We ran the numbers like we always do and came up with an estimated value of what we would pay for the item in the current market. We provided an estimate of $2,400 to the seller.
She wrote back stating we have provided two quotes for the diamond. The other quote was for $3000, and she preferred that price better.
Sure enough, there it was…
Why such a big difference in price, for the same diamond? We pulled up all quotes issued to her. Sure enough, there it was – a quote for $3000 based on the same diamond specifications.
The difference? It was from three years ago. Diamond prices have been falling, her diamond has lost 20% of the value in the last 3 years.
I noticed another transaction a couple weeks ago, a dealer contacted us looking to buy an expensive diamond. I looked up his previous purchase history. I found an amazing diamond that we sold him in August 2008. It was a 1.38ct D color, Internally Flawless diamond with excellent cut, excellent symmetry and excellent polish. A perfect diamond! The selling price for the diamond was $31,677.90.
That seems expensive…
I thought, WOW – that seems expensive. I wonder how much that diamond is worth today, so I checked it out. If we had the same class of diamond in our inventory today (we don’t), the selling price would be $15,605.
So from 2008 t0 2016 that diamond has fallen in price by 50%, that is a big loss.
Diamonds as an investment…
If someone had purchased that 1.38ct diamond in 2008 as an investment, they have lost 50% of their investment…. to make it even worse, with the affect of something known as drawdown the diamond now has to increase by 100% just to get a potential investor back to break even.
I’ve written previously about diamonds as an investment, and how some incredible diamonds worth millions have gone up in price so much. Generally speaking, you should buy a diamond because you want the diamond. If you think you are going to get rich off your purchase, you might want to reconsider.