Depreciation of Jewelry

Jewelry may depreciate in value over time.

In 1972, a 16.37 carat diamond was discovered in Texas by W.W. Johnson. Large stones such as this hold their value, but many other types of jewelry depreciate over time.

Types

The type of jewelry you own will determine whether it depreciates significantly and at what rate. Costume jewelry, for example, loses value so quickly that it is not even included on depreciation charts. Quality watches, however, have depreciation rates that are easier to track, while quality diamond jewelry may largely hold its value. Antique jewelry falls into a completely different category.

Rates

If a piece of jewelry does not fall into another category, you can use the standard depreciation rates for general items of value. The jewelry will probably lose 10 percent of the purchase price the first year, with another 10 percent of value being deducted each subsequent year. The item will not lose more than 75 percent of total value. However, items like watches depreciate more slowly, losing only 5 percent value each year. Some items depreciate immediately, such as costume jewelry, while items like diamonds are rated on factors such as cut, clarity and condition without taking age into account.

Considerations

Many pieces of quality jewelry have emotional appeal to the owner, and this can affect perceived value. In addition, insurance companies may not take depreciation into account, but rather provide full replacement cost for covered jewelry. Items that are old or rare often vastly exceed standard price ranges and depreciation ceases to be an issue.

References

• Crater of Diamonds State Park: Largest Diamonds since 1972 - 5 Carats and Over
• United States General Services Administration: Section 12 Depreciation Guide
• Professor's House: Insuring a Diamond