Two Carat-10 years ago and Today

Perhaps this is one of the most unwise things I’ve said this year, but I thought recently “I wish I hadn’t sold so many 2 carat diamonds 10 years ago for $5,000, $6,000, and $7,000.” The reason is, of course, two carat diamonds (of similar quality) have appreciated in price. And here is why it’s probably unwise to make my first statement.

Everything costs more today than 10-12 years ago. In 2003 gasoline prices were as low as $1.31 gallon. The average price of a car in 2000 was $18,000. In 2012 it was $30,000. And the car price increase brings me to my point (also perhaps not the wisest thing I’ve said since paragraph 1). Our cars lose value each year we own it. Yes it is necessary to have a car. Diamond rings are not necessary (unless you are connected to a woman who feels otherwise).

Our diamonds can and do increase in value each year, at least at the retail counter. Therefore my comment about having those 10 year old diamonds today. If I still had them, put away in a safe place, my appreciation in value would have been greater than almost every other of my investments.

Now I’m not suggesting you now buy a 2 carat diamond as an investment (though it does look pretty good for appreciation). We buy diamonds to mark a special occasion on milestone in life. Baby boomers now having satisfied mortgages, getting their kids off their backs financially and wanting to reward themselves for working hard and maintaining the good life want to own real assets like diamonds because diamonds mean value in our world. Fine diamonds are valuable and everybody knows this.

So 10 years goes by quickly and prices always go up. And my unwise wishful thinking is misplaced. It must be because I keep investing in 2 carat diamonds.