Are colored diamonds a good investment?

[WinkHPD]

According to Rachael Taylor in the October Rapaport magazine they are.

According to her article, between 2010 and 2015 Pink diamonds showed the highest rate of returns at 189%, blue diamonds rose 89% and yellows were up 17%.

Looks pretty good until you read deeper and see that pinks have actually gone down somewhat in the past year and blues have taken over as the color to invest in. My thoughts, as they have always been, are that such super expensive diamonds are perhaps a great investment for someone who has the means to play and who does not mind if prices stagnate for ten to twenty years. For those with less of a bankroll to play with and who might need to liquidate quickly, I think they are a dangerous investment as if you need your money in a hurry, you are likely to take a bath.

Also, while the multi million dollar diamonds may be a good investment, the smaller ones will always have less growth and will still be harder to sell, as they will not bring the high prices often achieved at auctions.

I welcome other opinions from both the trade and the public. What are YOUR thoughts?

Wink

 

[Karl_K]

There is a big problem is with them and with large high quality Ruby.
A few players drive the prices up at auctions so they can charge more for the ones they already have.
Its a bit of a con game in that there are a few people gaming the system.

 

[HDer]

Aren't pinks running out? What about top light browns? Did they go up any?

Although seriously, I can understand pinks and blues because they're rare and are in demand (who wouldn't want a nice looking pink or blue?) But not sure I buy the investment thesis when it comes to yellows.

 

[bmfang]

Pinks, blues, violets/purples and reds are the only colours that are “investment grade” in my books. Yellows, not so much.

 

[PintoBean]

Never. Why? Let's say a good 20 years passes - enough time to truly get a meaningful return on investment. Well guess what, by then I'll be too demented to truly enjoy the ROI and that money I gain will be spent on a nanny for me.

 

[kenny]

But when we nobodies buy them we have to pay retail prices, but when selling we only get wholesale.
If wholesale is half retail, then prices have to double to break even.
Horrible "investment".

By diamonds because you love them.

 

[diagem]

There is a big problem is with them and with large high quality Ruby.
A few players drive the prices up at auctions so they can charge more for the ones they already have.
Its a bit of a con game in that there are a few people gaming the system.

Not so anymore Karl, amazingly if you look at the top buyers of the last few years you can clearly notice that the privates have left many (and shocked) dealers in their dust. Privates have been spending unheard prices on rare gems and jewels. Sought after signed pieces have moved a notch or two towards the importance of art level value. IMO they surely have the potential to move up this importance ladder in the near future..., especially with the last few years as US monetary regulations is placing force on free world markets and currency movements.

Rare gems don't need to be big and expensive, they must be truely distinguished as a beautiful rare gem in its own bracket. Small rare colored Diamonds made the most advance % wise in the last decade IMO.

 

[valeria101]

I have noticed the pink swing ! As if the world could not value more than one colour at a time ...

Then, the astonishing end of FVY seems to have acquired a reality of its own (congratulations for owning the one mentioned here, @Wink !). Not good news for me, as I hoped to have one.

Perhaps I am very old school: I understand that these archaic, colourful investments represent a form of insurance payable at any End of History & not much more. I feel awe for the sense of value they represent - older than anything ... In contrast, 'return' is not interesting. [Econ/Fin background]

 

[tyty333]

Aren't pinks running out? What about top light browns? Did they go up any?

Ha Ha!

Enjoy your beautiful new top light brown!

 

[ChristineRose]

Diamonds have very little inherent value. As the price of pinks rises, the number of people willing and able to buy pinks drops off. Eventually the market stabilizes. Then the starlet of the month comes out wearing a sapphire, and gradually the people who bought pink as an investment need to sell and need to take a lower price. This is pretty much normal. If something oddball happened like someone developing a new supercomputer than ran off pink diamonds, there might be a permanent price rise, but this is exceedingly unlikely. Even mines running out doesn't really count because sims and synthetics are the "same" unless you tell someone, and that's a social factor, and social factors are where most of the value in the diamonds come from.

Of course if you could guess the next big thing before it becomes big, you could make a fortune, and people have. But you'd better be an expert. Most people are better at guessing winners in stocks of companies in their own industry. If you're a janitor, buy stock in that awesome new floor polish.

 

[diagem]

Diamonds have very little inherent value. As the price of pinks rises, the number of people willing and able to buy pinks drops off. Eventually the market stabilizes. Then the starlet of the month comes out wearing a sapphire, and gradually the people who bought pink as an investment need to sell and need to take a lower price. This is pretty much normal. If something oddball happened like someone developing a new supercomputer than ran off pink diamonds, there might be a permanent price rise, but this is exceedingly unlikely. Even mines running out doesn't really count because sims and synthetics are the "same" unless you tell someone, and that's a social factor, and social factors are where most of the value in the diamonds come from.

Of course if you could guess the next big thing before it becomes big, you could make a fortune, and people have. But you'd better be an expert. Most people are better at guessing winners in stocks of companies in their own industry. If you're a janitor, buy stock in that awesome new floor polish.

Rarity is both subjective and objective so everyone is entitled to his/her opinion..., in my time spend in this industry I can attest that Pink & Blue natural colored Diamond were barely discussed or mentioned in the 1968 edition of the "Crown Jewels of Iran" book published by a group of Canadian geologists which for the first time were granted with the rights to study and scientifically describe the principal and major jewels and gemstones of the collection, that wasn't so long ago, and I believe ROI on such gems today are nowhere where they were a measly 50 yrs ago.

Another clear example are natural pearls, cultured - cultivated pearls did change history as far as the amount of people owning a pearl jewel but today the value is incomparable. Their value was incomparable before Mikimoto and today it still is.

