Diamonds have been a point of attraction right from their introduction to society and still, diamond is the symbol of luxury. But it doesn’t matter whether you are planning to own a diamond or inherit a diamond, the one question that must be always coming to your mind is whether the value of a diamond appreciates with time or not?
Even most of the diamond experts accept the fact that questions related to the appreciation of diamonds are the most common types of questions they are asked about. So, to put all the myths aside and give you straight facts, we will discuss all that you need to know about the value of diamonds over time.
Does the value of diamonds increase with time?
Whether they are certified loose diamonds or shaped diamonds, everyone wants to know whether the value of the diamond is going to appreciate with time or not. The short and simple answer to this question is most diamonds in the market don’t appreciate in value with the passage of time.
There is only a small category of diamonds in the market that gives you a guarantee of appreciation in value over time. There is a common misconception that just because diamonds are rare, their value always appreciates over time, regardless of which type of diamond you have.
You will be surprised to know that according to diamond experts, you should always expect to get only 25% to 50% of its retail value. This type of price drop in the case of second-hand diamonds might be surprising for many people.
The real reason behind the depreciation in value over time
The way in which the value of your car drops just after you hit the roads for the first time with your new car, in a similar manner, the value of diamonds drops once you walk out of the store with it. This happens in the case of certified loose diamonds and other types of diamonds since there are many people in the value chain of the diamond.
The value chain of diamonds doesn’t only include the seller and the buyer but there are other people involved in it as well. So, the retail price of diamonds might be high but the resale price of diamonds is always low.
Understanding the difference between resale value, insurance value, and retail value
Diamond retail value
This is the price you pay for buying the diamond at the jewelry store, regardless of the type of diamond you are buying. If you go by the data given by Business Insider then you will find that almost all the big box jewelry stores mark up their diamond prices from 100% to 200%.
It is because of the slow rate of inventory movement that the big box jewelry stores have to inflate the prices. In addition to this, inflating prices also allows the seller to build a profit and cover the operating costs.
Diamond insurance value
This is the exact amount for which your diamond has been insured, even in the case of certified loose diamonds. Both the insurance provided by the seller and from a private company falls in the same category of diamond insurance value.
The insurance value is always higher than what you paid for the diamond in the form of its retail price. This is done to increase your insurance cost and it is also done to give you a feeling that you have purchased the diamond at a bargain price.
But never consider the insurance value of your diamond to be the actual value or the current retail value as this gives false hope to the owners.
Diamond resale value
This is the price at which you can sell the diamond in the second-hand market. This never includes the profit that the seller had made while selling it to you. You can never be sure about the resale value as it depends on various factors.
Which type of diamond appreciates in value over time?
Only rare diamonds appreciate in value over time. There are a few fancy colored diamonds like those that come in red color, blue color, or pink color can appreciate in value over time. But along with the color, the diamond also needs to be exceptionally good in quality and in terms of carat weight.
The same goes for those high-quality, rare, and big pieces of diamonds that have almost a perfect color along with a good clarity rate. Only such types of diamonds can appreciate in value over time but owning such diamonds is not common.
Knowing the resale value of the diamond that you possess and understanding the way it appreciates over time is necessary for avoiding any bad surprises in the future. Keep in mind that only rare types of diamond appreciate over time, not all the certified loose diamonds or shaped diamonds.