Why is the diamond resale value so low?

Luis Schowalter asked a question: Why is the diamond resale value so low?
Asked By: Luis Schowalter
Date created: Sun, May 30, 2021 12:31 PM

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FAQ

Those who are looking for an answer to the question «Why is the diamond resale value so low?» often ask the following questions:

👉 Is diamond resale value low?

A Diamond's Selling Price

Diamonds indeed retain a portion of their value… The quality and condition of a diamond also impact resale value. The precious metal in a piece of jewellery also retains a portion of its value, but much of a piece's worth lies in other factors: Labour.

👉 Why diamond has no resale value?

But the truth stands: when you buy a diamond, you buy it at retail, which is 100% to 200% markup. If you want to resell it, you have to pay less than wholesale because the buyer is undertaking a capital risk… Hence, there is no gainsaying that diamonds are anything but a solid investment.

👉 Diamond faq - do diamonds have resale value?

Do Diamonds Have Resale Value? A short answer to this question is a straight yes. A long answer to this question will take you through the basics of trading in (buying and selling) diamonds, but the answer will remain yes. However, the resale value of diamond jewellery or loose diamonds does not fluctuate like the price of gold.

9 other answers

Why is Diamond Resale Value So Low? At a jeweler’s store, a diamond ring is worth twice what it’s worth after it has been purchased. This is because they buy their diamond pieces in bulk and this secures them the wholesale rate. This does get them more products at a lower cost but it also introduces an issue in mark-ups.

Why is resale value of precious stones so low? It’s not that the resale value of a pre-owned gemstone is so low, it’s that the retail markup on that same gemstone is SO high. A wholesale loose gem may sell for $50… that same gem gets mounted into jewelry, say a $250 ring at wholesale. Cost of materials is $300.

The pawnshop will give you 50% or less what he thinks he can sell the diamond for. But people don’t buy diamonds from a pawnshop so he can’t give you 50% of the retail price. In fact the pawn broker will only be able to sell the diamond to a jewel...

However, that does not mean that resale value of GIA certified diamonds is going to be much higher. Retail stores where we purchase these stones have a high markup. They bulk buy diamonds from wholesalers and sell it for twice as much, whereas the market value is much lower. This helps them pay their bills and make a small profit.

my fiance sent me this article in the atlantic that describes the development of the De Beers cartel, which controls almost the entire diamond industry, and why the resale value of diamonds is so low. i found it pretty interesting and thought it might spark some discussion on these boards.

As a consumer, diamonds do not have good resale value and you can expect to take a big loss in the event you need to sell your diamond ring. That’s because when you buy a diamond ring at retail prices, you are going to be paying a hefty margin that goes into the jeweler’s profit.

The lowest of these is, of course, the “cash price”—the price a store will be willing to pay immediately to acquire a diamond without a customer presently requesting this diamond. The reason this price is the lowest is because it requires an immediate outlay of capital in exchange for only the hope of a future sale.

There are several reasons for this, but the main reason as to why resale prices for diamonds are so low is because jewelers will often buy diamonds in bulk. Buying in bulk means wholesale prices, which are much lower than retail prices.

Diamonds resell for 25% to 50% of their purchase value. So if you purchased your diamond jewelry for $1500, the resale value will be somewhere near $855-900, depending on the buyer’s preferences. That’s why only rare and big diamonds are good for investments. For other stones, you need to cut down expectations in terms of resale value.

Your Answer

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