De Beers Wants To Convince The Public That Diamonds Are A Good Investment
Diamond company De Beers is looking for more than just weddings and other lifechanging events to sell their stones in this economy. The Financial Times says that De Beers has created a global campaign to pitch investors on diamonds as a good, safe investment similar to gold. They have been in touch with brokers who are "linked to sovereign wealth funds and wealthy individuals" to further the cause of diamond investing. It seems a desperate search for people to buy in a stones in a time when jewelry stores around the world are reporting plummeting sales and De Beers has been struggling to turn a profit. Are diamonds really a good investment? Yes and no. Rare stones, like that big blue diamond that sold for $9.5 million recently will always find their purchasers. Big stones, stones of unusual color or clarity, stones with a unique historical provenance, these stones will likely grow in value over time. These stones are not the norm however.
The diamond market is far different than the world of gold. As the Financial Times piece points out, the diamond market is not an open market. Stones are sold through auctions and private tenders. The closest thing to a public market price is Martin Rapaport's price list, a list which has shown prices fall over the past year. In a response to these falling prices De Beers itself has make a series of cost-cutting moves including scaling back exploration projects and enacting production slowdowns at mines in Canada and Botswana.
Anyone who has ever tried to sell back a diamond ring has probably been startled by the low price offered by retailers. There is a vast cavern between retail and wholesale diamond prices. One man even turned his quest to sell back his ex-fiancee's diamond ring into a jewelry resale website with the cheeky name of "I Do Now I Don't." Loose stones are a bit of a different matter but it still depends a lot on the size and rarity of the stone. The lack of an intrinsic public market price makes a diamond more akin to art or antiques in terms of value. The price is determined by what the market will bear.
Diamond prices have been stabilizing recently and the diamond trade has begun to feel a little bit of cautious optimis but the diamond industry is one that has been taking hits on all sides. The rise in personal electronics has eclipsed up some of the gift-driven jewelry business. Rises in production costs have nibbled away at profits. Lab-created diamonds exist as a specter on the horizon (an issue the gold market does not have to face). This is not the first time I've heard of a diamond investment fund but I still think that unless you are someone like Laurence Graff it's hard to make a fortune investing in stones. I believe diamonds are a bit like art, one should buy for the love of the piece not the promise of profit.
Anyone who has ever tried to sell back a diamond ring has probably been startled by the low price offered by retailers. There is a vast cavern between retail and wholesale diamond prices. One man even turned his quest to sell back his ex-fiancee's diamond ring into a jewelry resale website with the cheeky name of "I Do Now I Don't." Loose stones are a bit of a different matter but it still depends a lot on the size and rarity of the stone. The lack of an intrinsic public market price makes a diamond more akin to art or antiques in terms of value. The price is determined by what the market will bear.
Diamond prices have been stabilizing recently and the diamond trade has begun to feel a little bit of cautious optimis but the diamond industry is one that has been taking hits on all sides. The rise in personal electronics has eclipsed up some of the gift-driven jewelry business. Rises in production costs have nibbled away at profits. Lab-created diamonds exist as a specter on the horizon (an issue the gold market does not have to face). This is not the first time I've heard of a diamond investment fund but I still think that unless you are someone like Laurence Graff it's hard to make a fortune investing in stones. I believe diamonds are a bit like art, one should buy for the love of the piece not the promise of profit.
Reader Comments (Page 1 of 1)
John C. Randolph May 19th 2009 1:09AM
Diamonds are semi-precious stones, and they can be synthesized in a vacuum chamber today. The only thing propping up their prices is DeBeers' propaganda.
-jcr
Rick Dobbs May 20th 2009 3:15PM
Diamonds are a fine example of how a monopoly can get away from you. These thing are all over the planet and there's so much of it. DeBeers keeps the prices high by creating an artificial shortage. I'm surprised that any investor would fall for the "Diamands as investment" scam.
SqidgeeyEeaww Jun 23rd 2009 8:08PM
I'm amongst the older generation of Jewelry Store owners, having to go out of business after 33 years of being priveleged in helping our customers, "Find that special gift!" I love the creativness of the Jewelry Designers, I have spent so many happy years, making friends with my customers, being so lucky to make such close friends with them, that I entertained them in my home , having them share many happy Family Holidays and Special Occasions. I truly believe, Diamonds, more so than Gold, are a much better investment. So, even though I con not be of serivce to the public anymore, go for it Ladies ! go - buy - wera - and enjoy your Diamonds ! Thank you - Sue.