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As Boomers Age, a Record Amount of Jewelry Is Changing Hands

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.

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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.

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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 addition to the introduction of lab-grown diamonds into the market as an alternative. Numerous couples are electing to purchase a gemstone as opposed to a diamond for their engagement rings. These factors in combination with the large number of recycled diamonds re-entering the market have put downward pricing pressure on numerous sizes, shapes, and quality combinations of diamonds. Gold is a commodity and its price movements are affected by overall market fundamentals. However, consumer selling and buying demand contribute to these fundamentals. On the most basic level, this is similar to the rise and fall of gas prices – supply vs. demand.

How much jewelry does Diamond Banc buy in a year?

MM: Diamond Banc buys jewelry from the public and provides clients with Jewelry Equity Loans. This financial tool allows customers to receive the same amount of liquidity as if they sold their item while still retaining the advantages of ownership. Between both services, Diamond Banc will fund approximately 12 million worth of transactions in 2021. We will continually increase our volume with the expansion of our office locations throughout the US. Diamond Banc grows in a fiscally disciplined and methodical fashion, in order to ultimately reach major scale and build a reputation of providing industry-leading and unmatched liquidity solutions to our customers via outright sale, consignment options, or providing Jewelry Equity Loans.

Has the pandemic accelerated the trend?

MM: Surprisingly the pandemic did not provide the immediate acceleration on our business that common sense would conclude. Stimulus money, the delay or forgiveness of financial obligations, and PPP money to employers created a wave of liquidity to Americans. This, coupled with a reluctance to visit one of our office locations (COVID concerns), created a short-term decline in demand for our services. We found that customers use the funding from Diamond Banc to take action in their lives, business and make things happen. When everyone was sitting at home they did not need funding for these sorts of things. Beginning in October of last year is when our growth returned.

What are the main avenues consumers turn to liquidate jewelry?

MM: When selling a piece of jewelry or an entire collection, clients can work with a company like Diamond Banc whose sole focus is to assist them in maximizing the return on their items. They can also visit a local trusted jeweler that buys from the public. Lastly they can work with a consignment or auction-focused company.

What pitfalls should they be aware of from a seller's standpoint?

MM: There are several pitfalls to avoid when selling jewelry.

1) Avoiding unsuccessful consignment arrangements. Often retail stores will agree to a consignment value that will please you even if it is not realistic and or take an item on consignment that they don’t have the client base to support. When you give an item on consignment to a jeweler you are essentially becoming their banker, providing them with your jewelry on loan to sell with only an upside possible. It makes their jewelry cases look good, however, they will be more motivated to sell their own pieces over yours due to their financial commitment to their own inventory.

There are plenty of effective consignment options available, but there are even more options that are not effective. When considering consigning an item with a company, be sure to ask the following: How will the retail price of my item compare to other similar items you have for sale? How are you compensated? How many items a year do you sell that are comparable to mine? What proactive steps/investments will be taken to market my item? If my item sells how quickly am I paid? How much is my item insured for while in your possession? What is the process and timeline if I elect to take my item off consignment?

2) Accept the market price for your item. What you initially paid for your item is independent of its current market value for better or for worse, just like with a home or stock. If generating capital is your objective, it's far wiser to accept the current market value even if you are not as pleased as you would hope and invest the money and allow it to compound as opposed to sticking it back in a drawer or safe. Most likely you owned the item as a luxury with the intention of bringing you joy - not as an investment. Remember that when considering selling.

3) Accepting a proposed higher price with inferior terms. Check with 2-3 reputable large buyers (make sure to check reviews) and sell to the one who you feel offers the best price and smoothest transaction. If a buyer from another market offers you notably more it is unlikely their offer will materialize once it is in their possession. Once you, as a seller, are in their store they have an increase in leverage in the transaction and can lower their offer sighting discovering a negative attribute about the item after seeing or receiving it.

4) Avoiding peer-to-peer selling. Much like when you initially purchased the item, it was likely from a reputable company that offered you a luxury experience, after-sale care, and a return policy. This is what most buyers want. Trying to meet a stranger online and conducting a successful sale rarely will produce your desired outcome. The vast majority of jewelry today is purchased in person. The jewelry sold online consists mostly of lower price point items.

Additionally, selling jewelry online successfully requires your item to be refinished, professional-quality photos taken, a return policy offered and being able to field numerous questions and ultimately offer insured shipping. There is also the need to recognize and combat sophisticated purchase fraud tactics that can quickly leave you without your item or the money. The jewelry industry is definitely an example of the need for product distribution channels and true industry professionals to execute successfully buying or selling an item.