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Diamonds Are Still an Investor’s Best Friend
If you forgot to buy your loved one a Valentine’s Day gift and spent a week sleeping on the sofa, eating canned food, and cleaning out the cat box, you now have a chance to redeem yourself.
A revolutionary new website has just launched called Mazal Diamond, which promises to turn the online jewelry business upside down. I went to the privately held company’s website at http://www.mazaldiamond.com/index.htm and found an entertaining assortment of free tools. You can design your own jewelry, and even order a custom cut, which Mazal will supply out of their massive 100,000 stone inventory.
Just for fun, I appraised the diamond I bought for my late wife, which I bought from a Hasidic Jew in an alley off of New York’s West 47th street. He kept his inventory hidden in an envelope in his sock. How times have changed! The two carat, VVS1, round cut, yellow diamond that I paid $3,000 for in 1977, would fetch $16,800 today. Great trade!
Mazal Diamond’s game changing advantage is that they cut, design, and manufacture their own jewelry, enabling them to undercut prices offered by established industry leaders. In fact, the $30 billion a year diamond industry is undergoing radical change by moving online, much the same way as the book, music, and travel industry have gone. Your local neighborhood jewelry store is about to get wiped out, or become a quaint relic.
Blue Nile (NILE) pioneered the way, and instantly became the 800 pound gorilla. The company cut costs by keeping inventories low, relying instead on a secretive web of anonymous suppliers. Now, second generation entrants are snapping at its heels and eating its lunch with polished websites, better service, and lower prices, seducing potential customers with free diamond blogs. Mazal Diamond even offers a year of free insurance. No surprise then that Blue Nile recently announced and earnings disappointment that took its stock down a nausea inducing 20% in one day.
They are getting a boost from a 30% price gain a woman’s best friend has seen since the March, 2009 stock market bottom, taking them back to pre crash levels. The US accounts for about half the world market, so the new frugality will be a challenge. That will be offset by flight to safety purchases by inflation wary Americans, and new demand from the emerging market middle class. No lesser authority than UBS until recently advised clients that diamonds were easily transportable in tubes of tooth paste, invisible to the eyes of the Customs Service and the IRS.
Investment grade diamonds have been steady earners, gaining an average 5% a year over the last three decades. Blue Nile shares rocketed 370% from the lows last year, while Zale’s (ZLC) saw a ballistic 800% gain, offering a call on consumer spending with a real turbocharger. That means avoiding these stocks like the plague now, but entertaining a look when you think the economy is about to surprise to the upside. To avoid another week on the sofa, you might even think about buying next year’s Valentine’s surprise now.
For more iconoclastic and out of consensus analysis, you can always visit me at www.madhedgefundtrader.com , where the conventional wisdom is mercilessly flailed and tortured daily, or listen to me on Hedge Fund Radio at http://www.madhedgefundtrader.biz/ .
"Until proven otherwise the stone I buy is of high quality and the same stone sold is faulty."
Damn straight. The US accounts for about half the world market for one reason, and one reason only - Madison Ave. When CBs hold diamonds (not just to pacify Mrs. CBer), then I will consider them wealth storing investments.
1/4/77 AU = 136$; 12/30/77 AU = 165$, today 1103$ (London PM fix)
1103/165= 6.68
16800/3000=5.6
Gold outperformed diamonds and the resale value is fairly well known.
Until proven otherwise the stone I buy is of high quality and the same stone sold is faulty.
My scratched gold coin fetches melting value what is way less spread compared to diamonds.
BTW, i own few diamonds in a cutting wheel on my angular grinder and paid some twenty euros for the cutting wheel.
Compared to Blue Nile, Mazal has a pathethic web site.
joebren, u dont even know what u r talking about!! funny!! aint a web expert, but i see a huge difference there, a huge improvement...without going into details and market analysis i judge what i see...have u really compared them?
Most moronic article on ZH evar...
"The two carat, VVS1, round cut, yellow diamond that I paid $3,000 for in 1977, would fetch $16,800 today. Great trade!"
First of all, your diamond wouldn't "fetch" $16,800 - that's the retail price for idiots who buy diamond jewellery, you muppet. You would get a fraction of that if you tried to sell it, and factoring in 33 years of inflation, you would likely be sitting on a loss.
Secondly, selling your diamond would only be a "trade" if you bought it with the intention of selling it for a profit. Was your wife aware of this plan? Your... late wife? Hang on just a minute...
Mad, your articles are awesome. I disagree that diamonds are a GREAT investment (I would use the word fair), as they are very common. There will always be demand as long as athletes and women have purchasing power. I do like the online stock pick...savvy.
