Are Diamonds really worth anything since they don''t have a re-sale value?

[Slated]

I found the stone and ring to get for my girlfriend! she's 4'11" with a 2.5-3 ring. because of this, I went with quality over size. I got a .5 carat E , Ideal cut VVS2 with excellent/excellent on a 1/3 ct. wt. pave`

I've really started liking buying loose stones, and since I'm a financial advisor, I like to think of them as investments, but are they really. Not to say that I would ever want to sell something I bought her...maybe it's just my investment mindedness that has me thinking this way.

Can diamonds really be thought of as an investment when the market is so flooded and there really isn't any true rareness to them?

 

[oldminer]

There are excellent investments, good ones and rather poor ones, but all purchases could be called investments. Some things you buy last only an hour or two and you consume them or use them up, some things you buy last a month or even a few years before they are gone or used up and a very few things can outliast your own lifetime. Even if they last a very long time, many things one could purchase would not rate as a good or excellent "investment".

Diamonds happen to be a fair to poor investment, but until you get inside the mind of a woman who has been given a gift of love represented by a diamond, you will never appreciate how much that purchase means to her... It means a whole lot and she won''t care if it is worth the money or not. She won''t care if it can be re-sold or not, or for how much.

When you buy a diamond you can call it an investment if you want to, but it is not one with which you will ever make money. It might get you the lady of your dreams and with the divorce rates as high as they are, who can predict if you will get what you want or if she will get what she thinks she wanted. Buy a good deal for the current market and don''t worry over it.

 

[RockDoc]

Diamond Resale...

Diamonds do have a secondary market value. There are many avenues from which you can sell and the prices paid vary with the terms of the sale and the nature of the purchaser.

If you buy a diamond from a good source on the internet, you probably could "retail" it as long as you market it properly, and take the time to show it to buyers that want such a stone for end usage.

Unfortunately, may who buy diamondsthink they have the liquidity of stock. They don''t want to do anything but get paid immediately. This isn''t factual. If an owner of a stone takes it to a dealer, jeweler, broker etc. they are buying the diamond for the purposes of resale . Given the time you have the stone also affects what price you''ll get. There are also difference levels in the buying world, which varies such as a retail jeweler would probably pay more than a pawn shop. Also the terms of payment affect the potential price achieved

If you place the stone on consignment with the dealer you''ll get more than than if you want cash immediately.

Further desireability of the size and quality of the stone matters too. While a D- IF, wonderfully cut stone in a carat size may sell for what appears to be a lot of $$ - one must consider what percentage of buyers would want to pay the price for such quality. ( Sort of like you can find a Ferrari that less than 1% of the market would buy, but if it were a Toyota maybe the potential buyer''s market might be 50%.

Hope this helps.

Rockdoc

 

[youngster]

Others far more expert have already discussed the secondary market for diamonds but since I have a finance/accounting background, let me give you my take on this topic. Clothing purchases can be evaluated in terms of their cost-per-wear quotient. For example, say you purchase an expensive winter coat for $1,000 but only wear it 2 times over several years. Your cost-per-wear quotient is $500 ($1,000/2 wears). Not so good. However, say you purchase that same $1,000 coat and wear it 100 times each year for five years. Your cost-per-wear quotient is more like $2 ($1000/500 wears). Great purchase! So, let''s apply that to diamonds!

. Your lovely wife-to-be is likely to wear this diamond every day for perhaps fifty years. Using a purchase price of $5000, your cost-per-wear quotient is 27 cents! In addition, if the diamond is well-cared for, in fifty years, it will still have some monetary value attached to it (besides the priceless sentimental value it would have to you and any children you might have.) Sounds like a great jewelry "investment" to me!

(I''ve used this theory to great effect throughout my marriage! LOL)

 

[bar01]

Date: 12/6/2004 9:37:50 AM
Author: oldminer
There are excellent investments, good ones and rather poor ones, but all purchases could be called investments. Some things you buy last only an hour or two and you consume them or use them up, some things you buy last a month or even a few years before they are gone or used up and a very few things can outliast your own lifetime. Even if they last a very long time, many things one could purchase would not rate as a good or excellent ''investment''.

Diamonds happen to be a fair to poor investment, but until you get inside the mind of a woman who has been given a gift of love represented by a diamond, you will never appreciate how much that purchase means to her... It means a whole lot and she won''t care if it is worth the money or not. She won''t care if it can be re-sold or not, or for how much.

When you buy a diamond you can call it an investment if you want to, but it is not one with which you will ever make money. It might get you the lady of your dreams and with the divorce rates as high as they are, who can predict if you will get what you want or if she will get what she thinks she wanted. Buy a good deal for the current market and don''t worry over it.

Well Said !

 

[denverappraiser]

Two things in you question that have not been touched on in the above excellent advice. First, rarity is not what makes something valuable. It’s desirability. In the case of diamonds, people find the desirable because they usually are intended as a symbol of something that is far more ephemeral and far more valuable than a simple rock. How well they serve this purpose depends on you and your affianced and it has very little to do with the diamond itself.

Like most investments, there is a variety of secondary marketplaces where both dealers and consumers are active. Some yield higher prices than others. Most consumers wish to buy from dealers that offer quite a few value-added elements including things like warranties, convenience, financing, known ownership history, packaging and presentation, guaranteed grading, trade-up programs, mountings, etc. and are willing to pay a premium price to get them. As a seller it‘s difficult to offer these features. This means that you will be forced to sell for a lower price. How much lower will depend on what kind of a premium you paid and to whom and under what circumstances you choose to sell.

Neil Beaty, GG ISA
Independent Appraisals in Denver