Does diamond jewellery make for a good investment?

When most people shop for a white gold engagement ring, their minds will be on its beauty and its meaning. Usually bought to celebrate something particularly special, it’s rare that a person will walk into a jewellery store with profit in mind. But perhaps they should.

Before stocks and financial portfolios, precious metals and gems were seen as one of the safest investments around. In fact, up until relatively recently, most countries would back their currency with gold bullion, ensuring that the notes and coins were tied to something of actual value.

Times have changed, but the value that we attribute to gold and diamonds has not. So, does diamond jewellery make for a good investment?

The pros of diamond jewellery as an investment

Size: Diamonds don’t need much storage space, even compared to gold. Their value is so high that just a handful of quality stones can be worth as much as a house.

Durability: The hardest naturally-occurring material known to man has been formed over millions of years, so there’s no risk of breakage.

Historical increase: Diamonds have seen a gradual increase in value over decades that outpaces inflation.

The cons of diamond jewellery as an investment

Price transparency: Who sets the price of diamonds? It’s largely left to the largest diamond company in the world, De Beers, who also have a worrying level of control over supply.

Tradability: For the man on the street, it’s far easier to buy diamond jewellery than it is to sell it. Without the right credentials, you’ll be offered a far lower price for your diamonds than a jeweller will sell them for.

A long-term prospect: While the value of diamonds is always going up, it’s by no means a rapid rise. The stones will gather value slowly, and you’ll need to be patient to reap the rewards.