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Painful and pricy reminders of disappointed love, these gemstones nevertheless count among an owner's financial assets. They carry insurance, get locked up in banks and sometimes show up in wills. Their very pricetags have helped them symbolize connubial commitment - of a temporal sort.
But if Cupid shoots wrong, can his victim at least depend on recouping the diamond's cost one, five, or 20 years later? Or, like recent investors in silver and gold, can the owner even make a return?
The short answer is: Maybe, if price and fashion trends are on one's side.
The consumer faces some rock-hard hurdles, however. For starters, prices don't always go up.
For example, a price index for rough, or uncut, stones compiled by London-based WWW International Diamond Consultants showed a 7 percent drop from late 2005 to late 2006.
The reversal came after tight supply and demand from a strong global economy had driven up prices for the prior two years, marked by about 19% growth in 2004, said Richard Wake-Walker, a principal at the consultancy. It tracks diamond prices by monitoring sales and holding tenders in gem trading centers.
Prices "had gone up so much in 2004 and 2005, and like with all commodities, there has to be a correction," he said.
A stone held for 10 or 15 years, however, will likely be worth more, say jewelers. It all depends on when you bought it - and the size.
The value of a half-carat diamond in 1980, when diamond prices had shot through the roof, had fallen 20% by the end of last year, according to the Rapaport Diamond Index, which is put together by the research unit of New York-based diamond pricing and trading company Rapaport Group.
Prices for one-carat stones also dropped, by 40%, according to the same index, though they rose nearly 20% in the past decade.
Prices for five-carat diamonds, on the other hand, have nearly tripled in the last 25 years, reflecting consumer demand for bigger stones, says Rapaport.
"Diamonds are a commodity, they go up and down in price," points out Christine Szatko, manager of the Lincoln Park, Illinois store for Fey & Co., a Chicago jeweler.
Despite this inherent uncertainty, thousands of diamond owners are trying to sell their jewels every day.
A recent search on eBay's Inc.'s US auction Web site, where jewelers say an increasing number of customers are turning to resell their jewels, showed over 100,000 diamond-related items listed - or 10% of the site's listed jewelry and watches.
Prices for wholesale diamonds, the loose gems bought by diamond dealers, underpin prices in retail. But a consumer looking to resell a stone is as much affected by jewelers' profits margins as prices fetched in European trading houses, say jewelers.
Just to take home that little velvet box, a consumer pays 10% to 50% more than the wholesale price of the stone, say jewelers. That mark-up constitutes profits the jeweler uses to pay for overhead like a downtown retail location or an e-commerce site's Web servers.
And the jeweler has no reason to pay a consumer even the wholesale price - unless the gem is rare. Jewelers say consumers may get half of the stone's retail value when they go to sell it.
"If you buy it retail today and sell it tomorrow, you're not going to get what you paid for it," says Martin Rapaport, publisher of the Rapaport Diamond Report, which is part of Rapaport Group.
He estimates that a consumer who buys a diamond for $1,500 that includes a 50% retail mark-up might be able to sell it back for about $700. To get a better price, he suggests asking a jeweler to sell it on consignment.
Fashion trends even affect demand for stones that have been around for billions of years. What was hot 10 years ago may not be now. These days, customers are favoring shapes like round, emerald and azure-cut diamonds, says Craig Horwitz, vice president at Chicago-based wholesale and retail jeweler H. Horwitz Co. Favorites from past decades, like marquis, pear or oval shapes, have fallen out of favor, so they fetch less.
"Everything in the jewelry business is as cyclical as fashion is," he says.
Notwithstanding the trickiness of just breaking even on a stone, some in the diamond industry think diamonds will make good investments - eventually.
Rapaport, for instance, is trying to set up a way to trade diamonds as a commodity, like oil or gold. If he's successful, consumers may be able buy gems without the retail mark-up that makes achieving a return on their purchase so tricky.
"Retail prices aren't investment prices," he says. "You can't buy a diamond as an investment unless you're buying it from an investment house, and that's not yet possible."
So at this point, most jewelers advise consumers preparing to make a diamond purchase focus on other reasons to buy a stone, like sentiment and decoration.
And they're always happy to help customers trade in their gems for a bigger, pricier model.
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