Diamonds - Asset or Accent?
Lady Gaga wore the stunningly gorgeous necklace, featuring the Tiffany Diamond, at the Oscar Awards Ceremony last week. She 'stole' the celebrity, 'borrowed jewelry show' with this necklace, estimated by news outlets, to be worth $30 million US dollars. In this context the necklace is both an 'asset' due to its provenance, beauty, durability and rarity and an 'accent' due to its ability to be fashionable, recognizable, and wearable.
Are all diamonds assets and accents? First a definition of the word asset. There are several definitions, so here are two that I found applicable to diamonds: 1. a useful or valuable thing, person, or quality. 2. property owned by a person or company, regarded as having value and available to meet debts, commitments, or legacies.
We have to acknowledge that diamond jewelry is more than an asset or an accent to most people. Everyday I deal with the 'tangible sentiment' which is jewelry. Clients remember who gave them the item, why it was given and they will remember (or closely remember) what it looks like. The experience of selecting and/or receiving a piece of jewelry involves all of the senses and frequently registers an indelible memory in our brains.
Is a diamond engagement ring an asset? By definition - it is useful, as a symbol of a commitment, and valuable because it is usually made from a precious metal along with the diamond. Can you use it to secure a loan or pay a debt? Possibly, but not without a reduction in monetary return.
Why is that? If you had to make that ring yourself, where would you start? You would have to mine the diamond, cut the diamond, mine the ore for the metal and refine it, design the ring, construct the piece and pay someone to market and sell it. All of the labor and transportation costs are not recouped in a secondary sale.
A diamond engagement ring is an investment in your relationship. It is mostly an emotional or relational investment. Used Bridal jewelry has a market, but it is not at 100% ROI of the retail dollar amount.
It is also a statement of fashion, but even that is fluid. Remember the marquise diamonds of the late 80's? When was the last time you saw one on a celebrity? (News Flash!
Actually the marquise and oval shapes are trending again!) Princess cuts were all the rage 10 years ago, but not so much now. The fashion trends of diamond shapes, affect the current value of diamonds. It is good to keep that in mind and remember to update your insurance values every 3-5 years.
Quality brands such as Tiffany & Co., Cartier, Bvlgari & Graff are sold at a premium and they will retain some of that premium in a secondary market compared to a generic jewelry item. As an accent or accessory, their styles tend to be more timeless then trendy.
A diamond with a credible report from a legitimate independent gem lab will also help maintain more of a diamond's value. (Note that I say report, not certificate, because reputable labs do not certify, they create reports.) Buy diamonds because they are durable, beautiful and fashionable and accent the physical beauty of the wearer.
Like any asset, there can be an element of volatility and it requires a lot of money and knowledge to deal properly in the diamond market. Currently there is an influx of lab grown diamonds into the retail market by companies including De Beers (Lightbox) and the Diamond Foundry, among many others. Diamond markets and consumers are in the first stages of learning how to react to this.
Buy diamonds with the proper knowledge and you won't have buyer's remorse. A realistic expectation is that you will not be getting a 100% return for your monetary investment, but you might make someone grateful, happy & stylish every time they accessorize with the diamond jewelry you gifted. Isn't that the true value that you are looking for?