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Gold or Diamond: What is the Better Investment?

Gold is more than a precious metal in several countries. It is a part of culture. Gold has appreciated 501% from 2001-2012, which means an annualized return of almost 18%. On the other hand, diamonds are a girl’s best friend. A tiny diamond can sell for millions of dollars. So which one shines brighter as an investment? Diamond or gold? Let’s explore.

Investing in Diamonds

Diamonds have captivated people more in recent years for several reasons:

  1. Diamonds have high aesthetic value. They look good as new for decades.
  2. A good quality diamond that meets the highest standards of the 4C’s – cut, carat, clarity, and colour – does not fade with time.
  3. The rise of the diamond as the perfect engagement ring and wedding jewellery in the 20th century came from the brand De Beers’ advertisement campaigns that promoted the stone as an eternal symbol of love. De Beers monopolized the diamond trading market until 2005, controlling sales and availability, playing a big part in escalating its value.
  4. Natural diamond has high value. Sometimes a tiny stone can be as much as one million dollars.
  5. It’s the hardest substance on earth so its highly durable. It seldom cracks, breaks, get scratches or loses natural colour.
  6. A diamond is inflation proof. The value of a diamond, like many other metals, is not dependent on the economic welfare of a nation. It remains coveted through ups and downs.
  7. A diamond that is handed down through generations is never considered second-hand. It remains as precious as the first time it was bought.
  8. Unlike stocks or financial items in the virtual world, a diamond is physical so the worth remains visible.

Despite all these factors, gold weighs far higher than diamonds in terms of investment. Here’s why.

Investing in Gold

Gold has been considered an asset for centuries. There are numerous reasons behind it.

  1. It has been used as a form of currency through much of recorded history.
  2. The value of gold is subject to supply and demand which fluctuates from time to time.
  3. The value of gold in trade is far more transparent than the value of diamonds.
  4. Gold is a smart way to safeguard earnings when inflation has adverse effects on the country because it retains its value through economic pitfalls.
  5. Gold has a sharp markup in the retail price. This is why it is best to buy it in its raw form. A diamond in its raw form has little value. It’s the 4C’s that dictates its worth.
  6. While regular diamonds have poor resale value, gold can sell at a higher price over the years. The value of a diamond is also dependent on fashion trends, but gold stands the test of time.
  7. Gold is molten. Raw gold can be melted down and recast to update fashion jewellery. For this reason, damaged gold bars do not lose their value but damaged diamond stones do.
  8. Gold has high liquidity. It can sell anywhere in the world at a fair price.

The Worth Gold Weighed Against the Diamond

Unlike diamonds, gold is an element (Au) that cannot be synthesized artificially. Diamond is a compound that can be produced artificially. In fact, it’s much cheaper to synthesize diamonds artificially than mine them naturally which underscores its value. It’s the manufacturer and supplier that puts the price on a diamond.

On the contrary, gold is naturally mined. It is the standard by which a country’s wealth is measured. A country’s economic strength depends on its gold reserves with central banks. When a country hits a recession, gold is sold off to offset losses. The value of gold is measured and put out for trade purposes every day. A diamond’s worth is more difficult to measure by an untrained eye. Brilliant marketing is more responsible for escalating the worth of diamonds closer to gold in recent years.

Gold has been synonymous with wealth, trust, value, and rarity for many centuries. Simply put, you can go wrong with a diamond but you can’t go wrong with gold. It is hard to tell a natural diamond from a man-made one and is a depreciating asset over time. The natural laws of supply and demand defines the price of gold. If you are looking for an investment that pays off over time, there’s no comparison to gold.

Invest in Gold from Gold Dollar Exchange in the Greater Toronto Area

Gold Dollar Exchange is the most well known and trusted name in gold and jewellery buying, selling and buy back loans in the GTA. We buy gold directly from the source. We pride ourselves on excellent customer service and integrity with the highest level of confidentiality. For a pleasant and profitable experience, get in touch with us.


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