Diamonds As An Investment?

Seems every year or so someone (usually Rapaport of Rap List fame) tries to introduce a way that diamonds can be traded as a commodity. Once again Martin Rapaport has announced his intention of publishing a daily diamond price list aimed at investors. The price list will highlight current prices for diamonds being offered for trade on the B2B Rapnet diamond trading network.

Diamond as an investment

The problem with this approach is that each diamond is unique and while the 4Cs try and standardize the grading there is still way too much leeway in what the actual diamond looks like. For example (and as I point out in my diamond clarity page) you can have an SI1 diamond that is eye clean and an SI1 diamond that has a nasty black inclusion on the table. Depending on the size of the stones there could be a several hundred dollar difference in price between them. If all you have to go by is the diamond certification and not the actual diamond photographs you can’t commodity the prices.

While a lot of investors see diamonds as a good thing to invest in, a lot (and actually most) of them have some concerns about that, because diamonds is way different than gold (as an investment). Gold is traded globally and its price is “somehow” controlled, it can’t go so down that everyone loses, and also if it goes high (so high), some backend hands get in and controls that, this is one point, the other point is as mentioned above, not all diamonds are the same, the 4Cs alone can make the variety in collections uncountable.

In my opinion this is bound to fail as it has done many times in the past.


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