Buying gold jewellery is not the same as investing in gold

Although the price of gold on the global market had risen significantly over the years, her jewellery was valued and bought back for a very low price. This was very upsetting for her. She then bought a new, more modern jewellery set and once again had to pay a substantial additional amount. Why does this happen?

Because when we buy jewellery, we are paying for more than just the gold itself. The price also includes:

• the jeweller’s workmanship;
• the design of the piece;
• precious stones and decorative elements;
• the seller’s markup;
• in some cases, the brand and current fashion trends.

But when it comes time to sell the jewellery, most of these components are no longer taken into account. The piece is generally valued based on its weight and gold purity.

As a result, a person first buys a piece of jewellery at a high price, which already includes the costs of making and selling it, as well as other expenses. When it comes time to sell it, they receive an amount close to the value of the gold as scrap. After that, they buy a new piece of jewellery and repeat the same cycle. This is not an investment. It is a high-cost way of holding gold in the form of jewellery. Of course, women buy jewellery for its aesthetic, family and emotional value. They choose it for weddings, as gifts, or simply for themselves. But let’s not call this an investment in gold.

Today, residents of Uzbekistan have a more practical alternative: 999.9-purity gold bullion bars, which can be bought and sold through banks. One of the banks in Uzbekistan offering this option is Hamkorbank. The price of these bars is determined with reference to the global gold market, while the selling and buyback prices are published regularly. This allows buyers to see in advance the price at which the bank sells gold and the price at which it is prepared to buy it back. Hamkorbank also offers 999.9-purity gold bullion bars. According to the bank’s official information, bars are available in weights of 5, 10, 20, 50 and 100 grams. This allows you to choose an option based on the amount you are prepared to invest and your savings goal. More information about Hamkorbank’s gold bars, their weights and purchase terms is available on the bank’s website.

When you buy a gold bar, you are primarily paying for the gold itself. Hamkorbank offers gold bars in different weights, so you can choose an option based on your financial means and savings goal.

There are no additional costs for jewellery workmanship, design or fashion elements whose value may not be taken into account when the item is subsequently sold. Of course, there is a difference between the purchase price and the bank’s buyback price, but this difference is minimal. These are transparent costs associated with investing, rather than recurring losses that arise each time you purchase a new piece of jewellery.

The price of gold can fluctuate significantly in the short term and may even fall sharply. Therefore, gold should not be viewed as an instrument for generating quick profits. Over the long term, however, gold can be one of the assets that helps preserve the value of capital and reduce the impact of inflation on savings. The primary role of gold is not to increase wealth quickly, but to preserve the purchasing power of capital over the long term.

Gold has another important advantage: high liquidity. In other words, when necessary, it can be converted into cash relatively quickly. Unlike many other assets, you do not necessarily have to wait months or years to sell gold. Where a buyback option is available, it can be sold within a few days, allowing you to regain access to the funds. Therefore, the point of investing in gold is not to wait and see how much its price will rise in the short term. Its main value lies in the ability to preserve capital over the long term, reduce the impact of inflation and, when necessary, convert it into cash relatively quickly.

The key question is not how much gold we buy. What matters is understanding why we are buying it, in what form we are holding it and why we are keeping it. From this perspective, standard gold bullion bars offered by banks, including Hamkorbank’s 999.9-purity gold bars, can be one practical way to accumulate gold.

Three Things You Can Do Right Now:

First, calculate the total value of:

• all gold jewellery;
• gold bullion bars;
• investment gold.

If you have investment gold, make sure it is backed by a specific amount of gold, accounted for separately, belongs to you, and that under the agreement you have the right to dispose of it freely or receive the corresponding gold.

For many Uzbek families, gold may account for 25–50% of their accumulated wealth, especially if they use few other investment instruments. But this is not diversification. It is concentration of capital in a single asset. Moreover, a significant part of this wealth may be held in the most costly form — jewellery.

If the goal is beauty, family tradition, a gift for your daughter or a memory of a loved one, jewellery has its own purpose. Keep it as jewellery, not as an investment.

If the goal is to preserve part of your wealth specifically in gold, standard 999.9-purity gold bullion bars may be a more suitable option. In Uzbekistan, such bars can be purchased through banks, including Hamkorbank offices.

The real change is not moving from 583-purity gold to 999.9-purity gold. What matters is changing the approach itself — from accumulating jewellery for consumption or emotional value to consciously allocating capital.

Investment gold can serve as a defensive asset and help reduce risks associated with:

• inflation;
• depreciation of the national currency;
• geopolitical instability;
• financial market crises.

At the same time, gold itself does not generate cash flow. It does not provide rental income, pay dividends or give you a share in business profits.

Gold is primarily considered part of a diversified investment portfolio. Depending on your goals and risk level, a gold allocation of around 5–10% of total wealth is often considered one possible approach to asset allocation. In Uzbekistan, those interested in investing in physical gold can purchase 999.9-purity gold bars through banks. For example, Hamkorbank offers gold bars in different weights.

For many families, keeping 5–10% of their savings in gold may be a reasonable approach. An allocation of up to 10–15% can be considered a higher level when there is an additional need for gold or a specific financial goal.

A significantly larger share is no longer so much about protecting wealth as about excessive concentration in a single asset that does not generate current income.

A young family that does not yet have significant wealth can gradually build a small gold reserve. For example, it could set a goal of accumulating 50 grams. However, this is not a universal financial rule. Such savings should not come at the expense of an emergency fund, money for housing or education, or income-generating investments.

The risk is not only that the price of gold may temporarily decline.

A much more serious risk is spending another ten years treating jewellery as an investment, regularly losing money when selling and replacing it, while at the same time keeping too large a share of family wealth in an asset that does not generate current income.

A much more serious risk is spending another ten years treating jewellery as an investment, regularly losing money when selling and replacing it, while at the same time keeping too large a share of family wealth in an asset that does not generate current income.

Check yourself

• How much gold does your family actually own?
• In what form is it held?
• What share of your total wealth does it represent?
• Does this form of holding gold match your actual financial goal?

Being able to distinguish gold jewellery from investment gold is an important aspect of financial literacy.

Khondamir Nusratkhujayev

International Islamic finance expert, former member of the AAOIFI Council (2016–2023), international Islamic banking expert, and author of the Mufeed Moliya channel.