Is diamond jewelry a good investment?
Although many people say diamond jewelry is not an investment, we strongly disagree…and we are here to explain why. We are also here to give you a beginner’s lesson on investing in diamond jewelry, such as what you need to learn and what to look for when making an intelligent diamond jewelry investment.
There has been a lot of growth and opportunity in the fine diamond jewelry investment space over the past decade, so diversifying your investment portfolio with diamond jewelry should not be overlooked.
Let’s first look at diamonds through an “intrinsic” lens…
But, do diamonds actually have an intrinsic value?
Diamonds don’t have an intrinsic value as gold does. There is no market price for them. What it really comes down to is “what kinds of diamonds have perennial popularity”…How to find certainty in the market? What do people desire and what will they desire in the future?
However, before we get into that, let’s quickly talk about the 4Cs, as without an understanding of that, we can’t really begin to understand a diamonds true nature in the jewelry market.
Study the 4Cs of Diamonds
Now, we aren’t here to teach you about the 4Cs, we just want to make it clear that as an investor in diamond jewelry, you must fully understand the 4Cs, which are clarity, cut, carat and color. The 4Cs control everything there is to know about any particular diamond. Moreover, the grading system is what helps determines the diamond’s value…
So, as an investor, you need to study this in-depth…and make note, the 4Cs are the very “basics” of diamond jewelry investments.
Assuming you are competent in the 4C’s let’s move on…
One of the most important rules of making a diamond jewelry investment is…make sure the diamonds are certified.
Although there are two well-known and reputable gemological laboratories that certify diamonds, in our opinion, the Gemological Institute of America (GIA) is the only one you want.
A diamonds cert will tell you everything there is to know about the diamond in question. It has all the info on the 4Cs.
To put things plainly, never EVER invest in expensive diamond jewelry if it doesn’t have a GIA cert. Even if you are getting a killer deal and you were to know the 4Cs like the back of your hand, it doesn’t matter. So, just steer clear of uncertified diamond jewelry. Any future buyer will want it, as should you.
Note: Even if you are not investing or planning to resell, make sure to only buy diamond jewelry that has a diamond certification. The only exception to this rule is if you are buying something like a fashion piece and its price is negligible.
Best Diamonds to Invest In – Aspects of Diamond Jewelry to Look For
Now that we got that out of the way, let’s talk about resale value, which really comes down to what the market favors and desires.
Best Diamond Shapes
The shape and cut of the diamond will greatly affect how easy it is to sell.
The shape refers to the outline and structure of the diamond (the actual shape), while the cut relates to the facets, symmetry, depth, and brilliance. Both are important here…
No matter how high-grade a diamond is based on the 4Cs, you want to invest in a diamond shape that has timeless appeal.
Even though most all of the diamond shapes and cuts have been around for a very long time (albeit the cuts have improved thanks to technological advancements), there are only two types of diamonds that have remained popular each and every year for centuries. That is the round and cushion cut diamond. They have proven to be the easiest to sell and the market consistently desires them.
Note: This doesn’t mean other diamond shapes aren’t a smart investment. As there are other factors to consider when looking at diamond jewelry, but generally speaking, round diamonds are going to be the easiest to resell, and we don’t see that changing.
Carat Weight – Bigger is Better for Investment
If you have multiple stones that total to 2 carats, they wouldn’t be worth nearly as much as one stone that is 2 carats. This is because larger stones are rarer than smaller stones. So, when investing in diamond jewelry, bigger is better.
A 1-carat (or larger) diamond will always remain a stable investment.
So, choose diamond jewelry with larger, high-quality stones over cluster diamond jewelry, even if it is impressive in design.
Unless that design is vintage or somehow noteworthy (i.e. one of a kind piece from a famous designer or a vintage piece from a classic brand)…
Vintage & Special Diamond Jewelry
This is one area of “diamond jewelry investments” that is truly an investment. Meaning, there’s potential for a serious ROI.
Exceptional diamond jewelry with remarkable provenance has always been coveted at auctions and by dealers because of their rarity, beauty, and “special” factor. Other investors and buyers greatly appreciate diamond jewelry with a certain pedigree.
In recent years, we’ve noticed a significant increase in the prices certain vintage diamond jewelry pieces achieve.
Modern vs Vintage Jewelry
Most modern pieces sell for their intrinsic value (break up value of the stones and precious metal), the labor and manufacturing costs are seldom factored in, unless the jewelry was made by an iconic designer.
However, jewelry from certain vintage eras can achieve very high selling prices, such as Art Deco Jewelry. Currently, there is a very strong interest in jewelry from the 1960s and 1970s.
All in all, when you dig into jewelry from the past, you find a lot of great investment opportunities.
It’s not just eras either, recognizing the brands that hold value over time is equally important. For example, Cartier and Van Cleef & Arpels hold their value incredibly well, with many pieces from the past exponentially rising in value.
As with memorabilia, signed pieces can be a great investment too.
When speaking of signed pieces, we are referring to the jewelry makers. Not some random celebrity. Although a piece of jewelry owned by a famous celebrity could be seen as an investment
Jewelry makers started signing their designs back in the Art Nouveau era (1860 and on). For example, René Lalique, always signed his work. These pieces fetch considerable amounts at auctions.
The point is, diamond Jewelry from certain brands, classic jewelry eras, and famous designers of the past can be great investments, you just need to learn how to read the market. You need to know what makes a piece of jewelry special to other buyers. If you really want to invest in diamond jewelry, you need to look past intrinsic value as you diversify your diamond jewelry portfolio.
That said, the “hold period” can be long. You may have to hold a piece of jewelry for years or even decades…albeit, this applies to most investments.
