MYTHBUSTERS: THE TRUTH BEHIND JEWELLERY VALUATION MYTHS

by Megan Austin for Jeweller Magazine

Jewellery valuations can benefit jewellers and consumers alike; however, there's still misunderstanding in the industry. 

While there are many good reasons for consumers to obtain valuations for their jewellery items, valuation certificates and how they are used have caused industry controversy in recent years.

Here we answer the most common misguided statements about valuations:

#1 - VALUING JEWELLERY IS SIMPLE; ITS JUST LIKE ANTIQUES ROADSHOW

THE REALITY: The popular TV show Antiques Roadshow perpetuates the myth that a cursory glance at a piece of jewellery will tell a valuer all they need to know in order to assign a value; it also implies a valuer carries all the neccessary valuation knowledge and tools required inside their head, and can draw on it at any time. In reality, there is a great deal of behind-the-scenes work involved in Antiques Roadshow and jewellery items are carefully inspected by qualified professionals well before the show starts filming. 

#2 - ANYONE CAN VALUE JEWELLERY, FORMAL TRAINING OR NOT

THE REALITY: Yes, it’s true that anyone can claim to be a valuer, just as anyone can claim to be an accountant; however, there are industry bodies that specialise in jewellery valuation and it’s up to the client to choose a suitably-qualified professional.

Members of the National Council of Jewellery Valuers (NCJV) must undertake many years of formal training in gemmology and other specialist areas to become registered and then commit to ongoing education for the duration of their registered status to remain up-to-date with industry changes.

Registered valuers may operate or work in self-owned retail jewellery outlets but sales people or jewellers are not necessarily valuers so it is wise to be cautious about who values your precious items.

#3 - TWO SEPARATE VALUATIONS ON ONE ITEM SHOULD BE THE SAME VALUE

THE REALITY: You may be surprised to know that multiple valuations on the same item can have different value outcomes. The most common type of valuation – retail replacement for insurance – will vary depending on the store in which the item is to be replaced. Retail outlets have different replacement prices because their costs and overheads vary.

Another factor to consider is the sector of the market in which the item is to be replaced. In addition to valuations for insurance replacement, there are other more complex valuations, such as those required for auctions, private sales or deceased estates, all of which can differ in their end result.

#4 - FAMILY JEWELLERY HEIRLOOMS ARE VALUABLE

THE REALITY: There is a tendency to regard all old or handed-down jewellery as valuable for no other reason than it is old or handed-down – this is obviously not always the case. Keep in mind that sentimental value and dollar value are two very different things.

Family lore might suggest that great grandmother’s much-beloved ring contained a rare natural alexandrite; however, be prepared to accept that it’s just as likely to be a synthetic colour-change sapphire bought in the 1960s.

#5 - JEWELLERY SHOULD ALWAYS APPRECIATE IN VALUE

THE REALITY: It is a myth that jewellery pieces and diamonds in particular are an investment that will increase in value over time.

Some high-end pieces are bought as investment items but everyday jewellery and diamonds are not considered stable investments. For that reason, jewellery valuations can fluctuate due to changing market conditions, exchange rates, metal prices and even the fickle finger of fashion.

#6 - A VALUATION IS HOW MUCH A PIECE IS ‘WORTH’

THE REALITY: Valuations are supposed to indicate what jewellery is worth but this is not always the case. This is a common complaint emanating from customers who have tried to sell items using an insurance replacement valuation report only to be offered substantially less.

 

Ultimately a piece of jewellery is ‘worth’ what someone will pay for it. An insurance replacement valuation indicates an amount that the item could be replaced ‘new for old’ or ‘like for like’ in a particular market but that doesn’t mean anyone’s going to pay that price. This is why valuations for insurance purposes are not intended to be used to set sale prices.

Valuations vary significantly depending on whether the aim is to establish replacement value, market value or liquidation value. For this reason, it is important to convey the purpose of the valuation before the appraisal process begins. A registered valuer should ask these questions prior to starting his or her work.

#7 - VALUERS CAN UPDATE A VALUATION WITHOUT SEEING THE ITEM AGAIN

THE REALITY: It is important that items are re-examined with each new valuation to ensure that values are kept up-to-date.

Some insurance companies automatically apply a percentage increase each year; however, this method does not necessarily reflect the actual market value and can result in pieces being over or under insured. Having jewellery valued every two to three years is also a good opportunity for a professional to examine its condition and advise of any repairs. 

#8 - A VALUATION HIGHER THAN PURCHASE PRICE INDICATES A BARGAIN

THE REALITY: How many times have you heard customers say, “I know I got a great bargain buying jewellery online because the seller sent me a valuation certificate issued by a laboratory at three times my purchase price!”

Beware of online purchases that come with a ‘valuation certificate’, especially those from laboratories.

Firstly, internationally-recognised diamond-grading laboratories do not value diamonds or jewellery; they issue grading reports detailing a stone’s specifications. In addition, valuations should always be provided by an independent third party.

When they are not, they can be found to be overstated, incorrect or not suited to the local market conditions of the buyer.

Valuations are offered by some online retailers as a sales tool; they’re designed to convince customers that they got a great deal when, in fact, they are possibly even overpaying. Worse, this inflated figure also becomes the figure upon which years of inflated insurance premiums are paid.

#9 - LAB-GRADED DIAMONDS CAN BE APPRAISED WITHOUT CERTIFICATES

THE REALITY: To get the most accurate valuation possible, all details should be provided to the valuer before the valuation process begins. Withholding documentation can be detrimental to the value conclusion of your jewellery.

There are limitations when examining a set diamond and a valuer can never be 100 per cent sure of a diamond’s quality unless it is examined as an unset stone – coloured tints from the surrounding metal can impact on the diamond’s perceived colour; claws can hide grade-setting inclusions; bezel rims and closed-back settings obscure the dimensions of gemstones, making accurate weight calculation extremely difficult.

Due to these limitations, the highest grade that an NCJV registered valuer can assign to a set diamond is G colour and VS clarity.

Any higher-quality diamond will be undervalued unless a grading report or other documentation is presented for consideration. Grades higher than these are impossible to determine accurately without removing the diamond for a detailed inspection.

MYTHS BUSTED !

As you hopefully now see, valuing is a complex profession that requires significant education and ongoing training, as well as a good understanding of the jewellery industry and its associated networks.

When you consult a valuer, you are paying for so much more than a piece of paper with a signature; you are receiving the benefit of years of accumulated experience from a professional who is qualified to correctly assess your jewellery for a particular purpose.

Whether for insurance replacement, auction, estate or divorce settlement, valuers provide an essential service that ultimately serves to protect the consumer. 

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