Why is Diamond better than Gold this Diwali?

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Diwali is round the corner and so is Dhanteras. On Dhanteras, individuals and business communities consider it auspicious to purchase gold or silver articles or at least sombre steel utensils – with the belief that new ‘dhan’ or some form of precious metal is a sign of good luck.

This Dhanteras – Give Yellow Metal a Miss!

In fact, years ago when gold price were under control, Dhanteras meant gold jewellery for almost everyone in the household – be it in the form of a thin chain or a simple ring. But, with gold prices spiraling sky-high over the last few years, buying gold during this festive season might not be the best idea for you – both as a devotee and as an investor.

However, you can still bring in good luck with other precious metals – such as Silver or Diamonds. Remember, silver will never be old fashioned. Moreover, since silver is a hard metal it will hold precious stones like diamonds even better.

But, if you are the one to believe in this cliché – “Higher the price tag, better the buy;” than certainly the dazzling diamond is meant for you. Though gold ornaments have always been a favourite buy, diamonds are fast becoming a rage among the buyers.

Diamond this diwali

For a Change – The White Bauble is winning over the Hearts!

You have plenty to choose from the wide range of diamond earrings, pendants and necklaces. Women are increasingly consider gold as old-fashioned and are now looking at the white bauble with greater interest. Well, that’s not all – this might just be the right time to buy diamonds from investment perspective too.

What’s more, diamond prices have also been more stable than the gold prices. Further, the recent rally in gold is being driven by market speculation as to the overall health of the economy, while the steady uptrend in diamond prices is more firmly grounded in demand and supply dynamics.

So, How Much does the Dazzling Rock Cost?

Recession hits the richest and even the toughest (of rock) – thus, even diamond prices were not immune to the global slowdown as it lost sparkle by almost 30% from the peaks. Consumer fear, triggered by tightened credit, resulted in reduced luxury purchases and lower demand for diamonds.

However, diamond jewellery prices, in all segments, have risen only by 10 to 20% in the last 5 years, against the spectacular jump, of 185%, in gold prices.

Specifically speaking, I still haven’t answered the query posted in the above sub-heading, “How much does the dazzling rock cost?” Reason being, unlike gold, there is no single price for diamond because of various determinants including cut, weight and clarity.

Hence, when it comes to buying a diamond, sometimes it gets a little stressful as you walk into a jewellery store and feel like you’re being over-quoted in terms of price depending on specific parameters.

4C’s of Diamond

The ambiguity in determining the diamond prices based on various grading parameters calls for a need to understand the diamond buying guide – which can be categorized as 4C’s:

1) Diamond Cut:

It is the most important factor which determines as to how well proportioned the diamond is – in terms of diamond diameter as its depth, its various angles and how do they interact with each other. Cut refers to how cleanly and brilliantly a diamond may sparkle and twinkle back at you.

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2) Diamond Color:

This aspect is the second most important characteristic of diamond quality. In fact, they claim that “When looking at a diamond, the human eye notices the diamond’s cut first and its diamond color second.”

diamond color

The color of a diamond or lack thereof is something that you have to keep in mind while going on a shopping spree. The more the clear and colorless the diamond is, the higher the quality and cost of investment for the same.

3) Diamond Clarity:

All diamonds have identifying characteristics, but most are invisible to the naked eye. The term ‘diamond clarity’ refers to the clearness of the diamond – including minute flaws such as bubbles, imperfections or scratches that are visible inside or on the surface of the diamond itself.

diamond cut

4) Diamond Carat Weight:

Lastly, you cannot ignore the weight of a diamond – which is expressed in terms of ‘Carat’ – in deriving its actual value. Larger diamonds are more rare and in more demand than smaller diamonds of the same quality.

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A one carat solitaire diamond ring is nearly always more expensive than a diamond ring made up of multiple diamonds that are similar, but smaller, even though they total one carat or more.

So, are you game for this new sparkle on upcoming Dhanteras?

(Img Source  )

  1. Robert Ganz says

    I can follow the gold & silver market at all times at coininfo.com For example gold is at $1352 0z. Silver at 24.66 as of this writing. I always know the value and I can buy at a fair price based on this information. Where do you follow a diamond market based on the 4 C’s? How good is the assurance that the diamond is graded correctly? How liquid is a diamond when you are ready to sell?
    Unless you are an expert in the diamond market, it is best to stay out of it for investment purpose. As we say in America, “The chances are most likely that you are going to get screwed.”
    Regards,
    Robert

  2. Neha Bhardwaj says

    I would love to write for you. I am an Assistant professor in Marketing and read your blogs on a regular basis.

