This article has severely shaken my long held belief that diamonds are precious stones.
Though it was written in 1982, Edward Jay Epstein, the author, investigates the behind-the-scenes manipulation that has driven the price of diamonds up. it’s a fascinating and downright damning report on the diamond industry as a whole.
What got me really thinking is the claim that hardly anyone trying to sell their diamond back gets anything even close to the price they bought it for.
Retail jewelers, especially the prestigious Fifth Avenue stores, prefer not to buy back diamonds from customers, because the offer they would make would most likely be considered ridiculously low. The “keystone,” or markup, on a diamond and its setting may range from 100 to 200 percent, depending on the policy of the store; if it bought diamonds back from customers, it would have to buy them back at wholesale prices. Most jewelers would prefer not to make a customer an offer that might be deemed insulting and also might undercut the widely held notion that diamonds go up in value. Moreover, since retailers generally receive their diamonds from wholesalers on consignment, and need not pay for them until they are sold, they would not readily risk their own cash to buy diamonds from customers. Rather than offer customers a fraction of what they paid for diamonds, retail jewelers almost invariably recommend to their clients firms that specialize in buying diamonds “retail.”
That’s a red flag if ever I saw one because if diamonds do indeed go up in value then there would be a lively resale market (much like we see for other items of value like property, art, etc). Whereas if the value of diamonds is really inflated no reseller would ever want to burst that bubble by revealing how cheap they really are.
It’s hard to believe that jewellery stores are doing anything different even 30 years down the road. If anything diamonds are just as expensive as they were then and continue to enjoy a reputation as ‘a girl’s best friend’ and a symbol of a couple’s love.
As long as diamond’s only ever adorn items such as engagement rings (things that you’d never think of selling) they will continue to enjoy a high price without people ever realising they’ve been conned.
Go give the article a read. It’s definitely worth a thought.
p.s. This reminds me a lot of another article I read about the inflated price of lobster