributing to a tremendous amount of jewelry being sold by the American public. This trend will continue and increase in the coming years. Baby Boomers hold the largest collective amount of jewelry in the world. Many of them are net sellers of their jewelry. Times have changed, and occasions to dress up are much less frequent. Many boomers rarely wear the jewelry they have accumulated over decades and find that converting it to cash can help fund their retirement, financially assist a family member, fund a trip, or experience they will value more than having the item setting in their jewelry box.
Selling a piece of jewelry, investing the proceeds, and allowing the power of compounding interest to take effect is exponentially wiser than letting it sit around. There are now numerous companies that primarily focus on buying jewelry that is accessible nationwide online, which was not the case until the last 10-15 years. In the past, it was commonplace, and often still is, that retail jewelers don’t buy jewelry from the public. This new access makes it easy for individuals of all ages to sell jewelry and put the proceeds to better use. Of course, economic contractions amplify many of the reasons to liquidate jewelry like those stated above. The present need for cash by many Americans has propelled the increase of consumers selling jewelry or borrowing against it.
What exactly are they selling?
MM: Consumers are selling virtually any type of jewelry that has value. This generally consists of gold jewelry, diamond jewelry, diamond engagement rings, signed designer jewelry such as Cartier, Tiffany, David Yurman, etc. Pre-owned luxury watches are also a huge category mostly driven by Rolex. The value of pre-owned Rolex watches, in many cases, increases over time as global demand outpaces new production. Further fueling the watch selling arena are brands like Patek Philip and Audemars Piguet among others.
Does this trend have an impact on diamond or gold pricing or the value of jewelry?
MM: Consumers becoming one of the largest suppliers of products in the jewelry industry, via recycled products has notably affected jewelry values. In some cases, it has raised overall values as increasing the ability to sell pre-owned models often increases the demand for new products from said brands. This is similar to what can be seen in the luxury car market. This is currently the case with Rolex and Patek Philip watches.
The flood of jewelry into the marketplace can have the opposite effect for different categories. For example, with loose diamonds, the overall demand has been curtailed due to people getting married later in life, in…