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 Replies: 50 / Views: 4,952 |
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Pillar of the Community
United States
931 Posts |
Diamonds are similar to gold in that people every year give their lives in the effort to recover them from the Earth's crust. I know that the same thing goes for coal, but I am specifically thinking about rare substances that humans consider valuable and precious.
If you bought a one carat diamond in 1962 that was "D" color ( almost colorless ) and with no flaws visible with a 10x loupe, it would have cost you about $2700. The same diamond today would cost $29,000.
I know that DeBeer's have a worldwide monopoly on the diamond market, so there are no guarantees that they won't ever dump their stockpile of flawless diamonds.
My reason for posting this wierd topic is that back in 1980 I came into a minor windfall. My Father was killed in a motorcycle accident in 1978, and as a poor working man had never bought my Mother a diamond.
I bought her a one carat " D " color flawless diamond solitaire necklace, and paid around $6000. My Mother passed away a few weeks back, and I am again the owner of this diamond. I took it to a very good jeweler in my area, and was told that wholesale on this stone is now at least $16,000.
I think that gold has done much better over this same time period, but I was surprised how much diamond values have increased, similar to precious metals. I wouldn't buy a diamond from a jeweler at retail for an investment diamond, but do you think that diamonds also could be a hedge against the unavoidable devalution of the FRN if purchased at wholesale?
Edited by junior e
10/31/2011 09:07 am
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Pillar of the Community
United States
4897 Posts |
First, my condolences on the loss of your mom. IMO (by no means a precious stone expert) from what I've seen the market for diamond is even more open to manipulation than the market for gold. I think it would be very difficult to sell diamonds at a profit unless you are part of the syndicate that controls the market. In my experience jewelers will not even consider buying stones unless they are large and flawless. Most retailers want to give store credit for diamonds. When they do want to buy them they seem to want them at less than one third of retail value.
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Pillar of the Community
 United States
931 Posts |
Yeah, I know. The jeweler was very interested in my diamond because it is 1.15 carats and flawless. He did not make an offer because I let him know that it was not for sale. He told me at one point as he was admiring it in the loupe, " You're sure you don't want to sell this?".When I bought this for my Mom I bought the best stone that I could find within 30 miles of where I lived. It is nearly as good as it gets. Thank you for thinking of my Mom.
Edited by junior e
10/31/2011 12:21 pm
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Pillar of the Community
United States
4132 Posts |
Sorry to hear about your mom.
Unfortunately, the diamond hasn't increased in value - it's just kept up with inflation (almost exactly). That makes sense - DeBeers has complete control over the supply and price of diamonds, so it's in there interest to make sure they remain at exactly the same level of affordability over time. Compare that price change to, e.g. the performance of the S&P 500 over that time. The diamond has increased in value by 0% in inflation adjusted dollars, while the S&P 500 has gone up 340%.
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Pillar of the Community
United States
1450 Posts |
As a hedge against inflation it may be alright but diamond values are so manipulated that there are no guarantees. Every time there is a new major diamond find in the world that is not controlled by Debeers prices dip until Debeers buys them out or removes "excess supply" from the market. So, in answer to your question,if I had a quality diamond like you have,and if it is certified as to color ,clarity and cut,I would hold onto it until I needed the money(or pass it down as a family heirloom)but I would NOT buy a diamond as an investment because you will not get your money back out of it unless you have connections to the syndicate.
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Pillar of the Community
United States
5832 Posts |
Junior,
My condolence to your mother passing.
All your answers is already said, but I will add that its you can easily sell PM, it would be hard to evaluate the worth of a diamond over time.
Since is a sentimental piece, just pass it on to your family even knowing its value.
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Pillar of the Community
United States
1391 Posts |
I am sorry to hear about your mother.
The diamond market is heavily manipulated. Lots of diamonds are kept out of the market. Most diamonds go towards industrial production.
I do not have personal experience in this area, but I know of some one who does so I'll give you the run down of what happened.
This person bought around $10,000 of diamonds back in the early 1980's as an investment. They were perfect and flawless diamonds and of a very high grade. Most of the collection investment was in one large stone. Years later he decided to donoate the diamond to a local Christian ministry to help them with expenses. The ministry had it appraised and it turned out there was a small flaw it it that was easy to miss. So that expensive diamond was worth a whole lots less than it should have been. I don't know if the original appraisal was insured or not so I don't know how it played out, other than the fact that he lost money on the investment.
That being said the man was not familiar with gem stones. This mistake could be as obvioius as someone buying plate or mill. gold and silver to people who know better.
