Social media has been buzzing about the notion that diamonds might not be a good investment. In this article, we’re going to have a candid discussion about whether diamonds are or are not an investment. We’ll break down why diamond resale prices are often below what you paid, discuss why selling a diamond is not always easy, and touch on whether lab-grown diamonds are better than mined diamonds.
So, are diamonds worth your hard-earned money? Read on to find out.
The Nature of Diamonds as an Asset
When it comes to investments with returns, people usually focus on the following fundamentals: liquidity (how easily you can sell it), appreciation (how much it increases in value over time), and market stability (how steady the market is). So, how do diamonds stack up?
Market Liquidity of Diamonds
Imagine you have stocks or real estate—in most cases, you can sell them relatively quickly if you need to. Diamonds, on the other hand, aren’t as straightforward. Selling a diamond can take time because it’s not something you can easily trade on an open market. You need to look for a specialized buyer, like Biltmore Loan and Jewelry, or a jeweler willing to take it off your hands at a fair price.
Price Appreciation of Diamonds
Next, there’s appreciation. Stocks and real estate increase in value over time—if you play your cards right. Diamonds? Well, that’s a bit more complex. While rare pink diamonds or jewelry from prominent figures in history (e.g., from monarchs, politicians, etc.) skyrocket in value, most depreciate rather than appreciate. The value of most diamonds depends on the whims of market demand. What’s hot today might not be tomorrow.
Market Stability of Diamonds
Changes in trends and economic downturns can impact diamond prices. Unlike gold, which has a fairly stable market due to its broad industrial and economic uses, diamonds are primarily valued for their beauty and status, which makes them more susceptible to market fluctuations.
Effect of Lab-Grown Diamonds on a Natural Diamond’s Price
Lab-grown diamonds have been causing quite a stir in the diamond market. Unlike earth-mined diamonds, which take millions of years to form, lab-grown gems materialize within a matter of two to four weeks using advanced technology. And guess what? They look as stunning as their natural counterparts and are officially recognized as real diamonds.
But how does this impact the value of your diamond investment? Lab diamonds are costly but less expensive than natural ones because they’re easier and quicker to manufacture. This influx of more affordable, high-quality diamonds has shifted consumer preferences. Today, many people opt for laboratory-grown diamonds for their jewelry, leading to increased competition and lowering the demand for natural diamonds. Moreover, lab-grown diamonds are more ethical and environmentally friendly. This appeal to socially conscious consumers adds a layer of complexity to the market.
As lab-grown diamonds and synthetic alternatives like moissanite and cubic zirconia become more popular, the resale value of natural diamonds may shift further. If you’re holding onto a diamond with hopes of a big payday, it’s worth keeping an eye on this growing trend.
A Diamond’s Sentimental vs. Investment Value
Let’s face it—diamonds are so much more than sparkly rocks. They’re brimming with emotional value, especially when we’re talking about engagement rings. The moment you or your partner slips on that diamond, it becomes a symbol of love, commitment, and shared dreams. That kind of sentimental value is priceless.
On the other hand, viewing diamonds as investments is a different ballgame. The emotional value attached to a diamond doesn’t necessarily translate into monetary value. While a diamond may hold personal significance, the market doesn’t account for that when determining its resale price. Factors such as clarity, carat, cut, and color play a more critical role in its value. Related: How to Tell if Your Diamond is Worth a Fortune.
So, Are Diamonds a Good Investment? The Truth
On paper, yes—diamonds make excellent investment sense. But in reality, diamonds are not the best investment from a purely financial standpoint, especially if they have visible inclusions, low carat weight, poor cut, or an undesirable color. As for their worth in love and memories? That’s beyond measure.
To add, as we’ve mentioned in our previous article, it’s unrealistic to purchase a natural diamond engagement ring with hopes of re-selling it for a profit within a few years. This is not a reason to propose or get engaged.
Shining Investment Alternatives to Diamonds
Investing in these precious metals can be a better and more reliable alternative to diamonds:
- Gold: Gold is a safe-haven asset. It retains value and provides a hedge against inflation and currency fluctuations. Investors can easily buy and sell gold due to its high liquidity. Gold also diversifies an investment portfolio, reducing overall risk.
- Silver: Silver’s dual role as a precious and industrial metal can provide unique investment opportunities. While gold often overshadows silver, it remains a valuable investment due to its industrial applications and affordability. The price of silver bullion, to be specific, is more volatile than gold, which offers the potential for higher returns. According to CME Group, “When gold prices move up, silver tends to move up more, thereby lowering the gold-silver price ratio.”
- Platinum: Rarer than gold and silver, platinum has significant industrial uses, particularly in the automotive and technology sectors. Its price is often more volatile, but it offers strong growth potential. Investing in platinum bullion can diversify your portfolio further.
- Rhodium: This silver-white metal with high reflectivity and corrosion-resistance is one of the world’s most valuable commodities. Its applications in the automotive, chemical, and jewelry industries, among others, make it a highly appealing investment option.
Read Precious Metals in Order of Value for more information.
The Bottom Line on This Diamond Hot Take
While diamonds are, without a doubt, mesmerizing and meaningful, they don’t always tick all the boxes to be a top-notch investment, especially if they have mediocre clarity, carat, cut, and color. But hey, that doesn’t mean they’re not worth having. And if you ever decide to part with your diamonds, businesses like ours are here to offer you a competitive price, respecting both your sentimental attachment and financial needs. Get an online appraisal today.