Buying or Selling a Diamond

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A diamond is a girl’s best friend—until she decides to sell it. Those may be your feelings after visiting a local jeweler with high hopes of selling your precious rocks.

Unless you purchased it right to start with, you are basically stuck with the diamond forever unless you accept a big financial loss.

Most people buy their diamond jewelry from big retailers, whose markups can range from three to ten times. You effectively lose 65% to 90% of your investment the minute you leave the store!

The well-known promotion ‘diamonds are forever’ makes perfect sense to me. Unless you purchased it right to start with, you are basically stuck with the diamond forever unless you accept a big financial loss.

Salem reassures us that the news is not all bad and there are exceptions. A larger diamond [over one-carat] with a GIA laboratory certificate can be a good investment, assuming it was purchased at a fair wholesale price. The secondhand market for large, high quality stones is strong. Paying RETAIL for anything, however, will rarely be a good investment.

Unfortunately, few people buy their jewelry wholesale, and even fewer have large diamonds that fetch the big bucks. Consumers with these small, average-quality stones really take a hit in the secondhand market. India and China have flooded the market with small and low-end diamonds. These smaller stones (under one-third carat) can wholesale for as little as $50 to $100 per carat. It’s really quite shocking—especially with big retailers charging ten times that much.

Here the following advice:

BUYING: Avoid buying expensive diamonds from big-name retailers. They have very high overheads, so they need the high markups to cover their costs. Instead, shop online at one of the many reputable diamond resellers and compare, compare, compare. Remember to compare apples to apples, and be sure your diamond comes with a GIA certificate (not some other generic certificate).

SELLING: Avoid general gold buyers and lenders. Try selling to family, friends, or possibly on Ebay or Amazon (though you must be vigilant). Your best alternative is to visit a specialized diamond buyer that is part of a trade network and can offer a fair wholesale price.

The one thing to keep in mind when buying diamond jewelry is this, you’re not making an investment. You are buying something that should make you or your partner feel good, whether symbolically, romantically, or just for fun. 

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