Diamonds and Inflation – A good way to hedge?

admin — Sat, 20 Jun 2009 22:25:42 +0000

Maybe you just like jewelry, perhaps an engagement is coming up. Or maybe you’re eyeing a new pair of diamond earrings. With Obama’s TARP billions of dollars flowing and the banks holding on money waiting for the best time to lend it out, and an almost Zero Interest rate of U.S. Dollars, there is a lot of concern of the future of the Dollar and the value of saving cash. The financial markets are a mess and paranoia of the future of the whole finanical system is at stake.

So, since diamonds are precious commodities that hold their value, is diamond jewelry a good way to hedge the value of your wealth? Are they a good long-term investment? Unfortunately, there is no simply “Yes” or “No” answer to this question. While a diamond enthusiast or jeweler is quick to say that you are making a great investment, there are many things that will affect the value of your jewelry and it’s value.

Here are things to consider when making a diamond purchase, and then protecting a diamond investment:

Market Conditions always change – The dollar is constantly in flux and currency/commodity trading is a volatile business. When the dollar increases value, the dollar value of diamond prices will decrease. It’s all about timing – you have to know when to trade and when not to trade. It can also matter who you will buy and sell from. Are you buying diamond earrings from a high-end jeweler? You can expect to spend top dollar for your diamonds. While your diamonds will always be valuable, if you want to secure your wealth in the Diamond trade, you have to know these financial factors – every extra dollar you spend on your diamonds is less that you will get back when you get them appraised and sell your jewelry. Unless you’re buying bulk wholesale diamonds, chances are that you’re making a risky investment.

Size Matters – The “Big Guys” in the Diamond trade will always have a lot of cash to invest and they hold enough that they can “Control’ the markets, to some degree. The more diamonds available, the less their value. The less diamonds, the more precious they become. If you’re a small-timer or just looking to get some jewelry to secure some tangible wealth apart from US Fiat Currency, keep this point in mind. For a small time collector or investor, heirlooms and collectibles are a great way to get fantastic jewelry that is not only valuable but marketable as well, even if minor repairs are needed. This jewelry can often be purchased at deep discounts, fixed, and sold for a profit.

Purchasing What You Want – If you want jewelry you can sell later, don’t pick something too trendy. You’ll want something that blends classic styles along with modern styles. The best jewelry will be timeless – this is what is going to hold its appeal for the longest period of time. This long term value will matter when you get your jewelry appraised and get a return on your investment. When investing in jewelry, it’s easy to get caught up in the styles of what you want in diamonds – earrings, necklaces, bracelets, come in all shapes and sizes. If you’re wanting to invest, make sure that you are shopping with a “timeline” in mind.

In the end: Investing in diamond jewelry can hedge inflation in the long term. We’re talking 10 – 20 years minimum – so do the research to know the right diamonds, styles, and the gall to handle the changing weather of the currency and commodity market – the world’s most volatile markets.

If you have a lot of money, this is a great investment. With a little money, you may secure a little extra cash but it’s not going to make you rich. So pick what you want, get it at the best price you can, and stick with the classic styles. Your diamonds and earrings are worth what you give them!

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Diamonds and Inflation – A good way to hedge?