Markets Down…Diamonds Glitter

With the economic crises at hand, I figured this would be a timely place to start with my blog.  I’m taking a break from burying cash in my back yard in coffee cans (just kidding, I don’t have coffee cans) and daydreaming about taking cash and buying precious metals or stones. 

I read yesterday that DeBeers is touting diamonds as an investment strategy, you can see the video here.  DeBeers is urging retailers and manufacturers to communicate the ideas of “things that last, which are not disposable and which hold their value” directly to consumers.  This sounds good, since investors are obviously fleeing the stock market and real estate, and looking for something safe to put their money into.  Historically, jewels are one way that people all over the globe have passed down and transported their wealth.  They are small and portable, and retain some intrinsic value as something rare that comes from the ground.  I am currently trying to tell my husband that it makes sense to go ahead and buy that big diamond ring he’s been promising (so honey, please don’t read the next paragraph).

But there are issues with this reasoning, namely that jewelry in it’s finished form is not so liquid.  While there are many ways to buy it new, there are fewer options for selling second-hand.  There are auctions (on- and off-line), estate sales, pawn shops and other avenues, but most of those require quite a bit of effort for the seller, and net them less than the purchase price.  Also, the value usually rests more in the intrinsics of the piece (how much gold or platinum, the quality of the gems) versus the labor to create it, so you may not recoup much of the workmanship costs. 

Still, I think that there is something comforting about putting some wealth into jewelry.  Buy it like you would art or wine: buy what you love, and get the highest quality you can afford.  You will enjoy looking at it for a lifetime, it will probably hold it’s value, and someone will inherit it someday.

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