Buying fine jewelry feels like a substantial investment no matter the piece. While you certainly CAN make a profit investing in fine jewelry, the question is SHOULD you?
Is the most important thing that it increase in value, be a gift for that special someone, or both?
Traditionally an investment is something you purchase only to appreciate and generate future income. Depending on the kind of asset you choose, the road to appreciation can be smooth, bumpy, or steep. Investing carries an inherent risk. No investment is guaranteed to gain value.
Every day fine jewelry purchases are more likely to be tied to relationships, emotions, and personal milestones than investment strategies. The value of the jewelry is related to how the wearer feels about it instead of the resale value.
Additionally, the price of investment grade jewelry is out of the reach of the average jewelry buyer. So, why do some people choose to put their money into investment jewelry vs. stocks and bonds?
Is Gold a Good Investment?
Through our 36+ years in the jewelry industry, we’ve watched the price of an ounce of gold fluctuate wildly. Gold prices are always the most volatile, while platinum and silver stay more consistent.
In May 2020, gold was selling for $1,724 an ounce. Only two months later, it zoomed to a high of $2,034. A year later, an ounce of gold is selling for around $1,880. (source: www.kitco.com).
Despite and because of its changing value, gold remains the most popular metal for investing. But, why?
2 Reasons Gold Prices Fluctuate
Economic Uncertainty – The price of gold goes up during times of political and/or economic uncertainty because investors believe its value is protected from economic collapse.
Economic Stability – Gold prices go down when investors feel optimistic about the economy. They shift away from gold during these times because it doesn’t offer the regular payouts a typical investment would.
Fluctuations like these are the biggest factors at play in the value of the gold in your jewelry.
Investing in Diamonds
Unlike gold – which is valued by weight – diamonds don’t have a universal price per gram. So, how is the value of a particular diamond determined?
Rand Diamonds, one of a small number of companies chosen to acquire rough diamonds directly from the source, describes it best, “Diamonds of investment and jewelry quality are rare. The best investment-grade diamonds are polished to the highest standard and rated GIA Triple Excellent. They are of the color, size, and purity globally in demand for engagement rings, making them the most desirable and resalable.”
What Makes a Diamond Investment-Grade?
- Extremely large, colorless diamonds (above 20 carats)
- Rare colored diamonds with good clarity ratings
- Diamonds owned by famous people like the Taylor-Burton Diamond
- Famous diamonds with a story, like the Tiffany Yellow Diamond
Large gemstones are rare and appreciate rapidly. Diamonds of more than 25 carats usually have their own names. Most people are not in the position to purchase diamonds large enough or of high enough quality to make a profit investing in fine jewelry.
“Diamonds 101” a Required Course
At Lake Street Diamond Company, customer education is as important as sales. We want you to feel confident about this important decision. That’s why we talk about “Diamond 101” during your complimentary consultation.
We teach the 4C scale used to evaluate the value of a diamond: cut, color, clarity, and carat weight.
What Are the Diamond Four C’s?
- Cut: This has the greatest influence on a diamond’s sparkle.
- Color: The less color, the higher the grade.
- Clarity: Hard to judge without a jewelers loupe.
- Carat Weight: A diamond’s total weight has the biggest impact on price.
These are most important factors that determine a diamond’s cost. When you work with one of our jewelers, you’ll understand how a stone’s score relates to its value and your budget.
Our discussion starts with the cut, which, in our opinion, is the most important of the C’s. You can have a diamond with excellent color and clarity, but it won’t sparkle if the cut isn’t just right. Round Brilliant, with 58 different facets, is the most popular cut of all the shapes because they sparkle the most.
Next, we explain the importance of clarity and color. In “Diamonds 101”, customers learn that any stone graded a H, G or I is virtually indistinguishable from higher grade diamonds to anyone but the trained eye. That’s why we don’t generally carry those higher “investment grade” stones (F, E & D). We don’t believe it’s the best use of most people’s budget.
For clarity, a good place to start your search and maximize your budget is with Slightly Included (SI) and Very Slightly Included (VS) grades because those imperfections aren’t noticeable without magnification. Our store focuses on stones with a VS1 to SI1, with G to I for color. They are beautiful gemstones and they won’t break the bank.
Finally, we’ll talk about synthetic or lab-grown diamonds. We’ll help you decide if these man made, real diamonds are a better choice for you.
How “Diamonds 101” Helps You Choose Your Jewelry
Recently, we worked with a couple on their engagement ring. The older bride-to-be wasn’t attached to any particular style of ring. What she wanted was a ring that that would really sparkle and shine. They chose a ring with one of the better diamonds we carry (a VS2-H) with excellent cut, polish, and symmetry in a halo setting. They joked that if they were ever lost in the woods they could signal a passing rescue plane with it!
This is a perfect example where a less than “perfect” stone was “just right” for this new family. There’s no need to spend significantly more money for a stone with “investment-grade” color and clarity. No one but a jeweler will ever know the difference.
Investment Jewelry at Lake Street Diamond Company
At Lake Street Diamond Company, the investment we’re most interested in is our relationship with you. Getting to know you means we can create pieces you’ll love and wear for a lifetime. We are matchmakers between our client and their jewelry.
That’s why our sales process feels a lot more like a consultation. We listen closely to what look and feel the you have in mind. We’ll ask smart questions like what you do for a living and how you wear your day-to-day jewelry. If you work with your hands a lot, you’ll need a sturdier design for your rings.
This understanding helps us make educated choices about the best metal, design and gemstone to use. Finally, we bring it all together in a piece that makes sense for their lifestyle, taste and budget.
If that same piece becomes a beloved heirloom passed to the next generation, well, that’s the kind of investment we’re interested in creating. Our typical client wants jewelry to mark a special occasion and aren’t interested in making a profit investing in fine jewelry.
Building Community Pays Dividends
Lake Street Diamond Company invests in our community every day. The time we’ve spent getting to know our customers and their families pays bigger dividends than we could have ever hoped for. Thank you for letting us be a part of your stories.