Jul 282011

Yes, No, and Maybe So.

No, because…

…a diamond is similar to a new car. Once you purchase it at retail price, you’ll lose out on the mark-up. You won’t be able to sell it at retail, and unfortunately, you might not be able to sell it at wholesale. A diamond broker won’t buy a diamond from you at wholesale when he can buy one for the same price at any time from a supplier.

However, you may be able to sell it to another consumer for somewhere around wholesale or slightly more. We often advise customers to try and sell their jewelry on Ebay or Craig’s List if they want to try and get the most money for it. The problem is that most people don’t want to pay much for “used” diamonds, especially if it’s for an engagement ring. The time you end up spending trying to sell it may not be worth the difference.

Yes, because…

(there are a couple scenarios in which the value of your diamond could grow)

As a long-term investment
My mother bought a 1ct diamond in 1950 for $600 and now she has a diamond worth $8,200.  If she had bought it and wanted to resell it within a year or two, the answer would’ve been “No” …it would’ve only fetched $300.

Maybe so…

In a failing economy
Interestingly, today times are very different.  With the value of paper monies being questioned, and therefore collapsing, people are buying gold and diamonds as safe haven buys which might not collapse in value but actually appreciate.  You might ask yourself, “Who is going to want diamonds and gold if things are falling apart in the world?”

The bigger question is…who will want a piece of paper?

If no one wants that piece of paper, all you can do is burn it to start a fire.  The other items you could of bought with that piece of paper before no one wanted it are called commodities, and have proven their value for thousands of years as forms of trade.

Many cultures use gold jewelry to hedge against the wildly fluctuating currency of their home country.  The very rich people in the world use diamonds as a store of emergency wealth, since you can carry millions of dollars of diamonds easily, as opposed to the same amount in gold.

If you’re looking to MAKE money, invest in the stock market, not diamonds. If you’re looking for a luxury item that will likely hold its value, diamonds are a fairly reliable option.

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