Updated: Feb 29
Through the years, diamonds have long held prominence as a status symbol, a sparkling outward reminder to the world of an individual’s wealth and prestige.
But diamond values have indeed fluctuated over the years. From the booming economic excess of the 1980s when De Beers dominated the market and proclaimed “a diamond is forever” to a downturn in the De Beers monopoly as well as the the economic downturn of the Great Recession, diamond values and prices are a reflection of numerous market variants. Yes, there have been marked events in the timeline, where prices have dipped, but like any other commodity, this is economic and market related.
D-Color Flawless Round Diamond
Just like the prices of precious metals such as gold, silver and platinum, the market for a diamond ebbs and flows in value based on demand for the precious stones. Any influence on the diamonds released into the market would influence price.
So is a diamond an investment? Does it appreciate over time? Yes, and no. The answer, like most diamonds, isn’t flawless. Overall, the answer is yes. A diamond’s value appreciates over time.
Like most valuable items and other commodities, diamond prices increase with inflation. A diamond that was purchased in 1980 would, of course, be worth considerably more in 2020, just the same as if you purchased gold. However, whether that is due to the rarity of the diamond or the result of inflation is largely dependant on many factors.
Rarity is the key to a diamond being “Investment Grade”
What ultimately makes a good investment is a diamond that is very rare. The larger the diamond, the rarer it is in nature, so high carat weight is one way to find a rare stone. But perfect color and clarity are also rare, no matter the size of the stone.
Maximizing the rarity, a flawless, perfectly cut, colorless large diamond will always be in demand and fetch a higher price in the market. The rarity of perfect stones allows the diamond to increase in value more rapidly – both because of inflation and because of the high demand and limited supply of perfect stones. Imperfect stones and those showing considerable flaws are not nearly as rare and valued, nor are they likely to appreciate much over time. They will hold value, but their value likely will increase and decrease in value more freely than a flawless stone.
It must also be noted that natural fancy colors, such as the fancy intense yellow, more commonly called canary yellow, are also considered investment grade. Some colors are more rare than others, and appreciate more quickly.
Topping the most rare natural diamond colors in the spectrum is red, but blue and pink are also very rare and considered great fancy colors for investment purchases. Depending on the rarity and color of the stone, a fancy colored diamond can be up to 200,000 times more expensive than a normal diamond. Have a look at our Fancy Diamond Blog post for more information on these stones.
Hearts and Arrows - now this is "Investment Grade"
Back in the 1980s, Japanese jewelers were the first to discover the existence of a kaleidoscopic effect when a round brilliant cut diamond was examined through a special viewer.
At that time, those diamonds didn’t feature perfect looking hearts and arrows patternings yet. As the Japanese started to refine their polishing techniques, the hearts and arrows phenomenon slowly gained popularity and was picked up by other cutting houses around the world.
By the time the kaleidoscopic cutting style arrived in the United States during the early 1990s, the foundational technique and guidelines for producing the Heart & Arrows patternings had already been established before it underwent further development.
Diamond Housekeeping Tips
Diamonds and the jewelry settings that house them must be kept clean, and all precious jewelry should be removed during aggressive activities like sports. Diamonds are the hardest mineral, but that does not mean they are immune to damage. Hitting a diamond the wrong way can chip or crack the stone. Storing diamonds together is also ill advised as the stones can scratch each other.
A diamond that was purchased as flawless could become damaged during everyday wear and tear or in improper storage. This damage lowers the value of the diamond. While a chipped diamond can be re-cut, the lower carat weight will still decrease the overall value.
The long and short of investment diamonds is that diamonds are subject to the fluctuations of supply and demand, so the more rare a diamond is, the more likely it will appreciate in value over time. Preserving and protecting a diamond ensures it retains and gains value.