Popularly said that diamonds value drop by over 25-50% the sec you buy it. I know that diamonds value is low key de beers bullshit.
But what I wanna know is how do they calculate the diamond resale value and rational behind 50% resale value of something that never breaks or damages. How do they come up with this shit?
In: 1922
Okay kind of off topic but diamonds do break and quite easily. They are hard, that means that it can scratch any other thing without the thing scratching back.
If you hit a diamond with a hammer it would break
Diamonds aren’t actually worth much. They’re not rare at all, and can easily be created in a lab. They’re only expensive because the DeBeers company essentially tricked society into normalizing diamonds in wedding rings, by having celebrities wear and talk about them. That’s where the asinine bullshit that a ring should cost a man 3 months’ salary came from too.
Diamonds are not rare or special. They’re only expensive because we as a society have been too naive to see the scam, and even now people who know its a scam still want diamonds for some reason, so people still buy them.
TL;DR: the price is massively over-inflated, so they can choose to buy it back at a way lower price so they can sell it for an absurd profit again.
Another reason that people tend to look over when it comes to reselling diamonds is that a lot of people want to sell them while most people don’t want to buy a “used” diamond
There are a couple factors… there is always a wholesale / retail spread. The diamond you pay $5k for cost the jeweler $3k. So they’re not going to pay you more than they pay their typical suppliers. Especially since they now have to inspect, grade, etc. to verify your diamond is what you say it is, and that costs them time/money.
Other buyers don’t trust you as much as they trust a jeweler so they’re not going to pay you as much as they’d pay a jeweler they trust for the same thing.
To be fair, most everything you can buy in this world loses value as soon as you buy it or as soon as it’s past the return period. It’s far from being just diamonds, so I’m not sure why you’re getting worked up about it.
With the crazy inflation and scarcity a lot of luxury goods are actually gaining value right now so that people who get them at retail are starting to “flip” them. Watches and purses being an example of the top of my head. But keep in mind, this is one of them few times in recent history this has been the case.
Reddit circle jerks itself around “diamonds are worthless” but if people are willing to buy them at that price, then that is what they’re worth to that person. The very definition of something’s value is what someone out there is willing to pay for it.
Almost everything bought at retail has its value drop by more than 50% if you try to resell it. It’s just no one cares when a $20 t shirt can’t be sold for $10 on craigslist no matter what condition it’s in. For whatever reason diamonds are special in that people expect them to hold their value better than other retail goods.
Retail is expensive it occupies some of the best real estate in the world, employs a ton of people, and has many very bright people studying every single aspect of their store and all of these things only purpose is to get people to spend the most money possible. Take that stuff away, and people surprisingly want to spend a lot less on everything.
My wife has an heirloom diamond that was purchased for $800 in 1907. In 1993 it was appraised at $22500. The price doesn’t always drop.
If your only job is to buy things in order to resell them you are not paying their value. If you know you can sell something for $100 you aren’t going to pay $100 for it because you need to get paid too. You also can’t pay $90 for it because it might sit around and have its value degrade. Even if it doesn’t get worse over time the longer it takes up shelf space the longer you aren’t making money off that space that you are paying for. You also can’t sell it for $80 because it isn’t new. New sells for $100 and if it is used, even if that has no meaningful change to the product, people will rather buy the new thing than the used thing. So you have to buy it for less than $80 to make a profit. If you buy it at $70 you only make $10 and only if it sells right away. You can’t afford to sell it for any less than $70 so if the price drops you lose money, if the item sits for a long time you lose money, and you can’t move it any faster. If you get it for $60 you can make $20 or you can move it faster and make $10. You have more options. So you offer $50 for it. If the person selling takes $50 you make more but if they, like every person who has ever sold anything ever, say they want more than that you have room to move the price up some without taking a loss.
That is why diamonds are only worth 50% resale.
I don’t pay more than 50% for anything used. So 50% for a used ring sounds fair to me, but I wouldn’t buy a used ring just because I’m superstitious. I don’t need anymore bad luck lol
Think of it less like “the price drops by 50%” and more like “the price goes back to normal after the crazy markup that is somehow completely allowed and ignored by everyone”.
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