Why diamonds are nothing like gold
MarketWatch reports since the late 1970s, one man, Martin Rapaport, and his firm, The Rapaport Group, has largely been responsible for setting the prices of the polished diamonds that thousands of manufacturers, dealers, wholesalers and eventually retailers around the world rely on to conduct their transactions.
Now, there are moves afoot to break that dominance, partly as a result of an unwritten desire to democratize what has been a far from transparent enterprise, but also as the case is increasingly made — most forcefully, it’s worth noting, by Rapaport himself — to treat diamonds just like any other successfully traded commodity, such as oil or gold.
MarketWatch quotes Rapaport: “Diamonds are like a ping-pong ball on the financial ocean. There is a certain amount of luxury demand for them, as you have for gold, but the challenge, and why they are so confusing and very much not like gold, mostly reflects the lack of standardization in terms of quality.”
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3 Comments
Leed333
Duh ! A similar “looking” diamond can be thousands of times more or less expensive than the one next to it – while Triple 9’s in gold will alwasy be Triple 9’s in gold; making gold a STANDARD, but not necessarily a good investment.
Ttt543
Other than the “famous” ones, can diamonds be considered an investment?
FoodProcessorVillain
@Ttt543 I just happen to visit a financial advisor this week and he showed me this pyramid about the various financial instruments one could invest in as your financial maturity (or net worth) increases. At the top of the pyramid was artworks and just below that were gems.
So I assume that without having to be a “famous” diamond (whose value is already fully accounted for at the time of purchase) you would have to pick a diamond with really above average features. Like the cut, colour, clarity and all that jazz. For example at the moment, it seems coloured diamonds are all the rage in auction houses when they’re pretty clear (and by colour I really mean to exclude Australia’s brown diamonds!).
There is this blog entry about turning diamonds into an alternative asset class: http://justdigging.wordpress.com/2009/12/02/diamonds-an-alternative-asset-class/
And this one about how colour diamonds are faring in auctions:
http://www.mining.com/2011/10/06/vase-steals-the-show-as-19-million-golconda-pink-proves-too-rich-even-for-chinese-blood/?utm_source=digest-en-mining-111006&utm_medium=email&utm_campaign=digest
I am really into that orange diamond. I need a better paid job!