Someone (forget who) is buying Zales, what a maroon! I will admit most women have the soul of a magpie, if it shines, we want it. Something about beautiful gem stones, captures and intensifies the light, draws it to you...I do not look at them so much as investments, rather as adornment. I don't buy the fakes, because it does not have that "precious" feel. I will stick with gold for investment.
Only ones worth buying for investment are rare specimens of diamonds, rubies, emeralds, and sapphires.
Diamonds and stones like Tanzanite the ultimate liquidity trap, aka theft.
You actually consider a yellow diamond held for 33 years with a 5.36% CAGR
a good investment? Wait until you try to sell it at 40% off wholesale.
PS 30 year tax free XOM zeros bought in 1981 locked in 13% CAGR...
http://www.jubileeprosperity.com/
Prescient on the zeros. Props.
Oh and by the way madhedgefundtrader, while I appreciate some of the content you present, please lose the used car salesman pitch on everything you write.
Diamonds, will shut her up... for a minute.
-Ron White
MadHedgeFundTrader I think talks his book a lot. He may be right long-term but short-term I run from whatever he's shilling.
As a gemstone, diamonds aren't worth much. Image over substance.
Big fake ones get more attention than nice little ones. You only know they're real if you really know. Same goes for diamonds.
+10!
Diamonds are NOT rare, the DeBeers cartel with the aid of others had to find a way to MARKET these rocks so they could get higher profits.
PS: try a FAR better dealer from what my friends have told me www.gemstoneking.net
PPS: i virtually never buy diamonds, wasted money for common stones. Diamonds are a MARKETING scheme.
PPPS: If ZH runs junk articles like this daily i want my $50 donation back. :->
Not far better. Nothing special on deals.
LOOK, we are talking about diamonds, so OF COURSE there are no special deals. Diamonds are just a marketing scam for the uneducated. Every pawn shop owner knows this of course.
Comic books have out performed everything over the last 75 yrs.
One major issue with diamonds is that high quality artificial diamonds can be grown in labs, and the technology is increasingly improving. Some of these are so good that you need spectroscopy to be absolutely sure that you have the real thing.
My wife works for Tiffany. Trust me, "emotion" sells and so, always, will diamonds and "the little blue box."
Of course us ZH G-U-Y-S aren't really influenced by this emotional garbage, but, fortunately for our family of four, "ZH G-U-Y-S" ain't the majority - or enough of one.
I do, though, agree that the neighborhood jewelry store is on its last legs - but that is occurring for a lot of "neighborhood" retail stores. Period.
<flame diaper=ON>
funny - i read this article the way most gold skeptics read gold articles (disclaimer: i generally like gold).
i see diamonds as a completely artificial (de-beers, etc.) market (whether that's true or not...)
i see diamonds (gems in general) as pretty little stones, only interesting to those who are interested in them (kind of like stamps or most collectables)... i wouldn't know a 'good' diamond from a pretty piece of glass.
"you can't eat diamonds" - i just love the sound of that one for a change :^)
i can't imagine paying 'that much' for ...
<flame diaper=OFF>
yet my usual arguments for gold are similar:
fairly portable (in the amounts I can afford)
out of the gub-mnt's eye
women like shiny stuff
generally a strong value history (manipulated or not)
hard to produce (even in a lab, requires specialized equip)...
So. do i reconsider my stance on diamonds, or reconsider my thinking on gold?
or maybe just buy some SPY and go away for ten years...
again, purely an ignorance-based "gut valuation" without any graphs or history. just some diamond robbery movies i saw as a kid.
Go with your gut. While diamonds are (decreasingly) hard to produce, gold is an atomic element and cannot be created or transformed from anything else, not with any technology even imaginable at this time. Diamonds are also made from an element (carbon) but only their arrangement makes carbon in a diamond different from carbon in a charcoal briquette. And as someone else pointed out, once the purity of a quantity of gold has been determined, its value is absolute. A cut diamond's value is largely subjective depending on who is looking at it.
Oh, I can imagine the technology pretty easily. You just have to smash some smaller atoms to a degree otherwise found only in supernovae, and voila, gold! Much like Jules Verne imagined moon rockets and nuclear submarines. But I do feel a lot safer storing wealth in gold than in easily reproduced carbon crystals.
No they're not. The price of diamonds have been artificially propped up by the industry monopoly. Get your facts straight.
I never bought a diamond and never will.
Practically unlimited supply, subjective value, overpriced due to cartel monopoly, totally useless product.
