It’s no secret that diamonds represent an expensive purchase. Even for those who have never step foot in a jewelry store before, the high value of a beautiful diamond is common knowledge, and the idea that putting together the perfect proposal represents a minor expense pretty much went out with the dodo.
What many people don’t start off knowing, however, is why diamonds are priced the way they are – what’s caused them to be considered quite so valuable – and whether or not that high expense is really worth the cost.
And, while it’s not always a straightforward answer – and while the exact numbers vary from month to month – it’s important to understand how the diamond’s infamous ticket price came to be…
Yes, diamonds hold a high market value which, as it does for precious metals like gold, fluctuates a little over time.
Unlike gold, however, there is no single price per weight that governs exactly how much a diamond will sell for at any given point in time. While, at the time of writing, gold’s value is $1,760.82 per Troy Ounce, a diamond’s ‘price per carat’ depends on many other factors, such as color and clarity.
Their high value stems from a number of factors, such as their strength and popularity around the world.
First off, the more practical features. Diamond is the hardest natural substance out there, and it can withstand many, many years’ worth of wear and still look as bright and beautiful as it did when it was first cut. In that respect, they represent a strong investment (literally) that doesn’t need to be locked away in a safe in order for it to stay looking perfect. While the colors of paintings fade and the parts of a sports car will eventually wear out, a diamond will continue looking new.
What’s more, diamonds are rare. There is a finite number of them in the world – and beneath our feet, in the earth’s mantle. It takes billions of years for diamond to develop, which only contributes to their rarity and means that, over time, their value will continue to increase.
What’s more, each one is unique – and, as a result, highly appealing to collectors.
They are also beautiful. We have been drawn to them for generations upon generations, both for their physical appeal and for their symbolism and emotional value. People choose to wear them because no other gemstone is capable of rivalling the diamond’s beauty and sparkle – or, of course, as a representation of commitment and love.
And that brings us onto one of the most obvious points – the fact that, for so many shoppers around the world looking to buy an engagement ring, diamonds are irreplaceable. Their significance for future brides and future grooms has only grown stronger over the last hundred or so years, and that is a major contributing factor behind their high value.
When new, the price a jeweler will pay for a diamond will depend on the market rate for diamonds of that weight and quality. Second-hand diamonds, however, are valued lower.
A diamond’s value tends to dip immediately after purchase, since you’re not only paying for the diamond itself, but for the craftmanship behind the completed ring. However…
Yes, although it’s a little more complicated than that.
As we mentioned above, diamond is a limited resource – and one that is pretty rare at that. The market value of diamond is now ten times higher than what it was less than a century ago and, given the fact that the number of diamonds in the world will always be finite, it stands to reason that their value will continue to increase indefinitely.
So, while you won’t make a quick profit on your diamond if you decided to sell it a week or a month after buying it, the long-term value of diamond is clearly on an upward trajectory.
If your heart is set on a diamond, then they are absolutely worth the price since no other gemstone can compare with the beauty or strength – or even the symbolic meaning – of diamond.
In all likelihood, you’re not planning on selling your diamond – now, or in the distant future. For most people, diamonds are worth far more than their market value; they represent something unique and special between two people, or within a family. They become heirlooms, and not something that’s someday destined for the second-hand market.
As a result, your investment is being put toward that sentimental meaning, as much as it is the diamond itself.
The tradition of buying a diamond as a symbol of your commitment to your future spouse is one that has endured for centuries – and particularly since the mid-century. While some couples opt for an alternative to diamond, the majority of us still feel drawn toward diamonds.
Yes, diamonds are considered highly valuable – and will continue to grow in value as the years pass.
It’s true that a diamond’s value is not linear. Like anything, its performance on the wholesale market is totally different to its value once it has been passed between owners, worn on our fingers or ears or necks, and laced with that sentimental, familial significance most diamonds will take on eventually.
In the long term, however, the fact that the earth’s supply of diamonds is limited – and that nothing can rival the significance or meaning of a natural diamond – means that the years will continue to see a rising value, and that there will never be a time when diamonds become obsolete – either in a financial sense, or one that is more sentimental and, in a word, irreplaceable.
As always, by far best investments are those made into GIA graded diamonds, as this offers the most trustworthy insight into your diamond’s quality. You can browse our full range of GIA graded diamonds here.