In addition to being stunningly beautiful tokens of love, diamonds have enjoyed an enduring reputation as being a highly portable, highly liquid, and highly desirable asset. While not as predictable as gold or real estate as a hedge against inflation or as a safe haven for wealth, they nevertheless gave a sense of security to the owner. If personal or political fortunes took a turn for the worse, one could always flee the country and locate a discreet broker to handle a transaction that could transform the family jewels into a respectable nest egg.
This reliability was due to the rarity of diamonds, the supply of which is tightly regulated by the DeBeers cartel, and the fact that only nature could make a diamond, and that took a long, long time.
Now, not so much.
The diamond cartel may still control the supply of natural diamonds around the globe, but technology has once again ambushed another seemingly invincible market. ‘Lab grown diamonds’ now marketed to the masses by Pandora, among other vendors, portend a storm on the horizon: manufactured diamonds, just as ‘real’ as natural diamonds and offered at a fraction of the cost, are now a reality. And when you go into a jewelry store to look at diamond jewelry, there’s no way for you to know which one you’re buying, regardless of what the salesperson tells you. (They may not even know.) This does not bode well for the future price of diamonds, or any precious stone for that matter.
I encourage everyone to watch the Netflix/Showtime documentary ‘Nothing Lasts Forever‘ to discover the reality behind the marketing. Why? Because the chickens are finally coming home to roost.
In ‘The Old Money Book’ and ‘The Old Money Guide To Marriage’ I strongly suggested that young couples in love eschew the big diamond engagement ring and the big diamond wedding ring. I promoted simplicity, economy, and logic, and I expressed a preference for a simple gold or platinum band. The future of diamonds’ value, I believe, will confirm my wisdom.
If you want a similar example, read up on the history of pearls, and how ‘cultured’ pearls impacted the value of ‘natural’ pearls. Do you even know the difference today?
If not, that should tell you something, not just about the present state of pearls but about the future of diamonds.
They are not a girl’s best friend. They are not anyone’s best investment, and in fact are probably a horrible expenditure, especially for those young people just starting out in life.
Remember: nothing says ‘I love you’ like being smart with your money. Because one day, in the not too distant future, it may all be referred to as ‘costume jewelry.’
Enjoy the documentary.