For some people, Valentine's Day is the most romantic time to pop the question. But they say a proposal is not complete without the sparkling precious gem called a diamond.
Diamonds are every girl's best friend. They are not only valued for their beauty and perfection, they are considered the ultimate gift of enduring love.
But is it something worth investing your money in? To answer the emotional and psychological side of the question, buying the precious stone is a good investment if the marriage works, but it could be a disaster if it all goes wrong, quips Steve Gregory of Holborn Assets.
Setting feelings and emotions aside, there's a great chance that you're not likely to get your money back, should you have a change of heart and decide to resell the diamond.
Some jewellers are emphatic about it: a diamond ring, once acquired, doesn't usually appreciate in value — unless it's one of a kind that some people in the second-hand market are willing to pay a premium for.
"When you buy a diamond ring for, let's say Dh3,000, and you decide to sell it after six months or one year, you are most likely to sell it for half the price, not higher than the original purchase amount," says one salesman in Dubai who requested anonymity.
Some of the underlying reasons could be the lack of eager buyers in the second-hand market or the high mark-up on brand-new pieces. That makes reselling for profit an utterly tough thing to accomplish.
"The world's most expensive diamond ring is the Chopard blue diamond ring that sold for $16.26 million [Dh59.67 million]. It is so unique that it's likely someone will pay more for it in the future. On the other hand, jewellery shops sell diamond rings and they have a mark-up of up to 50 per cent over the cost of materials. So the pawn value of a diamond ring is less than half the amount you paid for it. Seriously, who is going to buy a second-hand diamond ring? Where is the market?" asks Gregory.
That doesn't mean the precious stone itself devalues over time. Prices of diamonds have actually increased "nicely", although the market for diamonds "is not as efficient and transparent as it is for gold," says Rolf Schneebeli, former head of the World Gold Council.
Unlike gold bars, every diamond is distinct. It is unique in size, clarity and colour, so it cannot be as easily exchanged and traded as gold bars. "If a person has one kilo of gold bar, he is probably quite happy to exchange it for some other bars without having the bar assessed and examined first with lasers and other high-tech equipment, which costs a lot of time and money. Gold is exchangeable, same as dirham bills, and that is also the reason why gold is considered sometimes like a currency," Schneebeli tells Gulf News.
"Diamonds are very individual and the spread between buying and selling is therefore much larger and when a client buys a diamond and leaves a shop with it, he or she has probably lost already 20 per cent being the spread, unless the jeweller gives a buy-back guarantee for some time," he adds.
But whether it's a good or bad investment, the allure of the diamond remains. In Dubai, known as a major trading hub for the precious stone, the total trade in rough diamonds grew by 36 per cent to $3.03 billion at the end of the first half of 2008, according to the Dubai Diamond Exchange.
During the same period, rough diamond imports to Dubai accounted for $1.15 billion, about 23 per cent higher than the previous $937 million worth of imports. The value of exports also increased by 44 per cent, from $1.3 billion to $1.88 billion.
Do you prefer to buy diamond jewellery? Why? Do you think it is a good investment?