The US stock market changes pitch and yaw enough to make even a salty dog seasick. With the bizarreness that is today’s stock market, many people are turning to other commodities in order to invest their money and build wealth. Gold, silver and even nickel have all seen their prices climb dramatically in the past few weeks. Many consumers are considering diamonds as a viable commodity, as well. If you’re considering buying and selling diamonds as an investment method, here are a few things that you need to know before you take that first step.First, diamonds do not make a very good commodity in the traditional sense. Metals, even precious metals, are a necessity for industries around the world. Jewelry grade diamonds are not a necessity, they are a luxury. Luxury items might make good commodities if you have a lock on a luxury market; however, finding that lock is getting harder and harder. Why is it harder now than ever before to lock in diamonds as a commodity? Let’s take a look.
The trend, at least in high-end US markets, is actually to cut back on diamonds and gold found in jewelry. Gaudy stones and lavish settings are giving way to more modest options and even completely different materials as more and more people are hit with the rising cost of living. Does this mean that you cannot make a living buying and selling diamonds? No, it does not. However, there are other markets that can be more profitable, such as playing the foreign exchange market.
Why is it difficult to make a living with diamonds? If you are buying and selling diamonds, you’ll have to find a reputable wholesaler from which to buy your stones. That, alone, is difficult enough. Next, you’ll have to decide what to do with the stones that you were unable to sell. Sometimes, you can sell the stones back to the original wholesaler, though you’ll receive far less than what you paid for them originally.
One thing that any potential investor must understand is that there is no real shortage of diamonds. In fact, the price of diamonds on today’s markets is largely artificial, due to the controlled release of the stones onto the market. This creates a high demand (relatively) and a lower supply.
Another reason that diamonds do not lend themselves well to commodity trading is that jewelers and diamond cutters can usually find stones of higher quality for lower prices than you, as a trader, would be able to find. That makes it very difficult to be a middleman in the diamond market. The only way in which diamonds can be used as a profitable commodity is in a small market, with a modest demand, or in a large market with a hearty demand, in which you control the supply.
If you are considering trading in commodities, diamond trading is not likely to be the cash cow that you seek. Consider investing in metals (gold, silver or even steel) or another high demand commodity before you make the decision about diamonds.
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