By Preston Wallace, CGA, K-Jon’s Jewelery
Customers walk in my door every day and say “Wow! $8,000 for that? Diamonds are expensive!” But they’re not.
I know what you’re thinking: I’m crazy, right? No, I meant what I said, and no, I’m not crazy. If you consider what diamonds are, how we get them, and what their value does over time, I think you’ll agree that diamonds are NOT expensive. Here are 4 reasons why:
1. Diamonds are Rare
On average, one million diamonds must be mined to find one 1ct diamond. Think about that! Diamonds are extremely rare, especially in larger sizes. They’re hard to find, requiring years and years of expensive exploration and research to find large deposits. In fact, only a very select few locations in the world have gem-quality diamonds (the ones worth mining). Once the diamonds are found, they’re difficult to mine, often requiring explosives and immense earth moving equipment to extract them. Photo from www.firemarkprincess.com
2. Diamonds are Eternal
Diamond is the hardest material known. Thus, they last for years, many times centuries. Have you ever seen an Art Deco or Mid-century diamond ring? That ring has lasted for decades, if not a century, and the diamonds are almost untouched. Many of the family rings that are still in existence contain diamonds, and it’s because of their lasting qualities that keep them around. Just think of the Hope Diamond, arguably the most famous of them all. It’s been around since the 1600s, and it still sparkles in all its beauty in the Smithsonian Institution today.
3. Diamonds are Difficult to Cut
Diamonds have to be hand-faceted. This is done using a pottery-wheel-looking device that is literally encrusted with diamond dust so that the diamond can be polished. There are 57 or 58 facets on a Round Brilliant Cut diamond, and each of those facets has to be in exactly the perfect position and angle to maximize the diamond’s light performance. There is even one crystal direction in which a diamond will not cut. That means when the diamond cutter makes his first facet, he has to know that none of the remaining 56 or 57 facets will line up with that “uncuttable” direction. Diamond cutting is a painstaking process that takes hours to perform and years to perfect. Diamond cutters are just that—diamond cutters by trade, and nothing else. It’s much like a heart surgeon, taking education and years of training to become an expert.
4. Diamonds Have Great ROI
Diamonds are considered a luxury. However, what luxury good can you buy these days, enjoy to its full potential, and then 20 years from now, sell it for more than what you bought it for? I’m pretty sure your Porsche won’t do that. But diamonds? Because of their hardness and lasting nature mentioned above, they’ll still be the same 20 years from now. I never recommend someone to buy a diamond SOLELY as an investment, but if you like diamonds for their beauty and to wear them, the fact that they hold value is a huge added plus. A diamond is a commodity—a beautiful and breathtaking commodity, but a commodity just the same. In an inflationary economy, a diamond will most likely go up in value over the long run. If the value of the dollar (or your currency) goes to zero, you will still have something of significant intrinsic value. What’s more, like gold, it’s internationally recognized as an item of value, so it will hold its value no matter where you are worldwide. So, enjoy your luxury for years on end and pass it down to the next generation, knowing it still holds its value. Now tell me somewhere else that gets you a better Return On Investment than that.
While diamonds are certainly luxury goods, they are not expensive—at least for what you get. Diamonds are Rare, Eternal, Difficult to cut, and have great ROI. The next time you see a 1-carat round diamond for $8K, think of what had to happen for that diamond to arrive, breathtaking, in front of your eyes. Think of the years you will spend admiring its beauty and cherishing the person who gave it to you. And think of the loved one that will enjoy it for years to come, after you pass it on to them. Diamonds may cost a bit of money, but they are far undervalued and in the long run, they’re definitely worth it.