Diamonds as an Investment

In today’s unstable economy, many people are looking to diversify their assets. The stock market is on a roller coaster, banks are going under, and everyone is feeling the strain. So where should you invest your money? Gold and silver are the obvious choices, but what about diamonds? Are diamonds a good investment?

Well, as many things in life, the answer isn’t totally clear but is leaning one way over the other. Diamond prices have steadily been increasing over the past twenty years. So in a sense, diamonds are recession proof. They offer you protection from inflation, bank bankruptcy, market collapse, and currency reforms. They also have the benefit of total anonymity as there is no registration required, and there is world-wide convertibility. If your country’s currency is down the tubes, just hop a plane and sell it elsewhere. Diamonds also have no maintenance costs, and offer tax free betterment. Not to mention the fact that diamonds are a very prestigious investment that you can literally insure. And $30,000 worth of diamonds takes up a whole lot less space than the equivalent amount of gold coins.

So what does all of this mean for you? Well, the truth is, investing in diamonds is a tricky business. You can’t just go out and buy a few diamonds and hope for the best; a little strategy is a good idea. Now if you have millions of dollars to spare, by all means go for the rarest and largest stones, perhaps even colored diamonds. However, for the vast majority of us out there, a bit of homework is in order. I’m sure you know all about the “four C’s” and they will come into play here, but not in the way you would think. When you’re investing in a commodity like diamonds, you have to think first about how much they are going to cost you, while also thinking about what would be sellable when you decide to cash in on your investment. While a D flawless diamond looks the best on paper the majority of buyers are going to care more about size and cut. You want a stone that is beautiful, but approachable to a variety of buyers. Another aspect is to be sure you are buying graded (certified) diamonds. Diamond color and clarity grading is subjective, so just the word of your uncle’s family jeweler doesn’t hold much water, but having a reputable lab such as the GIA say that your stone is a G VS2 will improve your diamond’s value significantly. Also, if you plan on wearing your investment, or having it worn by another, it may be a good idea to set your diamonds in simple, classic jewelry if your intention is to sell the completed piece down the road.

Now that we’ve discussed how to invest in diamonds, what can you expect from the future? Remember that diamonds aren’t a “super quick turnaround” type of investment. They usually require years to increase in value enough to make you money. However their true untapped worth is in their value to your relationships. Diamonds are magical little things. Remember the last time you gave the woman you love a diamond? (If you don’t I need to have a word with you.) If she’s anything like me, I’m sure her eyes lit up and she couldn’t stop staring at it. She will remember that moment for the rest of her life. And then when she passes it on to your children, or grandchildren, the story of that day will live on for eternity. Yes, above all else, a diamond is truly forever and for all eternity, just like your love for her.  And that is a great investment.