Is Diamond Jewelry a Good Investment?

Diamonds have long been valued for their rarity, beauty and durability, This makes diamonds a sought-after asset for collectors and investors. Unlike traditional investments such as stocks, bonds, real estate, or bullion, diamonds are physical assets that offer a unique combination of aesthetic appeal and wealth preservation.

A diamond investment does not create passive income, unlike real estate rent or stock dividends. Diamonds can serve as a hedge against inflation and provide value, especially if they are rare, high-quality, and certified. It’s important to note that investing in diamonds is not for those desiring a short-term investment option.

Investing in diamonds differs from other asset classes due to the subjectivity of their valuation, the importance of their certification, and the complexities involved with diamond jewelry resale. The value of diamonds depends on multiple factors including the 4Cs (carat, cut, color, and clarity), as well as rarity, certification, and current market demand.

If you are looking for investment opportunities and want to include diamond jewelry as part of your investment portfolio, selecting the right diamonds is essential. High-quality GIA certified gemstones, especially those with excellent cut, high clarity, and rare colors all tend to hold and appreciate in value over time.

Key Factors to Consider Before Buying Diamonds as an Investment

Investing in diamonds requires careful evaluation of several key factors to ensure long-term value, retention, and profitability. Looking for investment opportunities with diamond jewelry means you need to understand market conditions. 

When buying diamonds as part of your investment decision, buy only high-quality diamonds. Synthetic diamonds/ lab-grown diamonds are not a good diamond investment. While lab-grown diamonds are cheaper, they have little resale value.

Market Dynamics

The global diamond supply is limited. Fluctuation and volatility occur based on mining production, economic conditions, interest rates, consumer preferences, and regional markets. The diamond market is more complex, and a deeper knowledge is needed to make informed investment decisions. Diamonds do not have the same liquidity as stocks or gold and will take more time to sell.

The price of gold has a universally recognized price per gram, but diamonds do not. The price of diamonds vary based on the 4Cs (carat, cut, color, clarity). Diamond prices also depend on factors like rarity, quality and demand. 

Invest Only in Certified Diamonds

Diamond certification from reputable gemological laboratories like the Gemological Institute of America (GIA) is essential to verify authenticity and protect against overpaying for misrepresented stones. GIA maintains a strict grading standard, ensuring the diamond’s true value is reflected. GIA certification is known and respected by the diamond industry.

Shown is a GIA Certified Oval Cut Diamond Engagement Ring in 14K Rose Gold, GIA Certified Emerald Cut Drop Pendant Necklace, and GIA Certified Round Brilliant Cut Diamond Stud Earrings.

Understanding the 4Cs (Carat, Cut, Color, Clarity) of Diamonds

The 4Cs (carat weight, cut, color, and clarity) play a critical role in determining a diamond's worth because high-quality gemstones appreciate over time and make the best investment. 

• Larger carat diamonds that are 1+ carat weight in size appreciate more. Shown is a GIA Certified 5.02ct Emerald Cut Diamond Ring and a GIA Certified 4.03ct Round Brilliant Cut Diamond Ring.

• Buy an “Excellent” or “Ideal” diamond cut which maximizes brilliance and resale potential.

Photo credit by GIA showing an excellent, good, and poor cut.

• Look for natural diamonds that are D-F in color for white diamonds. Colored diamonds, which are more rare, should have vivid or intense hues will have higher investment potential. Featured is a GIA Certified Pear Cut Diamond Ring with color E and VVS2 clarity and a Wide Pave DIamond Engagement RIng with E color and clarity VVS2.

• For best resale, buy diamonds whose clarity grade are VS1 or better. Avoid buying diamonds with inclusions (blemishes) that are visible to the naked eye. Flawless or near-flawless diamonds command the highest prices. This GIA Certified 6.19ct Round Brilliant Cut Diamond Engagement Ring has a clarity grade of VS1.

Prioritize Investment-Grade Diamonds

Not all diamonds are investment worthy. Unlike purchasing diamonds for personal use, it is important to buy investment-grade diamonds that meet strict quality standards to maximize their resale potential and receive a good return on investment. An investment-grade diamond is a rare, high-quality, GIA-certified stone with excellent cut, top color and clarity, and strong market demand. Having the best diamond makes for better diamond investment.

Loose diamonds are easier to appraise and resell than diamonds in settings. Buyers in the diamond market prefer unmounted gemstones because they can assess the diamond’s quality without obstruction of the setting. Diamond jewelry in settings are subject to mark-ups due to brand name, labor, and precious metal settings. Buyers may not like the style, metal, or craftsmanship of the setting which makes it harder to sell.

Diamonds in settings might be a good investment if they are rare, a high-end designer brand, or historical heirloom pieces. If the setting is a one-of-a-kind work of art, it may have added value for collectors.

The most valuable colored diamonds are those that are the rarest and most visually striking. Fancy-colored diamonds like red, blue, and pink diamonds will appreciate faster due to their scarcity and market demand.

Photo by CNN

The diamond cut that has the highest percentage of sales in the diamond market is the round brilliant cut. The round brilliant cut holds the best resale value due to its popularity and brilliance, Featured is a GIA Certified F.I. Yellow Round Brilliant Cut Diamond Solitaire in Platinum and a GIA Certified Round Brilliant Cut Diamond Solitaire Ring in 18K White Gold.

Buying From A Reputable Source

Wholesale diamond dealers will have lower prices than retail. Auction houses generally cater to the rare diamond market, but these gemstones are not for the average consumer. A reputable jewelry store that deals with buying and selling diamonds may also be a good source for you.

Conclusion: The Importance of Smart Diamond Investing

Investing in diamonds can be a profitable and rewarding endeavor but it requires careful research, strategic selection, and long-term planning. Unlike other asset classes, diamonds are high-value tangible assets that can retain or appreciate in value when chosen wisely.

To maximize investment returns, investors should focus on high-quality, GIA-certified diamonds with strong market demand, especially natural diamonds that have an excellent cut, high clarity, and rare colors.

Purchase from reputable sources and stay informed about industry trends. While precious stones may not be the quickest or most liquid investment, strategic selection and long-term investment can make them a valuable addition to a diversified investment portfolio. With the right approach, patience, and industry knowledge, investing in diamonds can be a smart long-term investment.

We welcome you to visit our jewelry store when thinking about investing in diamond jewelry. We have a sterling reputation and can help you with buying or selling your diamond jewelry. Our professional jewelers can guide you in finding high-quality diamonds and diamond jewelry that you can treasure, whether for your personal use or as a diamond investment.