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Natural Pink Diamonds are a poor investment
Jun 16, 2023
Diamonds
Natural Pink Diamonds are a poor investment

Providing exceptional value to customers without exploiting the planet and its resources has always been the hallmark of NOVITA DIAMONDS. The pursuit of this singular goal also drives us to write on controversial but insightful topics about the diamond industry in order to offer our customers the best advice and information possible. To that end, we present you with another stunning piece authored by our resident gemmologists and global marketing manager.

 
Natural Pink Diamonds Being A Good Investment is Nonsense!
The worst investments you could make are Natural Pink diamonds.

Since colourless or white diamonds have been dominant for so long, for good reasons, many people are unaware that diamonds can naturally occur in a range of colours, such as blue diamonds, green diamonds, yellow diamonds, champagne diamonds, and more. Coloured diamonds, especially pink ones, aren`t good investments in any way, despite their relative scarcity, at least as compared to mined diamonds. In response to the news that the Argyle mine in Australia will cease operations by 2020, a frantic craze of hoarding natural pink diamonds swept the globe. In reality, the belief that pink diamonds can only be found at the Argyle mine in Australia is false and intentionally perpetuated to bolster pink diamond sales.

Brazil and Russia also produce natural pink diamonds

Because pink diamonds are not restricted to just one mine in Australia, we can say with absolute confidence that their supply will not run out anytime soon. Russian and Brazilian mines also produce pink diamonds, and their reserves are far from exhausted, not to mention the deposits that are still not discovered. The reason Argyle mine closed was due to mundane economic forces. They were facing the combined pressure of increasing operational costs and a stagnant diamond market, rendering operating the mine commercially unviable. If circumstances improve again, such as reducing costs through new advancements in mining technology, the mine could easily be reopened in the future.

 

Investment Comparisons

We will need to discuss some figures in order to clearly illustrate why mined diamonds that are pink, or any other colour for the matter, are a terrible investment. First of all, you can expect to pay a 200% retail markup for a natural pink diamond. In other words, a pink diamond that actually costs $10,000 will be sold to you for around $30,000. Now let`s say you want to sell it back the next day. Naturally, you would have to go to a diamond dealer or a shop specialising in second-hand diamonds. You might be shocked by their offers for your pink diamond; you will be very lucky even to receive an offer near $8,000. Many dealers will even happily make low-ball offers between $5000-7000. Why such a dramatic difference? Quite simply, the dealer you are selling to could buy the same type of diamond for $10,000 from his supplier. Receiving an invoice directly from the supplier rather than an individual is always preferable for the dealer, regardless of the paperwork that comes with it.

 

As a further demonstration of the bad investment potential of pink mined diamonds, let us compare them with the gold standard of investments – actual gold. Unlike pink diamonds, which have no official recognition, commodities like gold have set world spot prices. Suppose you bought $30,000 worth of gold bullion, for example, and decided to sell it the next day. If so, you could walk into any gold bullion dealer and receive 98% of the value, or $29,400, immediately.

 

Note: Stay away from huge markups when shopping for colourless or white diamonds. If you want the best deal, purchase from wholesale websites like NOVITA, where the margins are low so that turnover is higher.

Natural Pink Diamonds are a poor investment

Note: Lab grown diamonds also come in a variety of colours and are physically, optically, and chemically identical to their naturally mined counterparts. However, lab grown diamonds sell for a fraction of the price of their mined counterparts. At NOVITA DIAMONDS, you can buy coloured, including pink, lab grown diamonds of any size. It is possible to make a lab grown diamond more intensely pink if desired, as well as save hundreds or thousands of dollars if you are looking to buy it, making it objectively superior to a mined pink diamond.

To conclude, there would be no benefit to investing in natural pink diamonds due to their heavy markups, as well as the lack of resale markets. Concerning their limited supply, it is simply a marketing campaign. Other mines around the world continue to mine them. We can confidently say that it is very likely that the Argyle mine will resume production sometime in the future or that it will be bought outright by another mining company.

False: Pink diamonds are produced exclusively at the Argyle mine in Australia and nowhere else.

False: All the natural pink diamonds have been mined, and no more are forthcoming.

True: pink diamonds are also being produced in Russian and Brazilian mines.

True: retailers are marking up at 100 – 300% above the real cost price for natural pink diamonds.

True: The Argyle mine may resume operations in the future or could be acquired by another mining company.