Are engagement rings an investment?

by queenofcolordiamonds

A friend of mine recently found an article where a jeweler had been disputing the notion that engagement rings can be considered investments.  He went on to say that engagement rings are sort of a waste of money altogether.  Knowing how passionate I am about diamonds, my friend encouraged me to rebute his claims because she knows that I consider Natural Fancy Colored Diamonds to be considered a luxury asset.

I decided not to dispute his article for a few reasons. First of all I think that everyone has a right to their opinion. I prefer to express my thoughts and opinions here in my blog because it is a place I created just for me. Secondly, this guy  seemed somewhat angry.  Do I need to be the person to get him more worked up?  Uh, not really.  Thirdly, not a lot of people understand the ins and outs of hard asset investments and what factors make up an “investment grade diamond”.  And last but not least there seem to be different camps in the diamond industry when it comes to labelling diamonds as investments.  One sector of diamontaires look at diamonds  in a puritan way in terms of their inherent beauty and believe that the value they offer is and should be of beauty and emotions generated from giving and receiving diamond jewelry.  They believe that by turning diamonds into a commodity if you will, that they lose their special place in the world.  The other camp believes that diamonds of the highest clarity, color (think D color grade for colorless diamonds) cut and carat weight are very beautiful, rare and therefore valuable which is why they go up in price and can be considered an investment.  Note, there are also some real scummy folks out there who will sell diamonds, rubies and emeralds that are poor clarity, color, cut and carat weight just to make a buck.  Often these stones will not come with a GIA (Gemological Institute of America) Grading Report.  These are the guys that unfortunately give a bad rap to the word “investment” and spoil things for people who do know what they’re doing when selling investment grade diamonds.  Then there are the diamond dealers that share the vision of the puritans but also recognize and appreciate that some diamonds are rarer than others (reds, blues, yellows, pinks etc.) and that in that combination of rarity and beauty illicit demand and therefore a higher monetary value.  Their businesses are built on providing the utmost in quality and value for their customers who also understand that the rare diamonds are a valuable asset.

So, the question of this man’s article was “Are Engagement Diamonds Considered An Investment?”.

My opinion?

I actually agree with the author/jeweler.  Why?  Because this guy made no mention of colored diamonds at all and seemed to focus on white diamonds.  He didn’t even  mention D color graded diamonds which if are Flawless with a significant carat weight can be and are considered an investment.  Unfortunately white diamonds otherwise referred to as colorless will not really go up in value that much, can certainly fluctuate in price and are more of a personal, emotional investment than anything else.  If however, we are talking about Natural Fancy Colored Diamonds in the highest color, clarity, cut and carat weight – this is absolutely considered a luxury asset and a true investment.

I have personally done a lot of research on this topic and can tell you without a shadow of a doubt that Natural Fancy Colored Diamonds are increasing on average 12-30% per year.  Colored diamonds have never dropped in value since record keeping began almost 40 years ago and are smashing auction records globally.  At work I have personally seen our own clients who bought stones a few years ago already making money on their stones.  Why?  Rarity and demand are the predominant factors.  Investors are seeking alternate ways to protect and grow their wealth and luxury assets such as art, collectibles and diamonds are a safe and lucrative investment compared to traditional markets such as real estate and stocks.

To the author’s position that engagement rings are sort of a marketed retail item and are a “lie”.  Ask any woman and they will agree that “diamonds are a girl’s best friend“.  Yes more and more women are opting to showcase their creativity and personality and going with colored diamonds or gemstones, but we still want the ring. It makes us happy.  To us, it does show us you care and love us and are committing fully.  And what’s wrong with a little tradition?  And hey, no one said our boyfriend’s had to or should go broke buying us an engagement ring.  Whether it’s colorless diamonds that will increase in value slightly (maybe by way of  natural inflation), or a Natural Fancy Colored Diamond that will increase in value over time… not everyone is that concerned and make no qualms about it….we want the wedding ring!

 

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