Diamonds are not a jewel of an investment

A rare 52.82-carat white diamond ring is displayed at Sotheby's auction house in London, England. 

It’s a story that sounds straight out of Hollywood: professional thieves disguised as police officers, big guns, an airplane about to take off, and $50 million in diamonds -- stolen. But the thieves are unlikely to walk away with all that money. By some estimates, they’ll get about 20 percent of the value when they resell the stones.

That number got us thinking about our own diamonds sparkling on our fingers. Just how much are they actually worth if we wanted to sell them?

Probably not as much as you might think.

 Jeweler Sam Chamsi has been selling diamonds in Los Angeles' jewelry district for nearly 25 years. In all that time, he says, he’s only had a couple of gents (and their diamond engagement rings) get rejected by their chosen ladies. And when they do, he tries to return as much of their money as he can. The first time it happened, he said, he gave it all back. The suitor was just too sad.

But love, and diamond ring resales, can go wrong in other ways.

Take Josh Opperman. He had a broken engagement. He tried to sell his ring back, and, he says, “the place I brought it from would only give me store credit.” (Rarely valuable for a man out of love.) So he took it around to a few other places, and, says Josh, “the highest I was offered was 35 percent of what I paid for it.”

So Josh turned his heartbreak into a business. He started a website called I Do…Now I Don’t. It’s a place to resell second-hand engagement rings and jewelry. He says he was able to sell his $10,000 ring for about $7,000.

Jewelry appraiser Neil Beaty says when it comes to the resale value of diamond rings, people need to keep their expectations in check.

“Diamonds as an investment almost always fail,” Neil says. The cost -- and appraisal value -- of a piece of jewelry isn’t just the value of the diamond plus the value of the gold or platinum. You’re also paying for the cost of making the piece, and selling it to you, the rent, the middlemen, the intimidatingly clean jewelry cases. Just like a new car or a couch, the resale value often falls once you get your hands on it. “People don’t think of diamonds as a consumer purchase,” Neil says. “They are.”

Now depending on the diamond, there are some exceptions to this. Diamond values fluctuate based on supply and demand (And no, the diamond heist was too small in the scheme of things to change those prices).

But, Neil says there is still value in these purchases. When your wife looks at her ring and is reminded that she is loved, that matters.

The investment is just in the relationship, not the stone.

About the author

Adriene Hill is a senior multimedia reporter for the Marketplace sustainability desk, with a focus on consumer issues and the individual relationship to sustainability and the environment.
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I disagree that diamonds are a poor method of investment, they are not only high in return but also diversity. Various colouration of diamonds allows for a varied risk and return. You can read more here - http://www.preciousportfolios.com

The Waldman Diamond Company, an international diamond manufacturer, has created an investor package that simplifies the process of investing in diamonds. For the first time, private investors can now purchase and resell investment grade, GIA-certified, laser inscribed, polished diamonds at wholesale prices through an online Investment Diamond Exchange.

Ernst & Young conducted a benchmark study on Waldman’s Investment Diamonds in December 2012 and found that WDC's investment-grade diamond prices are 6% below average international wholesale prices and 25-46% lower than online retail prices.

For more details visit www.wdcgroup.com

Diamonds being a high value tangible global asset that can be adorned, easily transported and traded globally will become more important in the emerging BRIC countries, than for Americans who traditionally purchase for adornment & size over investment, quality and wealth preservation. Today with technology, diamond wholesalers, retailers, and "Prosumers" / Investors can easily stay informed using pricing tools like the DiamondMaster App to monitor their diamonds global "Wholesale List" values in 11 foreign currencies, in Exchange to Gold's Annual Moving Average, and in IMF's SDR (Special Drawing Rights) basket of currencies unit (Appstore.com/DiamondMaster). Diamonds' "global values" are essentially un-pegged from the US Dollar when using the DiamondMaster App. Where you buy a diamond, if you obtain professional expertise or guidance are very important factors, and some diamond companies today are offering Back Agreements on their investment grade diamond a guarantee of 80% within the next two years, and market value thereafter.

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