Going once: How to buy jewelry at auction

This is Part One of a two-part post.

Jewelry auctions are an ideal way to learn about value and, if the moment is right, to acquire special pieces. (Shown, ruby, diamond and 18k ear studs, $750*.)

Christine found her jaw-dropping charm bracelet at an auction, and I've been been an occasional buyer over the years. They were smart choices. So, how did we do it?

Appraiser Jake Biddington (real name?) has a friend who was an equity fund manager. He details his method here, a canny approach.

A few points to add to Jake's:

If you're a competitive person, auctions bring that quality to the fore. Learn to separate your ego or competitive drive from the bidding process. You don't want to "win them all" unless you have money to burn.

I met a man who boasted that he never lost at auction; he was privately regarded as a sucker. Remember, you are not winning, you're buying.

How shills work

Unscrupulous practices can be at play. Shills (fake bidders) are not uncommon.

For those who don't know this scam, here's how it works: Al, Bob, Chris and Dan all place their high-end watches in an auction. Bidding begins for Al's watch. Bob, Chris and Dan (and possibly a few other shills) will bid, driving the price up. As soon as you bid, the shills drop out. Later, in their hotel suite, the proceeds are shared.

In the US, shills are illegal in some states, but many states don't regulate auctions or auctioneers at all. Bad guys simply recruit new faces or use phone bidding, so it's hard to be sure.

The way to shill-proof yourself? Know comparables– recent prices on similar objects.

Auction houses post prices for recent sales on their web sites. (If you have registered to bid, major auction houses will send these post-auction.) There are also specialized databases available by subscription.

Go on the first day, note what you like in the catalog, and do some research. Seeing the items in person is essential, because you should check the condition.

Don't assume that because a bracelet, for example, is listed in an auction, it will be cheaper than the same item sold by a shop. I have seen, for example, a mint-condition current Cartier bracelet sold at higher price than the identical bracelet at a jeweler's.

Some jewelers place their merchandise in an auction because they know that a skilled auctioneer and an energized crowd can result in a higher selling price than in their shop.

Estimates: Who's zoomin' who?

The catalog will list an estimate in a price range, for example, $1500-$2000, but be careful. Some houses deliberately lowball their estimates to attract interest. So you think "Wow, that's a terrific price", and as the bidding goes up over the estimate, you think, "They must know something I don't", and you keep bidding.

Shown, left, part of a Tiffany silver tea and coffee set, ca. 1865-1878. Estimate: $4,000-$6,000; sold for $11,000. I know very little about silver but thought the estimate was definitely low.

When the price zooms way above the estimate, either the buyers think the piece was undervalued, someone has a customer in mind who will pay more, or, in the case of a glamorous blonde who set her shoulders and held her paddle aloft till she had her strand of black opal beads, there is a bidder who is going to get her candy, no matter what.

Spotting good buys

I've seen many outstanding values at all price points.

Be sure to look at the 'second ' jewel auctions, sometimes called boutique or arcade" auctions. The house will separate the higher and lower-end goods into two separate events (often on the same day). The latter is a trove of reasonably-priced treasures mixed in with some godawful stuff. (Shown, 16mm pearl and 18k earrings by Llyn Strelau, $700.)

You will pay a premium for known and desired brands. Learn to look further afield, depending on your eye, not a name.

These gold and diamond Cartier C earclips sold for $950 last fall in a local Toronto auction, a good price.

This giardinetto brooch, with carved emerald leaves, ruby and sapphire branches and pavé diamond stems sold for $1,600.

I'd have to inspect the piece more closely to be sure, but this looks like an excellent value.

*All pieces shown are from past sales of the Toronto auction house Dupuis; prices given are hammer price in Canadian dollars (which at writing is at par with the US dollar.) In addition to the hammer price, buyers pay a premium of 25% (20% above $20,000) and applicable taxes.

Part Two, "Going Twice...", on Tuesday of next week, continues with more suggestions and examples.