Original article from Yahoo Finance by Joanne Poh

Diamonds are no longer just engagement rings that send brides-to-be into a size-comparing frenzy. Now, investing in diamonds is also a thing. Yes, is it even surprising?

The Singapore Diamond Investment Exchange (SDIX) recently launched standardised diamonds that can be traded like gold ingots. This makes managing diamond investments much easier. So the big question is: should you invest in diamonds, or are they about as useful as an oversized rock on some tai tai’s finger?

Here’s what you must know:

The supply of diamonds is limited

The reason diamonds work as an investment vehicle is because the supply of diamonds in the world is limited. That means prices are driven up when there is demand, as there is no option to “create” more diamonds, at least not the type that can be traded. And it seems that the demand for diamonds is indeed rising, thanks  to China and India.  The question for investors is, are diamonds likely to perform well as an investment moving forward?

Unlike gold, the value of diamonds is highly subjective

The value of gold is easier to figure out—you just need to know the weight and the karat number, and then match it to the current price per kilo. Even your grandmother’s gold teeth can be valued easily. Diamonds, on the other hand, are much harder to value, because every diamond is different.

So don’t think you can just pilfer your wife’s diamond earrings to trade on the market. They may be worth less than you think. And unlike gold, when diamonds are sold they aren’t priced entirely according to weight or karat number. Many sellers get away with tacking on a random mark-up.

Read the complete article on Yahoo Finance