Should You Buy a Diamond For the "Investment?

Many people over the years purchased diamonds as an investment. Some made the purchase with the idea of a future goal – a child’s wedding, or the like. Others bought it simply thinking diamonds would be a good investment, considering the intrinsic value pretty much always goes up over time. They figured if they bought some diamonds and put them away for a few good years, they could eventually sell them for a nice return on investment.

The truth is that “buy diamonds as an investment” was always a big scam and you should never buy a diamond thinking of it as a good investment. It is a horrible investment. There are other reasons to buy diamonds – love, romance, beauty – but “investment” is not one of them.

A friend once approached me, knowing I worked in the diamond industry. He was looking for a contact – about 25 years prior he had purchased a diamond thinking it was a good investment. His daughter had just been born and he figured if he bought a diamond and put it away, he could sell it eventually to pay for her wedding, or at least a nice portion of it.

So 25 years later his daughter is engaged to be married. He contacts me and asks if I can help him with finding someone who will buy his diamond from him. I ask around and most of the diamond guys I spoke with had no interest in meeting with him, as they had no interest in buying his diamond. One agreed to meet with him, though I felt it was more of as a favor to me that out of any real interest in buying this diamond.

I put my friend in contact with the diamond guy and they meet. Being that this was his only option after many attempts, he basically felt like he had to take what was offered. He had to sell the diamond, as he needed money to pay for the wedding. They meet, he shows the stone, and the die guy ended up buying the diamond. My friend sold the diamond at far less than he had ever expected – he sold it at a loss from what he had paid for it 25 years earlier.

Can you imagine that? He bought a diamond as an investment, being told by diamond sellers at the time that diamonds are a great investment, he holds the stone for 25 years and then sells it at a loss. Amazing!

Diamonds are not a good investment. The markup a stone goes through before you buy it on the retail market is so great that there is no way you can make that back reselling it back to the diamond market at wholesale prices, which is what they will pay. The only way you can make your money is if you find an unsuspecting buyer willing to pay retail value, which is never going to happen. The only place for you to sell your diamond is to a diamond dealer, and they only pay wholesale prices marked down.