Many people wonder how much money they can make if they decide to sell their diamonds; hence the common question, “Do diamonds have resale value?”. Fortunately, any type of diamond you possess have a resale value. The diamond demand is high. Hence there are always jewellry buyers ready to buy pre-owned diamonds.
The resale value of a diamond is basically the amount of money you receive when you decide to sell the diamond. It is crucial to know that the money received is often less than its cost price. No one will pay you higher than the retail prices, unless you find a retail customer who would rather buy from you. Which is rare because people usually trust a shop more than individual sellers.
Diamond resale value (Natural diamond) is affected by many factors, including the features (4 C’s) of an individual diamond; there no two diamonds are ever the same. Other factors may include:
- Where you decide to sell your diamond
- Where you purchased your diamond
- Grading certifications
- When you bought the diamond
- Special significance (antique value)
- Influential brand names
Is Buying a Diamond a Good Investment?
Diamonds may look like excellent investments on paper due to their high value. However, they are not suitable financial investments because there is no pricing system (price only depends on demand and supply). Although they have value, and are usually always in demand, the price at which a diamond is resold is far lower when compared to its initial purchase price. Mostly because of the large market supply.
Buying diamond jewellery is more straightforward than selling because buyers are only willing to pay lower than your purchase price, i.e., no retailer will buy at a price higher than wholesale price. Diamond resale value is often between 25% and 50% less than the initial purchase price.
Buying diamond jewellery to resell later for profit is a bad idea. Do not believe the common myth that a diamond ring or earrings are some types of investment. You should expect to sell those diamond earrings at a significant loss as they carry more sentimental value than actual value. Do not expect too much from the actual sale, unless you are holding a diamond with special significance which you got for a bargain.
Do Diamonds Increase in Value?
There is a common misconception that diamonds become more valuable over time since they are rare. Diamonds rarely increase in value (not accounting for inflation). Even though diamonds have resale value, it is unlikely to sell your diamond ring for the same purchase price, except your diamond has an exceptional colour (excluding blemishes in white diamonds), quality, and carat weight. The value of a diamond doesn’t increase or appreciate over time. The value of your diamond jewellery reduces by half once you walk out of the jewellery store after purchase. The value of a diamond may decrease due to many factors in the diamond’s value chain. Factors include fluctuations in market prices, the decline in diamond prices, and damage to your ring.
Why is Diamond Resale Value So Low?
Diamond resale value is low because of retail markup prices. Jewellery buyers and retailers buy diamonds in bulk from wholesalers at prices far lower than retail prices, that is how they profit.
Generally, the retail price of a diamond can be twice the wholesale price. Retailers cannot buy your diamond at a price higher than the retail price as they can buy the same diamond at a wholesale price. There are three significant reasons why diamond resale value is so low:
- Markup Price: all retail products have high markup prices, and retail diamonds are not left out because they are not quickly sold out (people take their time during purchase). A high markup is a way diamond retailers protect themselves because the gem can take a lot of time to be sold. So, if you decide to sell your engagement ring, expect a lower price than the original price.
- Value at resale: any piece of jewellery that has a diamond is subject to low resale value. Diamonds resold can be worth half of the price you originally paid. Because of retail markup and potential decline in diamond prices or trends.
- Appraisal value: jewelers provide a high appraisal value when you purchase a diamond. They provide you with appraisal value to make you think you bought the diamond at a lower price. But in reality, you did not. The appraisal value is always higher than the amount paid for the diamond. The idea behind a high appraisal value is to increases the insurance premium on the diamond, so be aware of this trick.
Gold Vs. Diamond Resale Value
You can sell both your gold and diamond jewellery to buyers for cash. There is no set price for either of these precious commodities because their demand constantly fluctuates.
Gold could be worth more than diamonds because it can withstand inflation, has a reliable return, and is considered a form of currency in some countries.
Natural Diamond Vs. Lab Diamond Resale Value
One downside of lab-grown diamonds is that their resale value is weak. Lab-grown diamonds are impossible to resell without losing a massive percentage of their original value.
The resale value of lab diamonds is about 40% less than that of natural diamonds, not because they are of lower quality but because they are perceived as not being the typical way of manufacturing diamonds. Because a jewellery store is not buying your lab-grown diamond doesn’t mean it has no resale value (they are new to the market).
Conclusion
Natural diamonds have a resale value, meaning you get some cash if you want to sell your diamond jewellery. However, unless your diamonds are rare and exceptional, they do not increase in value and are unlikely to bring any profit. Jewellery buyers will only offer you a lower price than what you initially paid for your diamond. You can expect 25-50% less than you paid originally and the store when you resell your diamond. To avoid getting cheated, only sell to honest and reputable diamond buyers to get a fair price for your diamonds.