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What’s the resale value of a diamond?

What’s the resale value of a diamond?

Unlike gold, a diamond is worth precious little once you buy it. We reveal how clever marketing has created its high margins and how much a jeweller will offer to buy your diamonds back

Diamonds aren’t bought to be sold. Not six months from now, not five years later, not ever, mainly because of the romantic sentiment attached to their purchase. They’re perhaps even more likely to be passed on to future generations than be sold. Diamonds are forever, as the slogan goes. But their high value, precious that they are, must be part of the reason they’re so cherished. Indian respondents to a recent survey by Forbes even stated that economic security was key to their preference for diamonds. So what is the resale value of a diamond?

To market, to market
Diamonds inherently don’t have much value. They have industrial uses, as they are unbreakable, but industrial diamonds are very cheap, often as low as $2 a carat (no, really!). Only the more beautiful diamonds have value. Since beauty is in the eyes of the beholder, the grading process for diamonds is unscientific. It is based on what is known as the 4Cs of cut, clarity, carat (weight) and colour. A lighter diamond with a better colour, cut and fewer blemishes could well be much more expensive than a much heavier diamond which is colourless, an inferior cut and is blemished. Diamonds are not often alike, so there is no fixed rate, as there is for a homogeneous metal like gold. Consequently, there is no diamond market.

Three lifelines
In the absence of a regulated market, you have three options if you really want to sell your diamond jewellery. You can go to any jeweler, to the store you bought it from, or attempt selling it the hard way, by posting an ad on ebay or telling friends. You’ll be made a separate offer for the diamond and the gold or silver the stone is set in will be weighed and paid at the current market rate. Let’s consider all three:  

Resale Method Expected Price
To any Jeweller 1/5 –- 1/3 of original price
Retailer’s Buyback Policy 80-85% of original price
Individually Price set by you

To any jeweller: Large retailers are unlikely to buy your jewellery, but smaller ones might. If this doesn’t work, try an online buyer, such as WP Diamonds, which claims to have bought diamonds worth $75 million just last year. Expect the worst deal by choosing this first option, though. WP Diamonds, for example, will give you 1/5th to 1/3rd the original price you paid. It explains the low offer by saying that ‘retailers often charge a mark-up of more than double the wholesale price’. Their offer will vary according to the condition your jewellery is in.

To your retailer: Most retailers have buyback policies. You could get a better deal here, but you’ll still be at a loss. Forget inflation, you should expect no more than 85% of what you originally paid for the jewellery. This depends on the condition it is in, of course, and is also not guaranteed. The retailer could simply not want to buy it back. Gili offers a maximum of 85%, whereas Orra offers 80%. Nakshatra Diamonds will offer you 100%, but will only offer a credit note in exchange. Also, if you bought the jewellery at a discounted price, expect to get that much less for it, and if you bought it by redeeming points, expect to a very low offer, if anything at all.

To anybody: The only way to get more than what you originally paid for the jewellery is to sell it yourself, to another individual. You won’t get today’s prices, or the buyer would just as well buy it new, but at least you wouldn’t have to absorb a loss. Try posting an ad on ebay or quickr or tell a few friends, if you’re comfortable. It would be difficult, but certainly not impossible.

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