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How Long To Gain Back Some Appreciation On Diamonds?


michelle0967
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I recently purchased some loose diamonds and have them on this forum for sale. I realize that I will loose money if I sell now. Was wondering how long I would have to hold onto them in order to get out of them what I paid. Like how many years?

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Now, that's a really tough question.

 

I believe that if you bought diamonds at retail (so called "investment") prices at the top of the late 1970's price surge you'd still be out of the money now, particularly if you take inflation into account, not to mention transaction costs. Diamond prices have increased fairly steadily over the last 3-4 years, but the last 6 months have seen a fall in retail values, particularly if you look at largish stones (>3 ct). Unfortunately, I think you bought (or exchanged - if I recall your other thread correctly) near the top of the market, and it will be a long time before your money comes back, if it ever does. Sorry.

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So my best bet would be to hold onto them for as long as I can to see if they will ever appreciate. If I sell now the market has dictated to me from recent exposure that I'd only get back 40% of the retail price I paid. Would that be your recommendation to hold onto them for as long as possible to avoid such a great loss now?

Edited by michelle0967
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I think you have three issues:

 

1. Current worldwide recession/crisis means low demand for luxury goods - with a bit (a lot?) of luck, this will last a couple of years, then demand will pick up again

 

2. Large transaction costs for small loose diamonds (your 60% "value" loss) - this is likely to remain there; even if diamonds were to appreciate 10% per year compound (very unlikely, by the way) it would be 5 years before you recoup what you paid

 

3. Illiquid market (particularly for a private individual) means even if the price picks up you may not be able to sell, especially since you have more than one item

 

I don't think you'll recover substantially more than now for at least two-three years, but I'm not an investment advisor, so please take this as an opinion rather than advice. Personally, I'd keep advertising and/or place the diamonds on consignment without upfront payment and sell as soon as you get a decent offer (over 60% of your "retail price" would be my benchmark)

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