Every industry has its good and bad operators, sometimes the largest and most successful firms are the least deserving from a customer’s perspective. Of course, in an ideal world, success should only be enjoyed by those that provide the best service and sharpest prices but sometimes, it is those that make the most outlandish claims and promises that win business. The Diamond industry is no different.
There have been several cases in recent years of ‘bucket shops’ (apologies to shops that actually sell buckets) being set up to sell gold, limited edition prints, high risk shares, ‘rare’ gems and diamonds at ridiculous prices. When you see the slick websites these firms operate from, which look professional on first inspection, it is no wonder that thousands of people are conned each year into either overpaying or even worse, paying for goods that don’t even exist.
These ‘bucket shops’ will always contact you through an unsolicited phone call which should set alarm bells ringing. The person calling you will be extremely enthusiastic and is likely to try and push you to spend as much as possible as quickly as possible and whilst their promises and claims will be numerous, actual detail and knowledge will be rather less so.
It is a shame that such operations exist as they give the ‘alternative investments’ sector a bad name. Ironically, I imagine that if the managers and owners of these firms set their minds to running a legitimate and fair business, they would probably do just fine.
A successful diamond investment is dictated by only two things – buying the right stone at the right price. If you pay 50% more than a stones true value, let alone 500%, it simply means that you will have to wait longer to secure a profit. A medium term investment becomes a very, very long term one.
These firms use what are known as ‘idiot lists’ to contact potential clients. They may have bought high risk shares over the phone in the past or have responded to high pressure sales techniques. I know this for two reasons – 1. Your writer is on one of these lists as I bought some shares during the internet boom of 1999 and 2. London Diamonds is regularly offered lists like this from ‘marketing consultants’ usually based offshore, wishing to partner with us. The word ‘offshore’ is important in other respects, as a great amount of ‘cons’ are run from untraceable offshore locations, and it can be very difficult to find out the true location of these firms, so that should flag up further concerns if you are already suspicious. That is not to say that all London or UK based firms (like us) are automatically reputable and beyond reproach, but it does reduce the chances of making an expensive mistake.
Customers tell us that the latest scams/opportunities include ‘rare’ artworks and ‘vintage’ gold coins, it seems that coloured diamonds especially are still popular amongst the bucket shops. We have heard of stones worth c£4-5,000 being offered for £30,000 to customers. You just have to hope that buyers will do some basic checks to make sure they are not being overcharged as there is surely no point in paying more than a high street shop would charge when buying over the internet?
Price is not the only consideration to take into account when deciding who to deal with and what to buy. We may have a price match guarantee in place to protect you against overcharging, but of course, we don’t want to actually have the embarrassment of a client ‘catching us out’ so it is better for us to ensure our prices are permanently sharp to avoid this.
You can make expensive mistakes by buying the wrong type of stone, even if it’s at a good price. For example, the market and trends in India are different to those of China. And the US is different again to Europe. It pays to have an eye on the resale of your stone when buying it, as this will increase the likelihood of achieving a good price and quick sale when the time comes to (hopefully) bank a profit. There are some cuts that are virtually unsellable in China for example. Not everyone is comfortable discussing money but budget is important. For example, should someone with a £2,500 budget be looking to buy a flawless stone of tiny dimensions or a larger stone of lower clarity? Should someone looking to spend £500,000 be looking at one large stone or several smaller stones? These questions need to be addressed at the time of purchase to ensure the odds are truly in your favour.
Talking of odds, the other trend we notice among these bucket shops is a steadfast refusal to ever admit or state that diamonds may present any risk or even entertain the idea that they may not rise in price forever. We routinely see claims of ‘guaranteed 8% growth!’ which is very appealing to the uninformed investor in 2017 but any firm making such bold predictions dressed up as fact, is being irresponsible. Of course, all prices are determined by demand and supply. If Ferrari had made 36,000 of its 250GTO model in 1963, they would not be worth $50m a piece as they are today. Diamonds are in demand from the new middle class of India and China and it’s true that there have been very few new mines discovered in recent years, so the market is likely to keep growing, but if you are paying five or ten times a stones true value, it will take many decades to recoup your investment regardless.
Another area to pay attention to is the difference between buying a diamond for jewellery as opposed to investment. When you buy a stone as part of a piece of jewellery, there will obviously be a cost for mounting and setting the stone in order to show the earrings, necklace or bracelet off to best effect. However, many people want to mix jewellery and investment by ‘wearing their investment’ and it’s here that things can get tricky. Remember, 90% of your jewellery’s value is in the stones, unless they were once owned by a celebrity for example, when the value may be increased. The setting will have to be removed to effectively check and value a stone, a process that may damage the setting. for this reason, we have partnered with one of London’s oldest and most respected workshops to help customers do just this without overpaying.
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