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But is it an investment diamond …?

Posted June 20, 2013

coloured-diamond

I received a phone call a couple of weeks ago from someone who claimed to be a partner in a company selling investment diamonds.  He wanted to put an advert on www.hattongarden.com and hoped I would promote these stones, which, he informed me, were coloured diamonds of considerable value, each placed in a nice little plastic package with a ‘certificate’ of authenticity.  It didn’t long to find out that these people had very little knowledge of diamonds and even less about investment!

A quick trawl through Google confirmed that there are many sites selling ‘investment’ diamonds, gold and  jewellery and at least as many claiming that ‘investing’ in precious things is a very bad idea indeed.  But none of the sites I looked at seemed to differentiate between investing to protect and enhance savings for the future, investing in something for pure pleasure, or investing in an important relationship with that symbolic gift of love.

Investment in commodities – especially the raw materials – is not for the faint hearted!  I would strongly recommend looking at the World Gold Council web site and read the Financial Times or Money Week , all whom run regular articles on how to buy and who to buy from.  Bullion and coin dealers abound but check the price of the metal (London and New York agree to fix a price for precious metals twice a day) before you go shopping.  Unless you are a professional and experienced in buying gold, make your purchase in the UK where your transaction will be governed by the Consumer Protection Act.

To come back to the original reason for writing this blog, there are many companies selling large quantities of diamonds for investment, and many offer genuine certificates from GIA, HRD or other reputable laboratories.   However, although the value of some stones has risen over the last five years or so, the increase has been driven primarily by the growth in the Asian economies – and the value can drop very sharply if those economies start to wobble.  Like any commodity, investing in diamonds is a risky business with absolutely no guarantee that you will be able to cash them in quickly and benefit from  a high return on your capitol.

And so to the subject of investment jewellery.  Typically, a piece of diamond jewellery will keep its value but not increase its value.     If you try to sell a ring that was purchased just a few years ago, you will probably not see a ‘return on investment’ unless there has been some rampant inflation during that period of time.  However, some pieces will retain and even increase in value if the stones were rare or exceptional.  Antique jewellery – particularly those pieces made by goldsmiths who have since become very well known – is very collectable and may make you a small profit in time.  The added benefit is that you can wear and enjoy your jewellery without having to worry about the state of the FTSE 100 or the economy in the US!

So is jewellery a good investment?  Most jewellery is purchased as a gift – a present for a birthday or to mark a special occasion.  Traditional gifts of jewellery – the engagement, wedding and eternity rings – will always have a special meaning for those who received it  and some of pieces may be very valuable indeed. Some ‘fashion’ or ‘contemporary’ jewellery is interesting to collectors who view it as wearable sculpture.  But all jewellery – whether it is precious or not – has a sentimental value far in excess of the sums of its parts, so wear  and enjoy it.  I hope you never have to sell it!

Image:  polished yellow diamonds with an 18 carat gold ring featuring an oval yellow diamond:  Diamonds for Today collection. For further information and a stockist list, email info @idjc.com.                        

Photograph by Paul Hartley, Hartley Studios: www.hartley studios.com