One of the reasons why old jewellery is a better buy is that new pieces attract VAT at 17.5 per cent. Pieces sold by private vendors at auction do not. Old jewellery sold by dealers only attracts VAT on their profit margin.
The cost of manufacturing old jewellery has also been absorbed by a previous generation. Today its value is determined purely by supply and demand in the market. Brand-new pieces retail at a price that covers manufacturing costs and provides a profit to the maker and retailer. The result is a retail price considerably above that at which the items sell on the secondary market. Disappointed vendors of jewellery bought new a few years previously discover this to their cost when they decide to sell.
On the other hand, items purchased on the secondary market have a far greater potential of retaining their value. Indeed, it is possible that over time this could even increase. For example, Mark Evans of Bentley & Co in New Bond Street has recently repurchased a cased set of five Faberge miniature nephrite Easter eggs, which he sold in the 1960s for pounds 150. This year he paid the original purchaser pounds 6,500.
As David Warren of Christie's neatly replied when asked if jewellery was a good investment: "It depends on what you pay." Beauty is certainly in the eye of the beholder and the interaction of supply and demand at auction can result in some extraordinary saleroom prices.
For example, at Bonhams in September, two equally determined bidders battled over a pair of cufflinks in the form of well-modelled owl heads set with small diamond eyes. It was anticipated they would realise pounds l,000. They sold for pounds 2,760, including buyer's premium.
On the day of the sale, an identical pair, save that the eyes were rubies, were being offered at pounds 850 by Anthea AG Antiques at Gray's antiques centre in London.
A prudent buyer will seek jewellery from both dealers and auctions. Both can yield good buys. Equally, jewellery from both sources can be pricey in relation to the market as a whole.
Putting a value on a piece of jewellery is a complex matter. Quality is of paramount importance. This embraces both the craftsmanship of the jeweller and the size and quality of the stones used. The grading of stones is a very complex area and requires considerable expertise.
Condition is also important as damage detracts from an item's value. Alterations also have a negative affect, but pieces in original cases sell for far greater sums than those that are not in their contemporary boxes.
"Buy only what you like," is the advice of Alexandra Rhodes of Sotheby's. Should you therefore want to sell at some time in the future, quality pieces will be easier to realise. Signed pieces by Cartier, Boucheron, Van Cleef & Arpels, and other international names, are firm favourites with buyers.
If you have to view jewellery as an investment, the secret is to anticipate what will be sought tomorrow. My tip is the 1970s work of Andrew Gima, which typifies the decade.
For a copy of The Bentley Collection, an illustrated compendium of fine jewels for sale, telephone 0171 629 0651.Several good jewellers are at Gray's antiques centre, 58 Davies Street, London Wl. The Fine Art and Antiques Fair will be held at Olympia (London) from 15 to 21 November. For information telephone 0171 370 8188.