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Caring for the community, as well as our customers is central to Novita’s culture. For this reason, we believe we have the duty to write controversial yet insightful topics of the diamond industry. For this article, we have asked our gemmologists and our global marketing manager to put their heads together to bring to you this incredible article.
Is Investing in Natural Pink Diamonds Really a Bad Idea?
Why Natural Pink Diamonds are Among the Worst Investments
All natural coloured diamonds such as blue diamonds, green diamonds, yellow diamonds, champagne diamonds etc are truly not great investments. A global buying frenzy of natural pink diamonds all over the world has surged from the announcement of the Argyle mine in Australia stopping its production in 2020. The Argyle mine in Australia is incorrectly believed to be the only one to produce pink diamonds in the world. But this is false propaganda to push the sale of the remaining Argyle pink diamonds.
Are There Any Other Countries Producing Natural Pink Diamonds Too?
There are also mines in Brazil and Russia that are currently also producing pink diamonds and they are not planning on stopping any time soon. You also need to take into account all the mines that are yet to be discovered, and that the Argyle mine is closing only due to the increased operational costs and a stagnant diamond market. This makes it not commercially viable at the moment to continue operations. This doesn’t mean they will not continue again in the future when let’s say mining cost production has improved due to the advancement of technology.
How Do Natural Pink Diamonds Compare to Other Investments?
Now, let’s talk figures. If you were to buy a natural pink diamond the average retail mark-up is 200% meaning if you pay $30,000 the real cost of the diamond is $10,000. Now let’s say you want to sell it back the next day. Naturally, you would have to go to someone that buys those type of things, so you head to a dealer or anyone in the diamond industry. You would get the shock of your life when you find out that you would be lucky to receive $8,000 in return. Why only $8,000? Simply because the dealer you are selling to could buy the same type of diamond for $10,000 from his supplier. That would be directly invoiced from the supplier rather than buying from a member of the public and not having detailed paperwork. Some dealers would even try to make a low-ball offer between $5000-7000.
To help you understand a little further, let's put another investment into perspective. If you bought $30,000 worth of gold bullion for example and you decided to sell it the next day, you could walk into any gold bullion dealer and receive 98% of the value any day of the week which is $29,400. This is due to being a commodity that has a set world spot price, unlike pink diamonds. We think you get the point.
Note: Those huge mark ups do not happen when you buy white diamonds especially wholesale websites like Novita, which we focus on high turnover and low margins.
