Is Diamond Investment a Shrewd Choice?

When one thinks of investments, the glittering allure of diamonds often comes to mind. For centuries, these precious gemstones have been celebrated for their beauty and durability, earning them the title of “a girl’s best friend.” However, the question remains: Are diamonds truly a good investment? In this blog post, we will delve into the world of diamonds as investments, exploring their history, the De Beers story, the rise of artificial diamonds, and whether you should consider investing in them.

The De Beers Story and the Rarity of Diamonds

‘Diamonds are forever’ You must have heard this phrase a lot of times. Diamonds are considered as a luxury symbol even bigger than gold. But did you know diamonds aren’t really rare. They are formulated with one of the most common elements on earth ‘carbon’ so they in no way are rare. But the question remains? Why are diamonds so expensive? 

The story of diamonds as a symbol of rarity and luxury is, to a large extent, a result of the marketing genius of the De Beers company. In the late 19th century, De Beers embarked on an ambitious marketing campaign to create demand for diamonds. They famously coined the slogan “A Diamond Is Forever,” emphasizing the eternal nature of diamonds and their suitability as symbols of love and commitment.

De Beers also controlled the diamond supply chain, ensuring that diamonds remained relatively scarce. By stockpiling diamonds and regulating their release into the market, De Beers maintained high prices and the perception of scarcity, making diamonds a sought-after luxury item. But it wasn’t really the case. 

Diamonds Vs. Gold Investment

Certainly, let’s analyze how gold investments are often considered better than diamond investment in three crucial aspects: buyback, resale, and reuse.

1. Buyback:

Gold: Gold investments tend to offer more straightforward and widely accepted buyback options. Gold is a globally recognized and easily tradable asset. You can sell your gold to various entities, including jewelry stores, pawnshops, refineries, banks, or through online platforms. The liquidity and demand for gold make it relatively easy to find a buyer, and buyback rates are generally competitive.

Diamond: In contrast, selling back diamonds can be more challenging. The buyback market for diamonds is not as standardized as it is for gold. Finding a buyer willing to pay a fair price for your diamond can be more time-consuming and less predictable. The buyback rates for diamonds can vary significantly based on factors like market demand, the specific characteristics of the diamond, and the reputation of the buyer.

2. Resale:

Gold: Gold is often referred to as “the currency of last resort” and has a well-established global market. Its price is readily accessible, and it is traded on various exchanges worldwide. You can easily track the current market price of gold, making it transparent and straightforward to sell. Gold’s value is generally stable and less susceptible to large price fluctuations compared to diamonds.

Diamond: The resale of diamonds can be considerably more complex due to the numerous factors influencing their value. Each diamond is unique, and its price depends on the 4Cs (cut, color, clarity, and carat weight). Assessing a diamond’s value requires expertise, and even with a certificate, it can be challenging to determine its current market worth. The lack of a standardized diamond exchange can also make the resale process less transparent.

3. Reuse:

Gold: Gold is a highly versatile metal that can be easily melted and recast into new jewelry or other forms as fashion trends change. Its malleability and durability make it ideal for reshaping and repurposing. This flexibility allows gold jewelry to adapt to changing styles and remain valuable over time.

Diamond: Diamonds, on the other hand, do not have the same adaptability. Once a diamond is set in a particular piece of jewelry, it is challenging to repurpose it without significant alterations. While some diamonds can be remounted, the options are limited compared to gold. The inflexibility of diamonds in terms of reuse may impact their long-term value.

Should you invest or not 

To investigate whether you should invest in gold and diamond investment let’s analyse gold and diamond investment-  

  • Price of gold in 2003: Rs. 5,600
  • Price of gold in 2023: Rs. 61,155.00
  • Price of average round shaped diamond in 2003: Around Rs. 2 Lakh 
  • Price of average round shaped diamond in 2023 : Around Rs  lakh 

In terms of investment gold is better as it is gave 10x returns in 10 years in comparison with diamonds that gave 3x returns. Also as discussed above the buyback flexibility and resale flexibility is better in diamonds as compared to gold. 

So in our opinion diamond can be bought as a luxury and something to remember an event by but not in terms of investment. 

Should you invest in Artificial Diamonds?

In recent years, the diamond industry has seen a significant disruption with the advent of artificial diamonds, also known as lab-grown or synthetic diamonds. These diamonds are created in laboratories rather than being mined from the Earth’s crust. But what sets them apart from their natural counterparts?

Artificial diamonds are created in a laboratory using high-pressure and high-temperature techniques. They are identical to natural diamonds in terms of their chemical and physical properties, but they are much less expensive to produce. Artificial diamonds are not yet considered to be a good investment, as their resale value is not as high as that of natural diamonds. However, the demand for artificial diamonds is growing, and their value may increase in the future.

Ultimately, the decision of whether to invest in artificial or natural diamonds is a personal one. If you are looking for a rare and precious gemstone that is likely to hold its value over time, then a natural diamond may be a good investment for you. However, if you are looking for a more affordable option that is still visually appealing, then an artificial diamond may be a better choice. 

In our opinion a mass produced product Will Never Hold its Value. The value of lab-produced diamonds depreciates over time, negatively impacting its resale value. There’s only a finite number of natural diamonds available, so they will retain their value over time, which is not the case with synthetic gems. 

Here is a table summarizing the key differences between artificial and natural diamonds:

FeatureArtificial DiamondsNatural Diamonds
CostLess expensiveMore expensive
Resale valueLowerHigher
Investment potentialNot yet provenProven
Visual appealSimilarSimilar

Way Forward 

If you’ve followed the advice above, you can decide for yourself if you want to wear and enjoy your investment or lock it up until you sell it. Of course, this one is a personal choice, as there is a cost to having it set in jewellery which you probably won’t recover.

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*The listed financial assets are subject to market risks. Please read all asset related information carefully or optionally contact us before investing.