Fear of markets pushes some to precious stones, gold

Business Professor Brian Bruce talks about how the volatile market has pushed some to invest in gold and jewels.

By Julie Wernau
Tribune Newspapers

At House of Kahn Estate Jewelers in Chicago, Kathleen Markiewicz fingered a ruby-encrusted brooch, shaped like a fish and pinned to the lapel of her shirt. She had paid $4,000 for the piece.

"I felt aquatic today," she said, taking a sip of sparkling wine.

For Markiewicz, such purchases have become almost a monthly affair, part of efforts to move her investments away from the rise and fall of the markets and onto her fingers, neck and ears.

"I'm protecting my money," she said.

While the Dow Jones industrial average closed above 11,000 this week for the first time since September 2008 and economists predict continued economic growth, Markiewicz is part of a growing group that has lost faith in traditional means of investing. Instead, she and others are putting their money into products and commodities they can see, touch, feel and even wear. Financial experts say the trend is similar to one seen in the 1970s, when poor returns in traditional markets sparked investing in tangibles.

During the last decade, stocks that make up the S&P 500 have had an annualized return of negative-1 percent, said Brian Bruce, professor and director of the EnCap Investments & LCM Group Alternative Asset Management Center at Southern Methodist University's Cox School of Business in Dallas. In such an environment, people start looking for alternatives, particularly those they can understand.

"Anytime any particular market falls, people abandon it, which is of course always the wrong time to do it. ... But what an excuse to buy jewelry," Bruce said.

In some ways, Bruce said, precious stones — which do not have tradable markets attached to them — fall into the same category as collecting coins, comic books and art. "There's no market for them, so to speak."

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