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diamonds as an investment
Old 07-18-2011, 11:57 AM   #1
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diamonds as an investment

I have an uncle who has asked if I would be interested in a couple of diamonds. One is 2.5 carats and the other is 4 carats. My only interest would be as an investment. I'm sure that I would be getting these for a very fair price. These are in a couple of old mens rings.

Do diamonds keep up with inflation? Would it be worth my while to buy them and put them back for hopeful gains in the future. Is there a market for these?
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Old 07-18-2011, 01:50 PM   #2
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The mark-up on jewelry is somewhere up to the 500% range, depending on where you go. I wouldn't pay any more than what a pawn shop would pay for them. I also wouldn't spend any more than play money. FWIW, I just sold my silver bullion. I have a feeling that prices are a bubble that will pop when peace breaks out. I made a good profit, but would have done much better if I had bought equities instead. I'm NOT an expert, but bought an amount to learn about gold-bugs.
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Old 07-18-2011, 01:51 PM   #3
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Number one: if you are buying at anything near retail it is not even close.

Number two: if the diamonds are not very, very, very high quality (think D-Flawless) they are not good investments. The size you mention are not bad (want to be at least above 2 carats).

Number three: trying to realize on your "investment" will not be easy. There isn't a ready made market to sell diamonds (unless you have access to the diamond exchanges).

Now, if you have a wife/girlfriend that likes diamonds, and you buy them well, then you at least get "use" of them while they "sit" around... that's another story.
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Old 07-18-2011, 01:59 PM   #4
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Historically, diamonds have been used as a store of value (small enough to sew into your clothes and flee your country kind-of-deal). I don't like them personally. Prices vary enormously based on quality, and I don't like the way quality is assessed for diamonds (too many subjective criteria). I am sure any buyer will find "flaws" to justify a lower price.
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Old 07-18-2011, 03:02 PM   #5
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The market for Diamonds is manipulated by the DeBeers organization. The supply is kept artificially low to match any demand out there. If someone opens a new diamond mine or distribution network then the goons from DeBeers pay them a visit to keep their scam going.

So, personally I would steer away from such an investment.
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Old 07-18-2011, 03:26 PM   #6
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So, 1982 article from the Atlantic that is a great read about why this is a bad idea (the more things change, the more they stay the same...):

Have You Ever Tried to Sell a Diamond? - Magazine - The Atlantic
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Old 07-18-2011, 04:02 PM   #7
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Never had any luck in getting anywhere near what I paid for a diamond(suppposed wholesale or retail) . Take the advice of others here. If it isn't almost flawless (no lower than VVS1) with D or E color and perfect cut...no one is going to want it or buy it back for what you paid....even if your uncle gives you a deal on it. (unless of course it is an unheard of deal!)...
Buy a diamond because you love it, or need it for an occasion like an engagement.
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Old 07-18-2011, 04:55 PM   #8
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The market for Diamonds is manipulated by the DeBeers organization. The supply is kept artificially low to match any demand out there. If someone opens a new diamond mine or distribution network then the goons from DeBeers pay them a visit to keep their scam going.

So, personally I would steer away from such an investment.
How about investing in DeBeers?
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Old 07-18-2011, 05:39 PM   #9
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Except for very rare and extremely good quality stones, which are a highly specialised area, diamonds are lousy investments - massive spreads, limited transparency, manipulated market etc. Avoid.
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Old 07-18-2011, 11:12 PM   #10
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If you do bring in the gems to a dealer be very cautious with letting them out of your sight. Switching higher quality gems for lower quality ones is a favorite scam at many places.

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Old 07-19-2011, 08:36 AM   #11
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My husband made a valuable investment in diamonds when he offered me an engagement ring - he got lots more return over time than what the ring cost.

It is without a doubt the only good jewelry investment we've ever made!

Amethyst

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Originally Posted by sheehs1 View Post
Never had any luck in getting anywhere near what I paid for a diamond(suppposed wholesale or retail) . Take the advice of others here. If it isn't almost flawless (no lower than VVS1) with D or E color and perfect cut...no one is going to want it or buy it back for what you paid....even if your uncle gives you a deal on it. (unless of course it is an unheard of deal!)...
Buy a diamond because you love it, or need it for an occasion like an engagement.
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Old 07-19-2011, 11:27 AM   #12
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Originally Posted by Retch The Grate View Post
So, 1982 article from the Atlantic that is a great read about why this is a bad idea (the more things change, the more they stay the same...):

Have You Ever Tried to Sell a Diamond? - Magazine - The Atlantic
There was also a book from that period titled "The Rise and Fall of Diamonds".

That was enough to keep me from ever buying any, except as a present for my wife.
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Old 07-19-2011, 05:01 PM   #13
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I've heard many times that diamonds, artwork and other such things should only be purchased if you love them and plan to use and enjoy them. There should be no plan to make a profit.
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Old 07-19-2011, 05:24 PM   #14
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Thanks for the info. I'll have to wait and see them. I would be paying pawn shop prices, so hopefully I would have some room to work with. And this would not be a big investment for me.

I'm still interested, but after reading the 9 pages of the 30 year old article it does make me think. But I also have some shipping stocks that are down quite a bit so its not like I havn't lost on investments before.
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Old 07-19-2011, 10:16 PM   #15
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Hey, don't let these people tell you that diamonds aren't a good investment. I'd rank them right up there with ammo and MREs.

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