Buy a diamond and who knows what it is worth? Only an 'expert' can grade and value it. But every ounce of gold is like every other ounce of gold.
Easy call.
i only buy blood diamonds... just doing my part... ya know.
Wait what....
Diamonds are not actually rare in the earth's crust. Their scarcity has been artificially created and sustained by the diamond cartel. This isn't tinfoil hat - it's easily researched and demonstrated.
I view diamonds as a poorer investment than spec homes in exurban California. In fact I view them as close to being a consumable item, not because the rock should be destroyed, but simply because there is little certainty they won't be cheaper and more abundant in the future. Artificial diamond technology is advancing rapidly. It won't take Moore's Law for it to wipe out most of the natural diamond mining industry and make prices drop.
You want shiny rocks, get some gold or silver. They are actually scarce, and barring enormous advances in nuclear fusion or extraterrestrial mining, will remain scarce.
I happen to receive offers almost daily for diamonds. I am offered, on average, 40 off Rap. Anyone on ZH who wants a diamond, from D IF to LMNO's to fancy's, forget Mazal or Blue Nile. There's a glut of crystallized carbon out there. Russia, Botswana, Australia, Sierra Leone...everybody has buckets of it and they want to sell. Retail is minimum double wholesale, and 40 off Rap means 40% off the listed wholesale according to Rappaport Report. Pay $20K, you could have gotten it for $6k, and after buying, you can sell it for $4K or less to a pawn shop. Eighty percent loss out the door is hardly romantic.
Could you amplify?
Seeking 3 - 4 ct stone of execellent quality for my betrothed and she is very interested in saving money as opposed to buying from Mazal or Nile.
Where is a source I can trust?
Thx for any help.
If, she was as you say, VERY interested in saving money, she'd be happy with a 1-2 carat - dump the golddigger
Maybe I wasn't clear. She and I want a diamond that is a real bargain on a large stone, and Chindit seemed to know how to get one.
She's not a golddigger. She'a paying for most of it herself
because I'm such a great catch.
BTW, there's a big difference between a 1 ct and 2 ct stone.
That, or no sparkly rock at all. If I'd taken what I spent on my wife's ring and put it in gold instead, it would be up 300%+, instead of perhaps barely holding its value. (Of course, wife likes the sparkly rock in this instance, so I guess all is OK.)
My wife is very happy with her 1/2 carat stone. She is glad I have a job, too. I treat her well, do not cheat, speak honestly and from the heart, and relentlessly read sites like this so I can keep food on the table and the zombies out of the house.
"Eighty percent loss out the door is hardly romantic."
now that-there's some funny Sh***t
I'm sticking with cubic zirconium.
+5 lol
Sapphires are pretty. Get untreated ones. Madagascar.
Where does one find these? The only place I thought is ebay, where I found:
http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=130369637129&ssPageNa...
How much should sapphires cost? Relative to diamonds? Gold?
um...NO.
read this and become a bit educated:
http://www.edwardjayepstein.com/diamond/prologue.htm
(if you don't want to read it, stay
stupid and buy diamonds; fine)
diamonds are nothing more than an
inflated asset passed off to others
at higher value than it's worth
wanna have some fun? buy some diamonds
then try to sell them back to somebody.
The whole system is engineered for a
one-way transaction (on purpose..cause
you are a stuck bagholder.)
2 points:
1) A diamond is worth however much De Beers says it is. They're not going to let the price slip, but they won't let it climb out of the "affordable" range either.
2) The only other place I've seen a discussion of diamond prices is here: http://online.wsj.com/article/SB1000142405274870433700457505972359763017.... They would seem to disagree with your points on diamonds as an investment. Disclaimer: I am not interested in diamonds as an investment, so I'm hardly a guru. As I said before, the WSJ article is the only other discussion of diamond prices that I've seen.
Diamands can be made in a factory now. As the process improves the prices will drop. Not a good investment to me.
Im sick of these infomercials.
Is this a "madhedefund guy" a sponsor for 0hedge ?
why always that rubbish ?
Are you kidding? Phuck diamonds. Buy emeralds.
Be careful not to wet your pants in breathless excitement to be shilling for Mazal, Maddie--
"Mazal Diamond’s game changing advantage is that they cut, design, and manufacture their own jewelry, enabling them to undercut prices offered by established industry leaders. In fact, the $30 billion a year diamond industry is undergoing radical change by moving online, much the same way as the book, music, and travel industry have gone. Your local neighborhood jewelry store is about to get wiped out, or become a quaint relic."