Most importantly, you need to invest your time into learning about the market and gain experience that will make you a smart diamond jewelry investor. If you know what to buy, and how to get your hands on it, you can not only buy diamond jewelry that holds its value, but you can buy diamond jewelry that rises in value significantly!
The above is an area of diamond jewelry that most people don’t think of when they claim diamond jewelry is not an investment.
Second Hand vs New Diamond Jewelry
If you want diamond jewelry to be a good investment, you need to buy second-hand. Plain and simple.
New diamond jewelry loses around 50% of its value as soon as you leave the store (just like taking a car off the lot). Conversely, second-hand jewelry retains most of its value as the initial buyer who sold it first already took the hit. It’s the same for buying used luxury watches.
So, the trade-off is, you aren’t the first owner, but you get to keep most of its value with the hope that in time it will continue to increase. The good thing is when jewelry is bought with “investment” in mind, the whole ‘not being the first owner’ thing is extraneous. It doesn’t matter.
Moreover, precious metals and gemstones don’t have a lifespan like other items. After all, diamonds are the hardest known substance in nature! It’s not like having a second-hand car.
So, our next big rule is BUY SECOND HAND.
At this point, you can look to the vintage and signature pieces we mentioned above in the same category, but you can also look to modern pieces and their intrinsic value when shopping second-hand. When looking at pre-owned pieces, intrinsic value in terms of investment actually makes sense. As with new jewelry, the initial loss is going to be much harder to make up for, even with years and years of its intrinsic value rising. Your best investment hope with a new piece of diamond jewelry is to buy a popular brand and hope in 50+ years it becomes super coveted, like 1920 Van Cleef pieces are now. Your great-grandkids can thank you later…
When it comes to diamond jewelry, the diamonds are, of course, going to be in a precious metal setting.
Although platinum is popular for engagement rings and other jewelry now, gold will always be king. Many things in this world have come and gone, but gold has remained for millenniums. Moreover, gold is unambiguous, unlike stones, in that we have a clear market price, daily! No two stones are alike so it’s impossible to have a market price.
In terms of what color gold, yellow gold is the most classic and considered to have the highest purity. Keep that in mind.
Fancy colored diamonds
Now, this is where we feel the ‘diamond’ in “investing in diamond jewelry” gets really interesting.
Natural fancy colored diamonds offer a lot of advantages to investors.
First, many fancy colored diamond mines are shutting down, such as the Argyle mine in Australia where pink diamonds come from. This is sure to drive up the price per carat for pink diamonds in the coming years.
Second, fancy colored diamonds are rarer than white diamonds, unless we are talking about incredibly flawless white diamonds. This means certain diamond colors will only become more scarce.
“Only one in 10,000 diamonds has a fancy color” according to GIA.
Third, fancy colored diamonds are increasingly growing in popularity – they are more sought after than ever. We expect this trend to continue. Right now, yellow and pink diamonds are the most coveted in the jewelry market.
All in all, fancy colored diamond jewelry provides a very interesting opportunity for investors as more and more wealthy people want fancy colored diamond jewelry. The growth that we’ve seen over the last decade has been very pronounced.
Not all diamonds in the world are rare or unique, only the highest quality diamonds are. However, there are some gemstones that are truly rare. This is why a lot of people invest in stones like Rubies and Sapphires. They can be purchased for a significantly lower amount than a diamond and have a respectable resale value as a loose stone or set-gem jewelry.
Kashmir Sapphires have seen over a 1,000% increase over the last decade. Colombian emeralds have seen a 1,900% increase in that time as well. In the last decade, there have been some gemstones setting new world records for per carat prices.
The reason for this is not only about scarcity, but it’s also about demand. Rubies, sapphires and emeralds have never been as appreciated as they are now. Sapphires in particular. People crave fine colored blue, green and red stones.
So, it’s not all about diamond jewelry, consider mixing it up and diversifying your jewelry portfolio with gemstones. Moreover, a lot of jewelry these days utilizes both precious gemstones and diamonds in one piece as it offers stunning contrast – the best of both worlds.
Diamond Jewelry Investment Advantages
In the past few years, there has been an exponential growth of people using diamond jewelry as an investment tool.
Some of the factors for this are as follows:
- Size: You have a lot of value that takes up such a small space.
- Storability: As with the above, this makes it easier to store sizeable amounts of “money”.
- Perceptible: Unlike many things we invest in like stocks, diamonds and diamond jewelry can be seen and touched and felt. There aren’t many investments in the world you can say that with. This is surprisingly (yet unsurprisingly) great for the psyche.
- Usability: Maybe one of the most special things about this kind of investment when comparing it to other investments is you can actually enjoy it. Diamonds will never get worn out, so you can wear your investment proudly!
Summary: Retaining value vs Investment
Generally speaking, when you look at white diamond jewelry investments intrinsically, you are really just looking at retaining value. It may rise in value, but it’s likely not going to as significant of an ROI as other types of investments.
So, if you want to talk real profits, which is what investing is really all about, you need to be savvy, and buy second-hand beautiful jewelry with extraordinary provenance. To do this, you need to work with the right people…
Find an expert to help you invest in diamond jewelry
Investment patterns change, so you need an expert to help you stay informed.
For people serious about making smart diamond jewelry purchases, you need to deal with someone you can trust. Someone who knows the market. Someone who has breathtaking, distinct, fine diamond jewelry…
At Diamond By Raymond Lee, this is who we are to our clients. We are the experts and we guide them through smart diamond jewelry investments. We give VIP clients access to our private collection of diamond jewelry, which includes fancy colored diamonds and gemstone jewelry too.
If you are interested in speaking with us, feel free to contact us. Note: We have a qualifying process.