Do diamonds hold value? Top Expert Reasons you should know

do-diamonds-hold-value

A frequently asked question in the diamond market is, “Do diamonds hold value?” The answer to this question is dependent on multiple factors. Some think it’s the type of diamond and others may say it has to do with the age of the stone. The truth is just like any other market the main factor is demand and supply.

People believe diamonds are a worthy investment, and their value increases over time. The diamond market hasn’t proven this belief to be true over time, at least for the last ten years. Diamonds typically have a low resale value. Jewellery stores will only purchase at a lower cost to profit and end shoppers typically have more trust in retailers.  

So, selling your diamond engagement ring to a reseller expecting a higher payment from the “sentimental” cost you originally paid is unlikely. And selling your diamond to an individual shopper is difficult because of the trust. Unless you’re in it for business, diamonds are not a good investment, but there are some exceptions we will cover. 

Table of Contents

Why is Diamond Resale Value So Low? 

The primary reason why a diamond resale value is so low is because jewellers often buy diamonds in bulk at the lowest price possible. The intrinsic worth of a diamond and its resale price will be lesser than what was purchased. Sometime 3 to 5 times less than the price tag you see in the store. 

diamonds in bulk

A jeweler will not buy those loose diamonds you find under your jewellery box at retail price. He can get them at wholesale price from a diamond dealer at a discount rate of around 50%-80%. The same diamonds, same clarity, size and carat for more than half the price. If you thought the diamond industry works of small margins, think again.  

The Resale Value of Diamond Vs. Gold 

diamond-vs-gold

The resale value of gold is not static. Market value and consumer demand determine the gold price. It gives consumers a choice to resell their gold at a specific time when they can make a profit on high gold prices. On the other hand, diamonds have less market value no matter the time you sell. No jewellery store will buy a diamond at market price.  

However, there are some diamonds that are considered more of a collectable. The pink diamond for example is very rare as many of the mines that used to mine it closed. Which increased its scarcity significantly. Other diamonds with a history are also an exception, such as England’s royalty jewellery collection. 

Are Diamonds a Good Investments?

Diamonds are not a worthy investment as they rarely hold their value, even as collectibles. If you trade diamonds, you must know your market well, hence this investment is not recommended in contrast to stocks or property which are generally safer. 

Do diamonds hold value

A price of a diamond becomes at least half its purchase price after it has been purchased in a jewellery shop. So, if you are investing in diamonds, make sure you don’t buy it at the store. Diamond traders investing in diamonds usually have connections in the industry, such as suppliers and known traders. If you do want to invest in this commodity make sure you do your research and never buy at retail price. 

Diamond Value Specification (cut, clarity, colour, and carat)

The famous 4 C’s are the main factors that affect a value of a diamond: cut, clarity, colour, and carat. Certification can also affect the price, but essentially you wouldn’t purchase a diamond without one. 

Cut

Diamond cut is the most critical factor to consider while buying a diamond. Diamond cut influences how well its facets interact with light. A diamond with a good cut will display better brightness, scintillation, and fire than one with a bad cut. 

Some factors that generally affect a diamond cut quality include; proportion, which involves the angle and measurements of a polished diamond. Symmetry involves the facet placement and precision of a finished diamond’s shape. Polish also affects the overall condition of the diamond facets’ surfaces. 

It is also important to note that a diamond cut is not the same as its shape. The shape of a diamond refers to its outline, i.e., cushion and heart. In contrast, its cut refers to its proportion and finishing. A diamond with a good cut makes it look bigger and helps improve its face. A well-cut diamond makes it appear the right size for its weight. 

Colour 

Diamond colour is another essential factor to consider while buying a diamond. Diamonds come in many colours; it is rare to find a diamond without colour. However, a system has been devised to identify the various colours of a diamond with letters. It ranges from D (colourless) to Z (yellow or light brown). A diamond that exhibits secondary colours, such as yellow or brown, is considered tainted and less valuable.  

Carat 

A diamond’s carat weight is another critical factor considered while buying a diamond. At the same time, some people believe that the bigger the carat weight of a diamond, the bigger the size. It is not so. The weight does not always determine the size and varies on a case-by-case basis. 

The worth of diamond jewellery technically lies in its carat size, and some societies use it to determine a person’s wealth or status. The higher the carat the wealthier the individual, but this was an old practice. 

It is worth noting that diamonds experience a significant price jump at 1 carat. This is a popular diamond weight bench mark amongst people seeking wedding or engagement ring. 

Clarity 

Next is the clarity factor, the most misunderstood among the other factors. A common misconception is that its clarity grade is required for better sparkle and to avoid eye-visible inclusions. Diamond clarity is the qualitative assessment of the flaws present in a diamond, which may include blemishes (external flaws) and inclusions (internal flaws).  

Technically, the fewer flaws found in a diamond, the higher its value and clarity grade. A flawless diamond (no internal and external blemishes) is abbreviated as FL, while one with the lowest clarity grade is abbreviated as I3.  

Diamond Value Specification

Diamond Certification  

A diamond certification refers to a diamond overview or grading report usually issued by accredited gemological laboratories. This certificate contains grades and information for each diamond’s characteristics based on its cut quality, carat weight, colour, and clarity.  

Do diamonds hold value

This certificate has a significant influence on a diamond’s value and price. So, while buying a piece of diamond, its certificate should be requested for review. There are different types of certificates, some are more valuable and trusted then others. The most popular one is GIA Certification (Gemological Institute of America). They are incredibly consistent and provide the greatest peace of mind to diamond buyers. 

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The Complete Guide finally revealed Sell Engagement ring

The Complete Guide finally revealed

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