Expensive diamond jewellery cannot be a smart investment, because of artificial features in its price and value structure. The average person who buys diamond jewellery purchases them for their beauty and sentimentality while thinking they have made wise a investment. A person who buys for emotional reasons does not know enough about the diamond trade to evaluate, and determine diamonds for investment purposes. Even for people who are privy to the diamond industry it is a minefield.
The price of diamonds is fickle because of public taste and demand. Expensive diamond jewels is a luxury item and its demand fluctuates with the state of the economy. Public taste might dictate a certain style and size of diamond which drives up the price, and later when this trend has passed your diamond will only be worth a fraction of what you paid. Even if a buyer has done his homework there are still other factors to consider. There are many varieties of stones to choose from. When you consider selling your diamond jewellery there will be thousands of stones to compete with. One could argue that buying higher quality and larger stones would be the way to secure your investment.
The higher price larger carat diamond investment is more profitable but the market is very small and you might not be able to find a buyer. The ability to unload your investment in an emergency is an essential element in any smart plan. The diamond jewel will be difficult to sell in a emergency unless you are willing to take a significant loss on its value.
Another factor to consider is that diamonds are tied to a currency and any fluctuations in that currency will affect the valuation. If you are lucky enough to have a pricey piece of diamond jewellery that has appreciated in value you will have to pay capital gains tax.
There are several stores that sell expensive pieces but there are only a few places that will buy your jewellery. It is even difficult to get an appraisal. The only places who will take your jewellery are stores that specialize in estate and antiques. And you will have to place your jewel on consignment.
The diamond industry market its product as an investment, but there is no place to handle and cash in your investment. Customers are left in the dark about resale value of their valuable diamond jewellery. Expensive diamond jewellery should only be purchased for their intrinsic value and not as investment pieces.