Diamond values in times like these...

It should come as no surprise that I’m often asked about the future of diamonds, particularly as an “investment”. Of course, I’ll always believe that diamonds have superlative physical and extensive emotional value.

In economic terms, the markets that are waxing and waning as we speak are staffed by fully-licensed brokers and speculators, who have training and accreditation to buy and sell all sorts of financial vehicles (read: paper assets) depending on a myriad of signals and indicators.

Diamond sellers are typically not qualified or well-versed enough in these matters. Unfortunately, some jewelers still promote diamonds as an investment. In my humble opinion, this is a no-no.

I am the Diamond Wizard, but alas I’m not clairvoyant. Who is? Unlike many know-it-all and I-told-you-so pundits these days, I do not even pretend to portend the future. But, I can tell you what my Mamma told me with great certainty… “There’ll be days like this”.

And, there have been before. In fact, the classic “boom and bust” business cycle is endemic to commodities in general and minerals specifically. Ore is found, a mine is built, full-scale production ensues, the community thrives, the market gets saturated, demand softens, prices fall, the mine loses “efficiency” and then it closes.

Prices firm up over time, a new mine is found… ad infinitum, or at least until the natural resource is completely exhausted. Sound familiar?

It's precisely why DeBeers was formed. Cecil Rhodes was among the first to recognize that the best way to curtail calamity and disaster in supply and demand was to “cartelize”, “monopolize”, or otherwise control the diamond trade through a “single-channel”.

To make a long story short, it has generally been a boon for consumers with diamond prices and value steadily climbing over the years. The most notable exception was the bust of the speculative bubble in “investment diamonds” in the late 1970’s. In this case, I must note that these were bought and sold as commodities on the strength of their paper (read: certificates) alone.

But, all that is solid does not melt into air!

Indeed, diamonds are the most tangible of assets. Their supply is limited by Mother Nature. They offer immediate allure and continual appeal. They do not deteriorate. They don’t need to be fed, clothed or housed. And, their benefits can easily be passed along for future generations to behold.

Common wisdom tells us that the best tends to hold or increase in value the most, much more so than second best or normal or average or less. And, consumer’s demand for branded diamonds has certainly clarified, reinforced, and solidified the perception of what is best in today’s marketplace.