Boyd, Roosen, Quartermain: It takes grit, invention, luck to make the big time
Mining industry legends discuss the backstories on their multibillion-dollar successes.
The blog Priceonomics takes diamonds out to the woodshed for being no-good, darned-awful investments.
The mark up at the store is 100% to 200%, scarcity is artificially created by cartels, and unlike gold or silver, diamonds can’t be easily traded:
A diamond is a depreciating asset masquerading as an investment.
As with televisions and mattresses, the diamond classification scheme is extremely complicated. Diamonds are not fungible and can’t be easily exchanged with each other. Diamond professionals use the 4 C’s when classifying and pricing diamonds: carats, color, cut, and clarity. Due to the complexity of these 4 dimensions, it’s hard to make apples to apples comparisons between diamonds.
But even when looking at the value of one stone, professionals seem like they’re just making up diamond prices.
So let’s be very clear, a diamond is not an investment. You might want one because it looks pretty or its status symbol to have a “massive rock”, but not because it will store value or appreciate in value.
Creative commons image by Walt Stoneburner
3 Comments
chris duffield
Investing in diamonds is one of the safest places you can put your money right now… I was a hedge fund trader for 5 years, and I truly believe in the asset class. When the ETF launches we should see a similar pattern to the price of gold from 2004 – 2011, which more than quadrupled. Diamonds have less than 1% speculative capital where as gold has over 40%.
Since 2004 diamonds started trading on supply and demand once DeBeers sold their stockpiles. To combat this author’s point there are several diamond exchange platforms that offer liquidity. At http://investmentdiamondexchange.com they have the bid and ask of over $50 million in investment grade diamonds.
diamond rings
Its very true that the diamond is a depreciating asset, and its value keeps on decreasing with the increased time span.
Claudia Steiner
There is a really interesting graphic about colour diamonds as an investment in the page: http://www.asteriadiamonds.com/en/diamonds-education/investing-in-color-diamonds.html
I think colour diamonds are a good investment in the near future.