Whether an investment or a gift, many people find diamonds an illusive and unstable purchase. We met with Mr. Adi Levy, CEO of Schwartz Japan KK and owner of 10L.jp, to clarify some doubts:
Firstly, how do you determine the price of diamonds?
Diamonds, much like commodities, have a market price, but unlike commodities they have one different variable criterion – their beauty, which is judged by the human eye. We dealers have a list price we work with that gives us an idea of the price for any specific Carat weight, Color, Clarity and Cut – also known as the “four Cs”.
It is our professionalism and experience (that teaches us) if a specific stone will trade at a discount on the price or at a premium. To professionally trade diamonds, you have to be constantly active and aware of global demand, supply and ongoing trends. The only way to do this is be extremely active in the trade.
Do diamonds make for a good investment?
We have a variety of clients with different needs. Some are emotional about the purchase and care less about the resale value. In the first meeting we verify the clients’ needs and accordingly offer a solution. Some need a solid investment and some prefer a higher risk with higher potential return. Unlike other paper investments, diamonds are assets to hold on to and enjoy. They don’t provide an ongoing income (except the pleasure of wearing them) but they also don’t carry any hidden costs, maintenance or taxes.
The purchase and sale is private and can be given to a loved one or handed to the next generation without the need to deal with tax issues as with real estate. Diamonds are the most stable of all gems and show healthy positive growth compared with worldwide stock composites.
Even in purely sentimental purchase cases, a diamond would provide better return compared to other gifts by far. Take for example clothes, a trip or even a car!
So why is diamond jewelry not such a common investment?
There is a trust issue that has been heavily breached over the years by retailers. Diamonds have been heavily branded and are retailed at outrageous prices, especially in Japan. Folk that bought diamonds at retail and at some point tried to sell them back may realize their asset is worth only a fraction of what they paid.
With diamond jewelry, people rightfully expect a certain value, unlike other purchases. The amount people pay in retail covers branding and retailing costs on top of the diamond. The price of diamonds and diamond jewelry is set by how many hands traded it, whilst retail is the last station. I see diamonds I sold to retailers being displayed in showcases for sometimes as much as five times the price!
Are you saying major brands are a bad investment?
People buy brands because they create the trust. They have an intrinsic value that allows people to feel they achieved a certain social status. For very heavy investments, branded goods fetch a better price in auctions because they carry the history of the brand but when referring to mainstream diamond jewelry there is little value in the name.
Unlike buying a car for its known visual brand, diamond jewelry, taken out of the black silk bag and blue or red box, once worn, looks and feels same as generic jewelry – just like makeup! Designs are not patented and there are so many lookalikes in the market. In reality the stones we use when making custom made jewelry fit a budget and surpass the quality a brand name would use.
So how do you create trust without branding?
All our pieces come with a certificate and appraisal documents for insurance purposes from an internationally acclaimed third party gemological laboratory. We offer a lifetime guarantee on services such as resizing, polishing and coating, so your jewelry always looks fabulous.
We give a lifetime full refund guarantee on upgrades, thus the client gets 100% of their money as credit for their next purchase – no retail shop can ever do that. Our company has been in this business since 1948. We have catered to the rich and famous in Japan and worldwide and carry a very large inventory both locally and in our other worldwide branches to fit any request of style and budget. We also have comprehensive programs for individual investors to match risk/return levels.