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Home > News > Diamond Articles > Buying Diamonds As A Hedge Against Inflation

Buying Diamonds As A Hedge Against Inflation

Tue, October 7th 2008, 07:05 EST

 

You`re shopping for a diamond pendant or perhaps considering purchasing a pair of anniversary rings so that you and your spouse can mark an important milestone in your marriage. Diamonds are not only beautiful, but they can also hold their value, something today`s savvy consumer is well aware of.

One question you may have, especially as you survey the topsy-turvy global financial markets, is whether diamonds can be a good investment for the long term. Well, that answer isn`t as simple as you might hope, because there are a number of factors which determine whether a diamond or diamond jewelry will be worth substantially more money several years down the road.

Though some of what I will share with you is theory, there are a few things to consider before making a diamond purchase especially when doing so as an investment. Please read on and we`ll explore how you can protect your diamond investment:

The Bigger, The Better – Jewelry broker, Martin Rapaport, whose personal price list is used as a standard for wholesale trade in polished diamonds, mentioned earlier this year that the decline in the value of the dollar, in which diamonds are priced, has increased investment in diamonds as a hedge against inflation. But, the recent run up in value of the dollar is easing diamond prices, suggesting that current market volatility may make such investing a risky proposition for most people.

Heirlooms and Collectibles – Some investors stay away from the big diamonds market, unable to keep up with the big guys who have a lot of cash on hand. Instead, these people frequent estate sales for family heirlooms and collectibles in search of that special diamond wedding band or pair of pearl drop earrings from another era. Dealers scour the market for the best deals, make needed repairs, and turn around and sell their finds for a profit.

Designer Jewelry – The jury is out on the long term value of designer jewelry, particularly on trendy pieces which tend to lose their appeal within a few short years. Keeping that in mind, most of the top designers embody both trendy and classical themes to develop lines of jewelry that will look great ten, twenty, even fifty years or longer provided they are kept in very good shape. Designers such as Danhov and M. Geller are prized today and have what it takes to bring much long term value for buyers.

What You Love – Of course, most buyers purchase their diamond jewelry with one thing in mind: what they love. This is the most important consideration when making any jewelry purchase, that you really like what you want to wear. Buying jewelry with an eye on its long term value is fine, but that shouldn`t ever supplant your desire for a particular pair of diamond earrings, a silver ring, pearl drop earrings, or some other personally valued accoutrement.

So, can buying diamonds be a good hedge against inflation? Perhaps if you have a lot of money, the expertise to select the right kind of diamond, and have the intestinal fortitude to weather the vagaries of the marketplace, then that answer might be yes.

For everyone else, finding the right diamond jewelry at affordable prices can provide for you just the right blend of value and desirability, something no one can put a price on except for you.


                                                                          


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