Do diamonds appreciate? This is a big question that has long surrounded the diamond industry.  It’s clear that rare diamonds, of large size or stellar color, do make a great investment and have set many auction records in recent decades.  However, for those purchasing diamonds of more average cut and quality, the query is a little more challenging to answer.

Statistics show that the average cost per carat has increased more than tenfold over the past half-century.  In other words, the person who purchased a diamond worth $2,500 in 1955 could reasonably expect that the same diamond would be worth $27,000 today.  That is not a precise measure, however, of growth of the investment.  Consider some of the other factors that can determine the true success of your investment.


There is inflation to consider, which would discount the gains. There was a period of very steep inflation in the early 2000s, which played against the diamond investment gains.  When the increases in value are compared to the level of inflation over the course of the past 50 years, the true investment income was much less than what the statistics above demonstrate. Still, even after that harsh rise in inflation, there was still a notable increase in diamond demand and value.


As with many investment options, the time of sale greatly impacts how much the investor stands to make.  There was a big spike in diamond values in the 1980s, which was attributed to excellent marketing by leading brands. Slogans still used today were first introduced.  A rebounding economy meant that people had disposable income that they hadn’t enjoyed previously. The combination of factors led to a surge in demand.  Selling an investment diamond in that period would have resulted in strong gains. Selling in a more sluggish market and economy would not guarantee those profits.


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Supply and Demand

As was demonstrated in the paragraph above, supply and demand do play a significant part in the value of diamonds.  The industry has done a good job of moderating the flow of new diamonds into the market.  Should that funnel system break down, or should a decision be made to allow the market to be flooded without a marked increase in demand, price points would fall.  On the other hand, spikes in demand without an increase of product would push prices up.

Smart Shopping

The value of the investment will also depend greatly on how wise the initial purchase was.  Retail markups can really put a dent in profits.  Taking the time to really investigate fair pricing and various sources can help encourage better investment growth.

In short, the value of diamonds has increased over time. The exact percentage of increase is difficult to determine, due to a myriad of factors.  However, with smart investment practices, it is definitely possible to profit on natural beauty.