    Neha Bhardwaj

  3. Altaf Rahman says

    Nice article. Here are my two paisa :)

    The reason why Diamond sales did not take off in India is the same as the 4C’s as explained above. People of India know of diamonds even before westerners learned to wear cloths. Still India lags behind west today in per capita consumption of diamonds. At the same time India is the largest consumer of Gold and Silver. Why? The reason can be seen in the consumption pattern.

    90% of the gold and silver is consumed by lower middle class people who form vast majority of Indians. When the harvest is good and they have surplus money, they buy gold and silver as it is auspicious. As the saying goes “drops and drops make the ocean” the millions and millions of poor farmers and people whose earnings are just above their life support make India the largest consumer of gold. If you consider their hardships in life, they do not prefer complications. Buying gold is simple affair. They weigh the jewellary, pay the price as per caret quality. Most of the items are 22 carets so price is fixed. Silver is even simple.

    Now coming to buying diamonds, they have to go through 4C’s mentioned in the article. Theoretically what is said above is true. But when you go to check the 4C’s in the shop it is impossible. All you can see is the diamond fixed in the jewellary lets say ear rings.
    Of the 4C’s mentioned, you can not see the cuts (as it is already fixed in the rings), you can not see the color (for the same reason as above), clarity (again same reason), and weight (same reason).

    The consumer has to depend on the word of the seller. There is a saying that the goldsmith will not give exact 22 caret gold even to his own brother. So taking the word of the seller is out of question.

    The only other alternative is the certificate. For the consumers (with their profile of mostly uneducated lower middle class people) it’s a paper which may be lost, which may not have value. Also the certificate issued by one seller is not recognized by the other.

    In this scenario, they prefer gold as they feel they are more comfortable in the process of purchase, they know of its liquidity. Diamonds are seen as the playground of rich people.

    Now some may ask why our case is different from westerners. Now take westerners. Every young man has to propose to his would be. Though gold rings will suffice, what I have seen is they prefer diamond as they believe the decision of the young lady will tilt to yes if the ring has a diamond in it. The reason I mentioned this reason is to show the cultural factor working in favor of diamonds in west. Also they are mentally prepared even before buying that there is little resale value.

    In order for diamonds to take off in India, the diamond lobby has to come up with some thing which matches the consumer profile and involving their beliefs. Also once resale process is established where people can be assured that the diamonds once bought can be sold as freely as gold, Indians will slowly start buying stones.

    My own experience :
    When I was rich (once upon a time he he) I remembered once my mom telling (in general) how much she liked the diamond ear rings of a relative. I have seen the rings myself so I set out to buy similar rings and surprise my mom.

    As I am a novice in buying diamonds, I was confused, walked up and down the stairs of hundreds of shops, and finally liked a set of rings. The owner took out modern gadgets and showed me how the diamonds are pure. Once you touch the tip of a ball pen type of instrument to the diamonds, if it is genuine, it beeps. If you touch it anywhere else it will not beep. I am not sure if this is the way, however I took the test as I have to buy anyway. I paid US$.800 for the set. (US$.400 for the gold rings and the 12 encircling diamonds and US$.400 for the center diamond which I had to buy seperately)Upon hearing the news, my wife demanded one similar. I had to oblige. (Married people know the consequences if we go against the wishes). So after shelling out a lot of money, I happily presented the ring to my mom. She was happy. However few months later she talked to me as an elder. She told me how she appreciated my deed. However she told me that upon visiting one of our family jeweler, she was informed that though they are diamonds indeed and of the same weight as per the certificate, they were not of the same clarity as claimed by the place where I bought. The bottom line is I could have bought the same at Rs.15,000 per set in India. She told me like a true elder to be careful while buying things which we are not familiar with.

    The point is if I can be in such situation, so can the others too.

    At the same time I know they are slowly taking off with many certifying centers, increasing earnings, lifestyles.

    Also if India has to benefit by the diamond industry, they have to break the clutches of De Beers syndicate. Many tried but failed since centuries. But I think India is capable of doing so. We broke the monopoly of ICC in cricket and made it a pet in the hands of BCCI. We surely can do the same to De Beers.

    1. Viral says

      Altaf, thanks for the larger than the life comment. Are you sure those were 2 paise? I feel that was almost 200 rupees in size. :)

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