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Pillar of the Community
United States
931 Posts |
It definitely will never be sold while I'm alive. I have some nieces, and I'll probably draw straws when it gets to the point where I don't think that I'll be around much longer. Good input everyone, and once again, thank you very much for your condolences. This is a great forum. I will take the diamond out once in a while, roll it in the sunlight and enjoy the fireshow, and think about Mom. I could never have had a more loving and supportive woman even if they had a lottery for great Moms. She really loved it when I gave it to her. She wore it every day until Alzheimer's began to take its toll. It will definitely become an heirloom in my family.
Edited by junior e
10/31/2011 12:19 pm
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Pillar of the Community
United States
4008 Posts |
Sorry to hear about your loss, Junior. My wife and I have been through this 3 times and it never gets any easier.  As to diamonds... my wife and I were recently in a local shop that buys and sells PMs, jewelry, currency, and coins. She had a ring that she wanted appraised for possible sale. The appraisal came in lower than she wanted so she decided to keep the ring for now. The appraiser said that lower quality diamonds were selling for cheap these days and the higher quality stones were selling for less than they had been a few years ago because of the bad economy. We don't follow this market at all but this shop has a great rep and has been in business locally for 15 years. We will try some other places to see what they will offer. The $2300 that was offered was about 1/3 of what she was hoping to get for it. It is a beautiful gold ring with a 1+ carat blue-white stone of excellent quality. |
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Pillar of the Community
United States
3670 Posts |
Yes, I as well hate to hear your father's life was cut short, an your mother most recently passing as well. I do hope they are both in a better place now. Diamonds are indeed forever as is our souls I like to believe anyway. Unfortunately, our organic bodies are most temporary....
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Bedrock of the Community
Australia
21788 Posts |
I bought an unset diamond directly from a dealer who has one of the seats on De Beer's Diamond Buyers' Market. No taxes, other than the one on the sale itself, no manufacturing jeweler's profits and tax, no retail sale profits and tax.
There only 200 seats on this Market, and all are nominees of De Beers. It is within this Market that the World wholesale price of diamonds is rigidly controlled. It is not a market in the normal sense. The dealer has to buy packets of stones at a price nominated by De Beers, sight unseen, but gauranteed by them, or they are not for sale.
In this way, De Beers has artificially controlled the price of diamonds sold by them for many decades, and indirectly, the price of diamonds in the open market is also controlled.
Actually, I am a gemcutter. My favourite stones are Australian yellow sapphires, and I have cut quite a few of them. They come from Anakie, in Central Queensland.
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Pillar of the Community
United States
931 Posts |
Thank you GoldHawk for the comforting thoughts. I always appreciate your interesting posts. sel- it must be a fun and pressure-filled job cutting gemstones. I am very aware of DeBeers' control of the world market. I thought that it was interesting to hear of the dispersal method that they use. When I worked for Josten's, a lot of the stone setters and mold makers did contract work on the side. I could always depend on them to tell me if a purchase was wise or not. Sometimes they would offer to acquire stones for me, and when I bought this diamond they both concurred that it was a wise purchase to buy a diamond of that high quality.
I often saw them working on rings with large diamonds with such evident flaws that they looked like they had a crack running right across the table if you turned it in the light just right.
I wouldn't purchase a diamond now for investment, but it will be interesting to hold the one that I have and see what the price for a comparable stone does over the years. As long as DeBeers is willing to keep up with the rate of inflation, I am fine with that since my big purchase was made thirty years ago. I appreciate all who responded to this topic and approached it with an open mind. The reason I posted in the first place was that I have heard some talk about it recently on the financial channels and wanted the input of my knowledgable colleagues on this informative forum. Thanks everyone.
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Valued Member
Canada
442 Posts |
Sorry to hear about your mom.
As for the diamonds, I was told by a friend who's in the business that they usually don't purchase anything unless it is a round cut, Flawless D over 1 carat. Aparrently those are the gems and retain their value. All the other cuts are not as rare, so I've been told. I'm guessing the round cut is either harder to cut or rarer to find with no flaws.
Looks like you had a good eye back then!
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Pillar of the Community
United States
4897 Posts |
@vinny...I think it is more a function of demand not rarity. More people want round cuts than want princess, oval, or cushion cuts etc...
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Pillar of the Community
United States
3670 Posts |
Hey thanks Junior, I as well your posts....
Sel, I was gonna mention gem stones as well, as I think they are most beautiful of all the rare stones IMO. Very cool that you deal in an cut them....
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Pillar of the Community
United States
931 Posts |
D color, or nearly colorless is the main ingrediant of a diamond's desirability. Most diamonds are yellow to some degree, so the D is the rare part. However, I'm sure that DeBeers has a big ol' pile of D color stones that they could release any time they want.
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Replies: 50 / Views: 4,952 |
Posted 10/31/2011 09:25 am
