Differences in Gold Investing vs. Diamonds and Gems
A precious stone can give different emotions than a precious metal because of the variety of colors, reflections and shapes. However, personally, I believe that precious stones are a very different investment from many points of view than that in precious metals and moreover more risky.
Disclaimer:
The information provided does not constitute a solicitation for the placement of personal savings. The use of the data and information contained as support for personal investment operations is at the complete risk of the reader.
The price of gold is determined by regulated markets such as the London Bullion Market Association (LBMA), with a price updated daily and based on global supply and demand. Gold is a fungible commodity, which means that every gram of gold with the same purity has the same value everywhere.
On the contrary, diamonds do not have a standardized universal price. The Rapaport, which is often used as a reference, is only an indicative price list based on private transactions and influenced by subjective factors such as the quality of the stone and the local market. Each diamond is unique and its price varies by color, clarity, cut and carat.
#2. They are less liquid
Gold is much more liquid than diamonds because it can be easily sold anywhere in the world at a standardized price. Its price is public, transparent and updated in real time, allowing immediate buying and selling without the need for complex valuations .
Diamonds, on the other hand, do not have a liquid and uniform market. Each stone is unique and must be analyzed based on color, clarity, cut and carat. This makes selling much more complicated: experts are needed for evaluation and there is no global platform with certain prices. Furthermore, diamonds often sell with very wide negotiation margins, making it difficult to obtain the real value without intermediaries.
In short, gold quickly turns into money, while diamonds require time, expertise and the right buyer, drastically reducing their liquidity.
#3. They are not divisible
Gold is a divisible asset , which means that it can be split into small quantities without losing value. It is possible to sell even just one gram or one coin, always maintaining the same price ratio compared to the official price. This makes it extremely flexible for those who want to liquidate only a part of their investment.
Diamonds, on the other hand, are not divisible: a whole stone has value, but if it is cut or broken it loses much of its market value. Furthermore, a larger diamond is worth much more per carat than several smaller diamonds of the same total weight. This makes investing in diamonds less divisible and less practical than gold, which can be sold without loss of value even in small portions.
In short, gold offers greater flexibility in selling, while diamonds require selling the entire stone, making them less practical as an investment.
#4. They can break
One of the main advantages of gold is that it is an indestructible metal: it does not deteriorate, does not oxidize and does not lose value due to wear. Even if it is melted or transformed into bars, coins or jewelry, it always maintains its intrinsic value based on its purity and weight.
Diamonds, on the other hand, although extremely hard, can break or chip if hit in the wrong place. A simple fall or a bump can compromise their integrity, drastically reducing their market value. Furthermore, a damaged diamond must be re-cut, losing weight and therefore economic value.
This vulnerability makes diamonds a riskier investment, while gold provides greater security over time, without the risk of physical damage compromising its value.
#5. You pay VAT and they cost more
Another great advantage of investment gold is that it is VAT exempt in many countries, including the European Union. This means that those who buy physical gold in the form of recognized bars or coins do not have to pay additional taxes, making it a more convenient asset and easily resold without tax losses.
Diamonds, on the other hand, are considered a luxury good and are subject to VAT at the time of purchase. In Italy, for example, VAT on diamonds can reach 22%, increasing the initial cost for the investor. This means that, in order to recover the investment, the value of the VAT paid must first be offset, making the diamond less immediately profitable than gold.
This tax difference makes gold a more efficient and advantageous option for those who want to protect their capital without losing money in taxes when purchasing it.
#6. They can be created artificially
A key aspect that makes gold more valuable and stable over time is the fact that it cannot be created artificially. Gold exists in limited quantities on Earth and is only extracted from mines, which ensures its natural scarcity and a value that cannot be manipulated through artificial production.
Diamonds, on the other hand, can be created in a laboratory through processes such as HPHT (High Pressure High Temperature) and CVD (Chemical Vapor Deposition). These synthetic diamonds are visually identical to natural diamonds and have made the market more uncertain, causing mined diamonds to lose value. With the increase in artificial production, the price of natural diamonds could decrease further over time, making them a less secure investment.
Although a natural stone will always retain a much higher value than an artificial one, in the industrial field the artificial ones will almost always be chosen, thus influencing the demand and therefore the final price.
However, we must also take into account the improvement of replication technology and the possibility that in the future artificial and natural stones will become indistinguishable. This could cause the value of natural gemstones to plummet.
Gold , on the other hand, being a rare chemical element and not reproducible from both an economic and practical point of view, maintains a stability and value that cannot be altered by technology or industrial production.
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