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Diamonds are not a (smart) girl’s best friend

Diamonds are not a (smart) girl’s best friend

Don’t believe them when they say diamonds are forever; that’s just marketing hype. Diamonds, although brilliant to the eye and coveted by many, are not a great investment.

Diamonds are considered precious due to the lack of abundance. However, the scarcity of diamonds is not so real, but controlled artificially to justify the high price by large companies who have a near monopoly on the trade.

In terms of investment appeal there are almost no similarities between gold and diamonds. Diamond prices have remained flat in the country for the past several years. At the start of this decade they increased by a mere 3.5%, which is less than half of the average inflation rate.

Today crystalline substances (which are not real diamonds but look like them) such as moissanite and cubic zirconia (CZ) are available at 0.01% of the cost of real diamonds. Also, these are bought back by suppliers at 5-10% lower than the buying price. Most diamond-detecting devices have failed to differentiate moissanite and diamonds. The colour, purity, brilliance and cut possible in moissanite and CZ is better than real diamonds.

Geoferry Miller in his book ‘Spent: Sex, Evolution and Consumer Behaviour’, writes, ‘The “real” rubies are inferior to synthetic rubies by any rational measure, though they cost a thousand times as much, because their rarity makes them more desirable to some.’

If your partner argues that you can fetch a resale price for the real diamonds and not the fake ones, clarify that small diamonds (below 1 carat) have almost no resale value. Your old diamonds would fetch not more than 70% of the price at which you bought them. This is because the jeweler would find it difficult to sell a traditionally cut diamond, when new technology on cutting and polishing diamonds is evolving each day. The best you would get is an exchange offer; that too only at the place where you bought it.

Have a happy Valentine’s Day, with a romantic dinner and a drive. Try not to spend a large amount of money on diamonds though.

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