Diamond in a rose, investment graph and diamonds

Tips For Investing in Diamonds

Depending on what you read, diamonds are either a fantastic or a terrible investment prospect. The fact is that it is both, even at the same time. Investing in Diamonds is a great opportunity.

Here are our tips for those thinking about diamonds as an investment opportunity.

1. Get to Grips with the Basics of Diamonds

Diamond Engagement Ring in Rose

Learn the 4Cs and what they mean to the valuation of any diamond. It isn’t enough just to know what each C stands for, you need to know how they work in tandem.

2. Play the Long Game

Key in a Keyhole

Although traded as a commodity, buying a diamond one day and selling it for a profit the next just doesn’t happen. The second you pay for a diamond, it loses about 40% of its value at least. Getting to the stage where you can turn a profit can take years. This makes diamond investments a little bit of a “buy and forget” exercise, at least temporarily. As a rule, think about spending around $5,000 on a “right diamond” and keep it for at least 5 years to have a chance of making a profit. See below for more of an explanation of which diamonds will appreciate.

3. Have a Budget and Stick to it

Budgeting for Diamond Purchase

Whether you buy several smaller – by smaller we mean 2ct – diamonds or a couple of larger ones, make sure that you only spend what you can afford to lose. Although not gambling in the traditional sense, there is always an element of that. And the fact that you won’t get your money back any time soon (see above) means you need to only spend the money you have.

4. Think about Diversifying

Diversify word in between E-trading and Valuation Ratios Word

Starting out, focusing on white diamonds is a very sensible thing. After a while, start to look at colored diamonds. The rarer colors can actually appreciate quite quickly in comparison to white diamonds. The other side of it is that they are usually more expensive to begin with.

5. Always Buy Certified

Diamond certificate in a desk together with a laptop eyeglass and pen

You need to do this for several reasons. Although the purchase price will be higher, so will your selling price. Without a certificate, you may not even find a buyer at all. A certificate will also be necessary in order to purchase insurance for your diamonds.

6. Think about Buying Jewelry

Diamond jewelry on stand

Loose diamonds are what we usually think about when we talk about a diamond investment. However, buying complete pieces can pay off too. You will usually pay more for a finished piece, but it usually has a higher immediate sale value. It may also be that the diamond is excellent in a poor piece of jewelry. This may make the purchase price lower than if you were buying the diamond while loose.

7. Stay with the Classic Cuts

Brilliant Diamond Cut with black background

Don’t be tempted to buy marquise, pear, heart, or any other fancy cuts. Stick with round brilliant or cushion cuts instead. Fancy cuts are, buy their nature, very much subject to trends and fashions. It’s not impossible that they will fall in price instead of rising. Classic cuts will always be in demand, and so you maximize your chance of a future return.

8. Buy Online

Businessman Shopping Online

Although it goes against the usual practice of seeing what you’re buying, most online dealers will usually have much better prices on their stock. Reputable online stores will usually provide certificates, and you will have all the details of the diamond in front of you before you pay a penny.

9. Or Find a Wholesale Dealer

Jewelry Showroom with diamonds displayed and chair

Buying from a jeweler will probably cost about twice as much as buying from a dealer. Jewelers need to add their own markup on any item, and diamonds are no different. Be warned, though, until you build a relationship with your chosen dealer, he won’t be interested in selling you a single half-carat diamond. You will need to put serious money into it initially. The upside is that you will get a lot more for that money. This is changing, though, with some dealers and even manufacturers now selling directly via online stores.

10. Go To The Source

Diamonds with blue background

If you think laying out $20-30,000 is just too much, think about buying shares in a diamond company. That way, you can buy and sell more regularly. Of course, as we’ve seen all too regularly, shares can crash quickly and violently. It’s not an option we’d recommend, but it is an option. If you choose to do this, then look for companies that have more than one mine, or who have other interests. This will help to mitigate some market fluctuations.

11. Buy Antique

Chest with Antique Jewelries and Diamonds

If we’re honest, all modern diamonds look the same. This is mainly because they are. Modern production techniques mean that differences in weight, color, etc. aside, all are very high-quality cut diamonds. Antique diamonds are usually absolutely unique. Cutting methods of the time meant no two were the same, and all were reliant on the skill of the cutter and polisher. The rarity levels of antique diamonds are also much higher than modern stones.

Today, there is an emphasis on getting diamonds to market as quickly as possible. This produces very few truly collectible diamonds. Antique diamonds, though, are hugely popular amongst serious diamond collectors. Buy the right diamond, and you have a chance of making a very nice profit.

12. Ask Questions

Questions word in between sticky notes with question mark

Ask a lot of questions. Try to get in touch with diamond experts and advisers. Diamond boards are good. Now is the time to share and carry. Social networks are full of helpful people who are happy to help. Some people have possibly already bought diamonds and can talk about their own experiences.

13. Buy Your Diamonds Cheap

Diamonds in hand of a lady with diamond bracelet

In this paragraph, we continue from the last one. If you buy a gem from a store, it means that many brokers and middlemen already got their cut. It’s not that we want to buy cheap gems when we say “buy cheap.” In other words, you should buy as far up the supply line as possible. Do not use middlemen. Try buying straight from the makers. A lot of companies that make diamonds, including ours, now have online stores and are happy to sell straight to customers.

14. Compare Prices

Cost and Benefit balance

I apologize for making such a blatant analogy to stocks, but a diamond is not a stock to begin with. In a transparent online marketplace, the price of a diamond is not determined by thousands of customers and sellers bidding on them. In spite of this, you are able to readily compare the prices that are being asked for comparable diamonds thanks to the vast number of internet stores.

15. Be Patient

Hand planting coins

Diamond investments are considered to be long-term investments, as was previously indicated. It is true that all of that patience will eventually pay off. Should you decide to sell your rare pink diamond five years after you purchased it, you will discover that it will be worth your time and effort. Wait 10 years, take pleasure in your precious jewel, and observe as it grows in value over time. It is common knowledge that the availability of diamonds, particularly color diamonds, is decreasing, and it is also common knowledge that the demand for these diamonds is increasing. The value of these stones is not going to undergo a significant shift over the next few years, but it is highly possible that it will do so during the next ten years.

Some Closing Notes

Diamond prices are not the transparent entity you may expect. This isn’t oil or corn we’re buying here, where the markets determine the price openly. Shop around and compare prices for identical diamonds.

If you think buying diamonds is difficult, wait until you try selling them. Unless you have a very rare or unusual diamond, your selling price will need to beat those of other dealers. For that’s what you technically will be, a diamond dealer. That’s why it isn’t a game for a day or two but for many years.

We can’t stress enough that patience is a virtue. If you’re looking for a get-rich-quick scheme, diamonds aren’t it. The price of diamonds will not spike by 20% this year, next year or the year after. Above-inflation growth isn’t unreasonable to expect, but don’t buy that yacht just yet.

0 0 votes
Article Rating
Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments
0
Would love your thoughts, please comment.x
()
x