I don't believe your vision rare natural gems has a precedent.

 

[Rockdiamond]

To me, any seller advertising diamonds ( of any color) as an investment is offering a misleading statement.
The difference in price between "asking" price and a hard cash offer can be dramatic.
Sellers are well aware of this, so presenting diamonds as a financial investment seems like false advertising.
Say a seller is offering a diamond in a retail environment ( store or website) for $10k. Say the dealer bought the stone for $8k.
If they can wait till they find a buyer for $10k, it might have been a sound investment. That might take years ( literally)
If they have to sell for cash, that generally involves selling to the trade.
They might be lucky to get $6k- likely even less.
If I have an investment and I need to sell, I want an investment that can be liquidated in a predictable manner. For example, even if one has to take a loss selling a stock, the manner of sale is guaranteed.

Without a doubt, wholesale prices on certain pinks and blues has risen dramatically over the past 10 years- but given the difficulty a consumer faces in selling, it's hard to see them as a financial investment.

After 2008 I softened my stance a bit.
If a person can lose 50% on a stock in a day, a diamond, which brings enjoyment seems a good investment in one's self.
Plus they do hold value better than pretty much any other consumer item.
But still not a great investment in a cash sense.

Also, while the multi million dollar diamonds may be a good investment, the smaller ones will always have less growth and will still be harder to sell, as they will not bring the high prices often achieved at auctions.

Actually there two sides to this Wink. If a consumer needs to sell a 10 smaller diamonds at $10k each, they might be in a stronger position than if they have a single $100k stone.....but maybe not

 

[denverappraiser]

No.

Mind you, it is possible to buy and sell diamonds at a profit. I know dozens of people who make a living doing just that, but if you watch how they do it, it’s very different from what ‘investors’ generally plan. They advertise. They rent or buy storefronts. They carry inventory. They spend millions on their websites. They have full time staffs and some have been in business for decades to build up a reputation. They work hard at it. This is not an easy to make a buck and, even at that, peddling diamonds have been a marginal business of late. They're way behind the NASDAQ.


Ah, but fancy colors are better. They’re the darlings of the boiler rooms. 10-20-30% in a year have happened! Look at the prices they’re getting!!


OK, look. A $1M fabulous pink stone at auction is going to cost you $1.2M at the big auction houses. Sell it and you’ll get $800k. That’s with zero change in ‘value’. It's what the seller got in your deal. It’s actually a little worse than that because of costs like insurance and shipping while you hold it. Even if it goes up 50% while under your care, you’ll STILL lose money.

 

[valeria101]

Enjoy your beautiful new top light brown !

Now, this is something that hasn't crossed my mind yet ...

 

[WinkHPD]

Interesting comments from many angles in this thread so far.

Sometimes luck plays a part in acquiring true treasures. I was at the GIA as a student in residence back in 1975. I went in to one of my diamond suppliers, I sold diamonds on the side for living expenses while my wife and I attended GIA, and he had an antique ring with a light fancy blue diamond in it. I bought it for less than $2,000, had a small chip in the diamond polished out, losing from 0.97 to 0.95 cts in finished weight if I recall correctly. Then I mounted the diamond in a solitaire mounting that Resa liked. I put a sapphire in the original ring and eventually sold it at auction for $100 more than i paid for the ring and the diamond.

Two or three weeks after I bought it, the seller called me up and offered me $5,000 for the ring and diamond. By the time he finally believed I did not want to sell it he had gotten to $10,000. It seems he was fairly new to the business and did not truly understand the value of color. His father-in-law had been looking for such a diamond and had a client who would pay $15,000 for the diamond and he was VERY hot that his son-in-law had given it away.

Frankly, at that time, I knew nothing about the value of color either. I just knew that Resa loved it, so I negotiated hard and bought it for her. She was in the room when he called and kept nodding her head no with each higher price. Some years later, after color was becoming popular, she again turned down offers on her diamond, the highest being over $30,000.

As far as investments go, it was a horrible one. She will never let me sell it while she lives, and if she is mean enough to die before me, I will never sell it either. I will give it to one of my children with instructions that it be given to one of the granddaughters when they are old enough to appreciate it. It would break my heart to see it ever leave the family after all the joy it has brought her over the years.

It may not have been a great investment in money, but the return in happiness and joy has been phenomenal.

Wink

 

[Rockdiamond]

I totally get it Wink!
Sandra wears a ring with three Asscher cuts- a Fancy Intense Yellow flanked by a Fancy Intense Pink and a Fancy intense purplish pink.
I bought the stones in 2002- for a song, relative to their current value- but some things are a lot more important to us and our wives than monetary appreciation....
That's the real investment in a colored diamond

 

[whitewave]

I would love a blue diamond, but I would never consider it an investment.

 

[mimosa]

Sorry if not allowed. I'm new to this community and tried to message Wink. Would you please let me know how? I'm into customize tennis bracelet and could not reply to any of those threads either. Please delete this if not allowed
Thank you!

 

[kenny]

Sorry if not allowed. I'm new to this community and tried to message Wink. Would you please let me know how? I'm into customize tennis bracelet and could not reply to any of those threads either. Please delete this if not allowed
Thank you!

There is no private messaging here on Pricescope.
Wink is a trade member, and a wonderful one, and can be reached at the link in his sigline:
https://www.hpdiamonds.com

Click the link.
Scroll to the bottom.
Click on Contact us.

 

[WinkHPD]

Thank you Kenny. With your help, Mimosa was able to contact us. It was very nice of you to do.

Wink