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Investing in Diamonds is Historically Profitable

Updated on June 15, 2011

Is Investing in Diamonds a Smart Move?

People with an eye on the future are always looking for a good investment, be it stocks and bonds, gold bullion, or real estate. But one area that has been historically profitable for investors is diamonds. You’ve all heard stories of people escaping war-torn countries by trading loose gemstones when the local currency went belly-up. Or you’ve seen the price that a costly collection can fetch at auctions or estate sales. The truth is, if you’re careful about what and when you buy, diamonds can be an excellent investment.

What to look for When Investing in Diamonds

One thing to think about when buying diamonds is style. This could include the cut, color, and setting of your stone. Princess cuts are popular now, but in ten years, it will be something else. Styles come and go, and occasionally they return, but where cut is concerned, sticking to a classic round-cut diamond (the staple of most solitaire settings) is probably your best bet. Ditto on color and setting. Simple and traditional is best, so choose a colorless stone (pink is popular, and may even be rare, but this doesn’t mean it will hold its value over time). If someone is going to be wearing the diamond, you’ll certainly want to get it set to suit their tastes, but be aware that the setting may be a detriment to resale. It will limit the scope of interested buyers and it certainly won’t improve your return, so if your objective in buying a diamond is purely as an asset, you may want to skip the setting altogether.

Additional Considerations

In terms of the value of a diamond, you should shy away from the biggest and best. In truth, you may not net the return you expect if you choose a rare stone. A more expensive diamond is going to be harder to sell in the long run, as the number of prospective buyers will be limited by cost. On the other hand, you may notice a reduced markup when you select a larger or more expensive diamond. And it is certainly easier to sell a single stone than a large collection since most buyers will either have to set or reset whatever they purchase.

So there are many considerations when thinking about investing in diamonds. Keep in mind that the value of luxury items like gemstones tends to fluctuate in accordance with inflation or recession, so you shouldn’t treat them the same way you would a stock, for example. Don’t buy today and expect to sell tomorrow. You’re going to enjoy a greater return over time, and treating a diamond as an heirloom may be wiser than counting on it for a windfall during a financial crisis. As long as you keep your goals realistic when it comes to acquiring diamonds, their capacity as an investment tool will almost certainly pay off.


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