The Diamond Investment Myth

For decades, diamonds have been marketed as rare, valuable, and even a solid store of wealth. Yet, recent discussions about diamond prices stagnating over the past 22 years bring a deeper question into focus: Were diamonds ever true investments?

𝗗𝗶𝗮𝗺𝗼𝗻𝗱𝘀: 𝗔 𝗖𝗮𝗿𝗲𝗳𝘂𝗹𝗹𝘆 𝗖𝗿𝗮𝗳𝘁𝗲𝗱 𝗜𝗹𝗹𝘂𝘀𝗶𝗼𝗻 𝗼𝗳 𝗩𝗮𝗹𝘂𝗲

The idea that diamonds hold long-term financial value isn’t based on market fundamentals but on one of history’s most successful marketing campaigns. In the late 19th century, vast diamond discoveries in South Africa threatened to flood the market and drive prices down. The solution? A monopoly.

𝗗𝗲 𝗕𝗲𝗲𝗿𝘀 𝘀𝘁𝗲𝗽𝗽𝗲𝗱 𝗶𝗻 𝘁𝗼 𝗰𝗼𝗻𝘁𝗿𝗼𝗹 𝘀𝘂𝗽𝗽𝗹𝘆 𝗮𝗻𝗱 𝗰𝗿𝗲𝗮𝘁𝗲 𝘁𝗵𝗲 𝗶𝗹𝗹𝘂𝘀𝗶𝗼𝗻 𝗼𝗳 𝘀𝗰𝗮𝗿𝗰𝗶𝘁𝘆. But the real masterstroke came in 1938, when the now-famous slogan “A diamond is forever” was introduced—not just to romanticize diamonds, but to discourage resale. If no one sells diamonds, no one realizes how little they’re actually worth on the secondary market.

𝗪𝗵𝘆 𝗗𝗶𝗮𝗺𝗼𝗻𝗱𝘀 𝗗𝗼𝗻’𝘁 𝗪𝗼𝗿𝗸 𝗮𝘀 𝗜𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁𝘀

A true investment is something that not only appreciates in value but also has a transparent and liquid market where it can be sold at a fair price. Stocks, bonds, real estate, and even gold meet these criteria. Diamonds, however, do not. Here’s why:

𝟭. 𝗡𝗼 𝗦𝘁𝗮𝗻𝗱𝗮𝗿𝗱𝗶𝘇𝗲𝗱 𝗣𝗿𝗶𝗰𝗶𝗻𝗴 – Unlike gold, which has a universally recognized price per gram, diamond prices depend on subjective factors like cut, clarity, color, and carat. Two similar-looking diamonds can have vastly different prices, making valuation difficult.

𝟮. 𝗡𝗼 𝗧𝗿𝗮𝗻𝘀𝗽𝗮𝗿𝗲𝗻𝘁 𝗦𝗲𝗰𝗼𝗻𝗱𝗮𝗿𝘆 𝗠𝗮𝗿𝗸𝗲𝘁 – When you buy a stock, you can check its price and sell it instantly. With diamonds, reselling is a maze of complications, where the price you get is often far below what you paid.

𝟯. 𝗥𝗲𝘁𝗮𝗶𝗹 𝗠𝗮𝗿𝗸𝘂𝗽 𝗞𝗶𝗹𝗹𝘀 𝗜𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁 𝗣𝗼𝘁𝗲𝗻𝘁𝗶𝗮𝗹 – When you purchase a diamond, you’re paying a hefty retail markup. The moment you walk out of the store, your diamond’s resale value drops significantly.

𝟰. 𝗟𝗮𝗯-𝗚𝗿𝗼𝘄𝗻 𝗗𝗶𝗮𝗺𝗼𝗻𝗱𝘀 𝗛𝗮𝘃𝗲 𝗗𝗶𝘀𝗿𝘂𝗽𝘁𝗲𝗱 𝘁𝗵𝗲 𝗠𝗮𝗿𝗸𝗲𝘁 – The rise of lab-grown diamonds—identical to natural ones but much cheaper—has further exposed the artificial pricing of diamonds. If a perfect, identical gem can be made in a lab for a fraction of the price, what does that say about the long-term value of natural diamonds?

𝗦𝗼, 𝗪𝗵𝗮𝘁 𝗦𝗵𝗼𝘂𝗹𝗱 𝗜𝗻𝘃𝗲𝘀𝘁𝗼𝗿𝘀 𝗗𝗼 𝗜𝗻𝘀𝘁𝗲𝗮𝗱?

For those serious about growing their wealth, the lesson is clear: Real investments generate value. Whether it’s 𝘀𝘁𝗼𝗰𝗸𝘀 that benefit from business growth, 𝗯𝗼𝗻𝗱𝘀 that pay interest, 𝗿𝗲𝗮𝗹 𝗲𝘀𝘁𝗮𝘁𝗲 that provides rental income, or 𝗴𝗼𝗹𝗱 that has a liquid global market, genuine investments have mechanisms for value appreciation and transparent pricing.

The next time you hear someone discussing diamond price stagnation, don’t ask why diamonds haven’t grown in value—ask why we ever considered them an investment in the first place.

𝗙𝗶𝗻𝗮𝗹 𝗧𝗵𝗼𝘂𝗴𝗵𝘁: 𝗕𝘂𝘆 𝗗𝗶𝗮𝗺𝗼𝗻𝗱𝘀 𝗳𝗼𝗿 𝗟𝗼𝘃𝗲, 𝗡𝗼𝘁 𝗳𝗼𝗿 𝗪𝗲𝗮𝗹𝘁𝗵

Diamonds can be beautiful, sentimental, and symbolic, but they should be treated like any other luxury purchase—not as a way to build long-term wealth. If you’re looking to invest, focus on assets that have real value, clear price discovery, and liquidity.