On paper, diamonds make great investment sense. They have high intrinsic value, they’re always in demand, and they last forever - plus, they’re small, portable and easy to store (unlike that priceless Ming vase you just had to have at auction). And, like most gems and precious metals, past performance shows that they will increase in value over time.
However, unlike gold - which is valued by weight only - diamonds don't have a universal price per gram. When no two stones are exactly the same, every diamond has to be valued on its individual merits. This makes investing in diamonds slightly trickier.
Despite this, many people are investing in diamonds - more so, now that traditional investment opportunities are failing to deliver the goods. Low-interest rates and falling markets make investing in diamonds look appealing to add to a diverse portfolio. But how do you go about buying a diamond for investment, and how can you be sure of making a good return?
- Make sure you are not paying too much – buying in retail adds the jeweller’s mark up (anything up to 150% or more) and VAT which makes the price a lot higher than the return value, at auction however the VAT is incorporated into the auctioneer’s fee which at O’Reilly’s is set at a modest 22%.
- Make sure the carat weight, colour and clarity are correct for the price, diamonds have a market value based on the carat weight, colour and clarity, at O’Reilly’s we assess the diamond and use a universal price report to value our diamonds for sale so you can be sure that they are priced correctly for their spec.
- Be aware of the returns; they do not appreciate quickly. Diamonds are a commodity and like any commodity, their value can go down as well as up. On the whole, based on past performance, they go up - just very slowly. It’s virtually impossible to make a profit in the short term so it’s not just realistic to buy a diamond and expect to sell it for a profit after five years. This means when you invest in natural diamonds, your money is going to be locked up for a while. The good thing is that you can enjoy the beauty of the diamond while knowing you can always get your money back, unlike shares, stocks and property which can depreciate quickly in recession.
- Know which diamonds to invest in; some diamonds are easier to sell than others, the cut, shape and quality are important and whether the diamond is natural or synthetic or has any treatment is crucial. All our diamonds are assessed by our in-house gemmologist using the latest equipment and we only sell natural untreated stones. A certificate or report from a reputable lab can help but is not essential once you have good advice from experienced professionals.
We are happy to advise anyone wanting to purchase a stone for investment or purely for enjoyment.
Sold in December: Lot 462: AN EXCEPTIONAL UNMOUNTED DIAMOND, the brilliant cut diamond in sealed HRD packet, Certified 5.01 ct. E colour & SI2 clarity Sold for €120,000