Why the resale value of diamonds is so low

[sweetpea&babycorn]

my fiance sent me this article in the atlantic that describes the development of the De Beers cartel, which controls almost the entire diamond industry, and why the resale value of diamonds is so low. i found it pretty interesting and thought it might spark some discussion on these boards.

The Atlantic: Have You Ever Tried to Sell a Diamond?

 

[stonecutter2]

I have definitely found that selling a diamond privately will be a frustrating experience, with a loss (if you can even sell it). It becomes a matter of how much you''ll lose, and not so much how much you''ll gain.

 

[oldminer]

There are few items a consumer can buy which will bring a greater or equal value later. Possibly the best exception are gold bullion coins. You can''t do anything with them, but they are bought so close to gold value that when gold moves up 5% you can begin to get your money back. When gold goes up 25% you will get quite a profit over your cost. You can''t do this with diamonds or any other luxury item that I know of. Expecting diamonds to go up in value enough to get you back what you paid, or more, is highly unlikely but often used to convince people that they are a "good investment"

Diamonds are very durable and highly transportable, but they are not an efficient method of sending money from one country to the next or equal to a credit card or wired funds. In the mid 1900''s people used gems as their currency of last resort to escape across borders, but times are very different today.

 

[LGK]

What''s even more interesting is that article is from 1982, and so far the Australian diamonds haven''t done what they predicted in the article to the marketplace.

 

[bgray]

Anytime you have artificial price setting or manipulation of anything the prices are driven far higher than they should be. Anytime you overpay for something -the less likely you can get your money back when the artifical price control is no longer in play or "enforced"