RebYidd23,
There are stories of people fooled by fakes. But what is the point of real jewelry if you can be fooled by fakes? The entire purpose of jewelry is to look pretty.
I think the primary purpose of giving jewelry is to bring joy to the recipient. Cultural norms are not always “rational”, and “real” gold and “real” diamonds are usually treasured more than “fake” varieties, even if they visually appear the same. Additionally, part of the intended statement when giving expensive jewelry is that the recipient is valuable to the giver, and therefore the giver is willing to invest his resources for the recipient’s pleasure. That said, I agree 100% with Joseph and DaasYochid that one should not spend beyond his means on jewelry.