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Diamonds Losing Value


tqttong
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Is this a riddle? I disagree with your premise. Buying ANYTHING a retail and seling at below wholesale is a bad financial 'investment' pretty much no matter what it is unless you get spectacularly lucky.

 

There are people who make money buying and selling diamonds and who can do it reliably and repeatedly. They're called dealers. Some do well with super-ideal expensive things and some do well with what we here would call crap. It *IS*possible but the difference isn't in the product, it's in the dealer, rather like dealers of clothing, food, electronics and nearly everything else you buy. Why do you think 2% of diamonds are somehow an exception to this? What are the criteria? Work. Advertising. Luck. More work.

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Innate value is a curiously complicated concept that seems very simple. Gem diamonds have no particular use beyond some seriously exotic scientific applications and symbolic purposes. People buy them for fashion reasons and fashion is a VERY fickle thing to bet on. For example, marquise cuts were extremely popular 20 years ago. Now they’re dead as can be. They’re just as beautiful as they ever were and they haven’t changed a bit but the ‘value’ has changed dramatically. 20 years ago, fancy yellows were duds. Most interest came from collectors. Now they’re hot. Again, the merchandise didn’t change. They were lovely then and they're just as lovely now. What will be popular 20 years from now? Who knows? It'll be something but whatever it’s going to be, there’s nothing innate about it.

 

Rarity does not drive prices in isolation. It requires demand. Without it, all you have is a rock, albeit a rare one.

Edited by denverappraiser
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Buying diamonds is not a good investment since 98% of all the diamonds will lose their value eventually.

 

However, some diamonds will never lose their value. What are those 2% of diamonds that do not lose their value? What are the criteria?

 

Thanks in advance?

 

 

Nothing is certain and I'm not sure where you came up with 2% I believe if there were a magic number it would be more like .00002%

 

If you are truly looking for an investment diamond that probably won't lose much value (strong wording, I know) I believe you would have to look at absolutely unique diamonds. These diamonds are going to be large, high/rare colour, high clarity with even higher prices.

 

I believe these to be some fine examples.

 

http://en.wikipedia.org/wiki/Wittelsbach-Graff_Diamond

 

http://www.bloomberg.com/news/2010-11-16/pink-diamond-sells-for-record-45-6-million-in-geneva.html

 

http://famousdiamonds.tripod.com/cullinandiamonds.html

 

http://en.wikipedia.org/wiki/Centenary_Diamond

 

Seriously, even a moderately rare stone, say 5ct RB D IF EX/EX/EX couldn't be bought on monday and sold on wednesday for the same price, you will lose money.

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However it's not for sale (nor as far as I know are any of the above), so the thing gets to be slightly academic/theoretical.

 

The reason why these will keep their value is that they are not only truly rare, but they appeal to the very very rich - who will always exist. A 0.25 ct red diamond is also very rare, but I suspect because of size it is not appealing to the very very rich; only to the moderately rich collector, who may or may not exist tomorrow.

 

If you are thinking of buying diamonds as stores of value, I think you are better off buying commodities (including precious metals) or investing in stock markets in growing economies or in sectors that are going to be on demand (energy, health care, some services).

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