The answer to the question “are diamonds a good investment?”, is not so simple and it depends who you ask. If one looks at the historical price of diamonds there are few records and the DeBeers does not provide this information, however, my research has shown that the price of a clear white 1-carat diamond in 1900 at the turn of the century was $100, if we compare that to the price of today a blue-white D colour flawless 1-carat diamond is listed at $18000 for 1 carat therefore when we look at that, under the 19 years this equates to a compound return of 4.3%. While there have been ups and downs like any investments, the long term trend has been upward.
This return of 4% is not a bad investment, especially in these times where certain countries have negative interest returns.
This however is a trade price which means when a member of the public purchases a diamond they would be paying more than this. The standard mark-up on an investment-grade diamond for a retailer is between 20 to 30%
This means, if you purchase a diamond and want to sell it a day later you are going to lose around 25% of the value, certainly not a good investment. If my investment advisor put my money into an investment and told me a-day later I’d lost 25%, I would be very disappointed.
Therefore, with a diamond, it probably takes in the region of 5 years before one could get one’s money back on the purchase of a diamond, definitely not a great investment.
What we do also have to consider however is what money do people use to purchase diamonds? And a person would not choose between a pension or an investment and a diamond. However, one would choose between a new car, a new TV, a new laptop and a diamond. Of course, the first 3 items immediately lose most of their value and after 5 years, other than maybe the motor vehicle these items would all be worth zero, and the diamond is still worth what was paid for it. This is a far better spend.
Every single other item one purchases such as clothing electronics, beauty products, furniture depreciate in value until the final value is zero, whereas diamonds will continue to grow in value.
When one also considers the pleasure, one receives from giving and wearing diamond jewellery this is truly the best reward, as happiness is the ultimate goal in life and if a diamond ring brings happiness and joy then what more can we ask for?
When one considers that the pleasure of wearing and owning diamond jewellery is the “dividends and interest” we receive, then it becomes a wonderful investment.
When asking are diamonds a good investment, One needs to also consider the store of value when it comes to a diamond and there is a saying that “with the diamond, you can put a million dollars in a matchbox” Diamonds, therefore, are the most transportable way to store one’s money. Recently a Blue Diamond weighing 7 carats sold for $14 million – you can squash four 7ct diamonds into a matchbox! IE $56 Million US Dollars in one matchbox. Whereas immovable property is worth Zero if you need to leave a country for whatever reason and you cannot sell the property
When one considers that after 5 years one can get one’s money back, the fact that it is discretional spare money that people use to purchase a diamond and the pleasure that one receives from owning a gorgeous sparkling gem diamond, according to this author of this Blog the best investment one can make blending both growth store of value and happiness is a Diamond.
My advice as to making the best diamond investment purchase decision is the following:
– Select the highest clarity you can afford – Never select lower than SI2 clarity
-The bigger the better – IE rather choose a 1ct over 2 diamonds 0.70ct, the larger diamonds are becoming rarer over time
-Always select a reputable Certificate – the GIA is the best
-Never choose Lab-grown diamonds as these will never have any long-term value.
-The Cut grade of the diamond should be Excellent or Very Good.
-Avoid diamonds with strong Fluorescence
