The central driving force of NOVITA DIAMONDS has always been to provide the customers with incredible value without resorting to exploiting the planet and its resources. This singular goal also compels us to write controversial yet insightful topics about the diamond industry to advise and inform our customers like no other company. In that vein, we present to you another eye-opening piece written with the combined input from our gemmologists and global marketing manager.
Natural Pink Diamonds Being A Good Investment is Nonsense!
The worst investments you could make are Natural Pink diamonds
Many are unaware that diamonds can naturally come from the earth in different colours like blue diamonds, green diamonds, yellow diamonds, champagne diamonds and others mainly due to the overwhelming popularity, with excellent reasons, of their colourless or white siblings. However, despite their relative scarcity, at least compared to mined diamonds, coloured diamonds, especially the pink ones, are not good investments in any way. The news of the Argyle mine in Australia ceasing its production by 2020 triggered a frantic craze of hoarding natural pink diamonds all over the world. However, the belief that the Argyle mine in Australia is the only place in the world to produce pink diamonds is false and intentionally perpetuated to drive up the sale volume of pink diamonds.
Brazil and Russia also produce natural pink diamonds
The reason we can say with certainty that the supply of pink diamonds is not drying up is simple; they are not restricted to a single mine in Australia. Pink diamonds are also mined in Russia and Brazil, and their mines are far from bottoming out, not to mention all the mines that are yet to be discovered. The reason Argyle mine closed was due to mundane economic forces. They were facing the combined pressure of increasing operational costs and a stagnant diamond market, rendering operating the mine commercially unviable. This leaves the option for reopening the mine in the future open when circumstances are favourable again, like reducing costs through new advancements in mining technology.
To demonstrate clearly why pink, or any other coloured, mined diamonds are a bad investment, we will need to talk about some figures. To start with, you will be met with a 200% retail markup for a natural pink diamond. In other words, a pink diamond that actually costs $10,000 will be sold to you for around $30,000. Now let's say you want to sell it back the next day. Naturally, you would have to go to a diamond dealer or a shop that specialises in second-hand diamonds. You might be shocked by their offers for your pink diamond; you will be very lucky even to receive an offer near $8,000. Many dealers will even happily make low-ball offers between $5000-7000. Why such a dramatic difference? Quite simply, the dealer you are selling to could buy the same type of diamond for $10,000 from his supplier. Dealers will always prefer the added benefit of being directly invoiced from the supplier rather than an individual, even with all the accompanying paperwork.
To further demonstrate how bad an investment a pink mined diamond is, let's compare it with the gold standard of investment, which is gold. Unlike pink diamonds, commodities like gold have set world spot prices, which have no official recognition. Suppose you bought $30,000 worth of gold bullion for example and you decided to sell it the next day. In that case, you could confidently walk into any gold bullion dealer and receive 98% of the value immediately, which is $29,400.