Do diamonds "depreciate"?

[IrishEyes]

Hello! This may be a silly question, but do diamonds depreciate in value? I heard somewhere that while cars and other valuable items depreciate over time, diamonds (because of their hardness and durability) do not. I would think this is the case, but wasn''t sure. Thanks for your responses!

 

[sjz]

Date: 3/24/2005 11

8:44 AM
Author:IrishEyes
Hello! This may be a silly question, but do diamonds depreciate in value? I heard somewhere that while cars and other valuable items depreciate over time, diamonds (because of their hardness and durability) do not. I would think this is the case, but wasn''t sure. Thanks for your responses!

I don''t think it''s a silly question...I''ve wondered the same thing myself. One thought that I''ve pondered about is when people say they are buying diamonds as an "investment", how much of an investment are we talking about? Are there people or places that will buy your diamonds from you, and actually pay you more that you paid for them in the first place, or pay you the appraised value?

I think the value of anything is pretty much dictated by the market. I don''t actually think that diamonds depreciate in value, but it depends on what you are talking about when you say "value". The monetary value for anything in actuality is only what someone will pay you for it. For instance...how likely is it that you would easily find a buyer for a 3 carat or higher diamond? I would think that most people in the market are going to be looking to buy smaller, more affordable diamonds. So If I were to think of buying diamonds as an investment, I would probably go for smaller high quality diamonds that I could buy for more reasonable prices and sell more easily.

 

[Matata]

IrishEyes,

There''s an old discussion here: https://www.pricescope.com/community/threads/investment.4346/ It''s about buying diamonds for investment but I think the same principles apply.

 

[Matata]

P.S. I just typed "resell" into the search window and a large number of threads are out there. Naturally, there''s also a large number of different opinions.

 

[IrishEyes]

Thanks for the responses, as well as the links!

 

[Dancing Fire]

Date: 3/24/2005 11

8:44 AM
Author:IrishEyes
Hello! This may be a silly question, but do diamonds depreciate in value? I heard somewhere that while cars and other valuable items depreciate over time, diamonds (because of their hardness and durability) do not. I would think this is the case, but wasn''t sure. Thanks for your responses!

not in the last 18 months

 

[valeria101]

They don't wear away... and prices have not gone down for a while.

It would be interesting to make a cold "value projection" for a diamond, you know, assuming you don't like it and there's no use of holding on to the thing (not quite right, but just assuming they are not nicer to hold on to than a treasury bond

).

Then... with resale value about 50%-75% of current purchase price at any time and market prices creeping up about 5% per year ('guess this has to be tweacked depending on what dimamond that is), 'guess you dn't get anything like "depreciation" but an upward courve starting with a downward blip.

A trade-in or trade-up policy from the seller make all this allot sweeter in the short run though, since these rise market value for anyone who would want them replaced with yet another diamond. And... diamonds surely have some raison d'etre of their own, beside resale value.

Did you have another way to consider depreciation ?

 

[Antwerpman]

It would seem to me that when you buy a piece of diamond jewelry part of the purchase price is the profit of the seller and any sales tax. Now if you buy a piece of diamond jewelry and immediately try to sell it back to the retailer, he is going to discount it by at least the value of these two items, so your diamond will have `depreciated`. But then over time its intrinsic value should only fluctuate according to the fluctuations of the market value of diamonds (which can go down). Qlso you may never realise full market value yourself. The reason for this is that a private buyer will want a discount over a comparable stone in a store (because you cannot provide the back-up and services the retailer does) and anyone who buys it with the intention of reselling will want to have some benefit ($) for doing so.

You should also consider the depreciation of any settings that you may purchase the diamond in. Usually a large proportion of their cost is labour and the resultant scrap value can be very low. Often you will only be offered a percentage of the gold value

Personally I would not recommend diamonds as an investment vehicle to the public as they have no mechanism for realising the value of their asset, would you for example buy shares if you did not know any brokers or could not access them?