Diamonds As An Investment

TheStreet.com is reporting on how diamonds aren’t exactly the best investment you can make. That might be true, but if you buy carefully, then at least the diamond will hold its value.

Traditionally, investment grade diamonds are either big (5ct+), rare fancy colours or both. This limits professional diamond investing to diamond dealers and the super-rich.

However, when buying a diamond for an engagement ring, or other piece of jewellery, most people don’t stop to think about the true value of the diamond they are buying. Indeed, most people buy diamonds or diamond jewellery at huge markups compared to the wholesale price, and should they need to sell it, they are left with something worth between 20 to 50 percent of what they paid for it.

However, that needn’t be the case. If you buy the right diamond from the right merchant, you’ll find that the diamond you bought, whilst on a wholesale level will be worth less than what you paid for (as you need to allow for the merchant’s markup), will appreciate in value, and in a few years will be worth more than what you paid for (probably not in real terms though).

So, when looking for a diamond that will at least hold its value, be sure to consider the following:

• Certification – Make sure it’s from one of the three most reputable in the world – GIA, AGS or HRD. Even then, take it to an independent appraiser to double check the grading.
• Cut – Out of the millions of polished diamonds in the world, only a select handful are an ideal cut, and therefore are easier to sell.
• Price – Use the internet as a guide. Sure, you may want to buy from a brick and mortar store, but don’t buy a diamond worth 50% of what you are paying. Besides which, most online vendors and brick and mortar shops as well, and will give you the same price online as in store.
• The dollar – now is one of best times to buy a diamond. Why? Because the Australian dollar is so high compared to the US dollar, and diamonds are always traded in US dollars. Therefore, if you buy a diamond for US$8000 now for A$10000 (approximate exchange rate at the moment), if the Australian dollar goes down to 70 cents, then your diamond automatically appreciates in Australian dollar terms. Of course if the Australian dollar goes up to 90 cents, then you loose out – but you can always buy another diamond 🙂

In conclusion, don’t just buy the first diamond you see in a shop at the right price because it looks good in store – do a bit of research and you’ll find that buying a diamond or engagement ring shouldn’t be like buying a TV or car – it should be more akin to buying a house (albeit with less monetary returns).

This entry was written by Nikhil Jogia and was posted on on Saturday, September 8th, 2007 at 11:38 am and is filed under Buying Advice. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.