Investing In Gold vs Diamonds

Investing In Gold vs Diamonds

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Gold and diamonds are two of the most beautiful and valuable precious metals that you can consider investing in. Both precious metals and jewelry are a good way to protect your wealth for the future. When considering the volatile market and economic climate, you should do some research on these precious metals to make your decision. 

Gold is known for its stable price that constantly increases over the years. It is a haven during inflation because it retains its value and is scarce. You can also hold it in your retirement account for your later years. Diamonds are also a great commodity investment that can be easily stored, as they are safe during economic instability. 

In this guide, we will compare gold and diamond investments so you can choose the ideal option for you. 

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Investing In Gold vs Diamonds

Comparing Gold vs Diamonds for Your Investment 

If you're thinking about investing in gold or diamonds, you should compare them based on factors like their volatility, liquidity, returns and how you can invest. Gold is usually seen as a better option because it is viewed as a currency, is easy to trade, and is a store of value. But for diamonds, they are highly coveted and can be worn as jewelry. 


Gold and diamond markets have moved in the same direction over the past ten years, as their prices have a direct relationship. In 2011, the prices of diamonds and gold hit record highs, but gold now has a higher value. Gold is the most expensive precious metal.

In terms of volatility, gold is more stable than diamond. Diamond prices increase over time per karat, but the rate of increase is less than with gold. Gold and diamond prices increase in response to geopolitical events, but gold has more value and is more stable during economic downturns. 

Investors are more likely to invest in gold than diamonds because gold is useful in keeping the value of your money and protecting it during downturns. 

Liquidity and Returns 

Although diamonds are seen as precious and pretty, gold is the better option if you want to make a profit. The diamond market is known for its lack of liquidity, scams and lack of transparency ad steep entry barriers, especially since diamond merchants inflate prices. Due to this, there isn't a lot of profit that you can get on the diamond market, and it takes decades to see a significant return on your investment. 

It's important to note that the value of gold and diamonds is measured differently. Gold is valued by its weight and purity, while diamond prices are variable and inconsistent. Unlike with gold, it is hard to predict the returns of diamonds. Diamonds aren't as safe to purchase as gold, so you should consider gold if you want to get better returns. 

Ways to Invest 

In terms of investments, you get fewer options with gold than with diamonds. If you want to invest in gold, you can buy the physical asset, invest in a gold ETF, or even hold it in your individual retirement account. 

For diamonds, you can only buy the physical asset and store it in your home or in the safety deposit box at a bank. Since diamonds are tiny precious metals, they don't take up much room and can be easily stored. There are no diamond ETFs or any other way to invest in diamonds. If you're investing in diamonds, you should purchase them from a reliable jeweler or dealer. 

Investing In Gold vs Diamonds

Investing in Gold 

Gold is known for holding onto its intrinsic value. As a store of value, gold can keep the value of your investment even during economic downturns. Gold is valuable because it is indestructible and can take on any form, it is very scarce, and it is attractive. 

Unlike most commodities, gold works as a hedge against rising inflation and is seen as a safe bet for investment purposes. Rather than storing fiat currency, you can buy physical gold and use it to save money. While the value does not increase significantly, it does not decrease either. 

Physical gold bullion and coins are now becoming popular as a way to protect wealth for the future, as they are easy to store and transport and can be passed from one generation to another. 

Pros and Cons


There are different advantages that you can look out for if you invest in gold. These include:

  • Hedge against inflation: Gold is a precious metal that holds its value over the long term. It will protect your investment against inflation. The track record of gold shows that even in the worst economic situations, gold will at least retain its value even if it does not increase. 
  • Low market risk: There is a low risk involved in investing in gold. If you buy gold bullion or hold it in your retirement account, there is very little risk of losing your investment except through a scam. 
  • Easy to liquidate: It is easy to convert your gold into money, even if you don't know a lot about the market. Unlike diamonds, you can find a trusted dealer and sell your gold. Some gold companies also offer buyback programs. 
  • Diversification: Most people hold traditional assets in their portfolio, so investing in gold is a good way to diversify. It is recommended to hold between 5 and 10 percent of your portfolio in gold. 
  • Multiple Options: You can invest in gold in different ways aside from purchasing the physical asset. Other options include ETFs, mutual funds, futures and options, and gold mining stocks. 


On the other hand, you should consider the disadvantages of investing in gold.

  • No returns on physical gold: If you buy physical gold and store it at home or at the bank, it won't generate passive income or offer you regular returns. You can only wait for the value to increase and then sell it. 
  • Extra costs like storage and insurance: There are extra costs involved in gold investments, like paying for storage, delivery, and insurance. If you're opening a gold IRA, you will pay maintenance and custodian fees. 
  • Fear-based investment decisions: Most people turn to gold investments during market downturns, so this is done out of fear. It might not be ideal for their long-term investment goals. 

Ways to Invest in Gold 

There are different ways you can invest in gold if you are interested. The diversity of options makes it easy to choose the ideal one for you. 

Physical Gold 

A popular option is to invest in physical gold by buying gold bullion and coins or gold jewelry. You can store your physical gold at home or pay for storage in a bank or private vault. Before buying gold bullion or coins, you should check the spot price and work with a reputable dealer. 

Gold Mining Stocks 

Another option is to invest in the stocks of a gold mining company. You can purchase stocks from a company that mines or refines gold and benefit from the profit of the company. This also gives you the opportunity to get constant returns through dividends.

Gold ETFs and Mutual Funds 

You can also buy gold exchange-traded funds or mutual funds, which allow you to track the value of gold without buying gold directly. There are different kinds of gold ETFs, and you can trade them on stock markets. You can invest in those that track the price of physical bullion or the stocks of gold mining companies.

Gold IRAs

When preparing for your retirement, you can hold gold in your individual retirement account. A gold IRA is a specialized retirement account that allows you to hold gold as your retirement investment. You can roll over your existing 401(k) or traditional retirement account into the gold IRA easily. It's important to work with a gold investment company and custodian to help you with this. 

Gold Investment Companies 

If you're thinking of investing in gold, you will find a wide range of companies out there that you can choose from. We've made things easier for you by recommending the top three gold investment companies, which also partner with custodians to offer IRAs. 


Augusta Precious Metals is the best gold company you can work with if you can afford the $50,000 minimum investment amount. The company focuses mostly on its customer service, as it offers one-on-one video chats and meetings and assigns you a dedicated specialist to help you every step of the way. 

#2. Goldco


Goldco is a reliable gold investment company with a minimum investment amount of $25,000. The company is known for its buyback program and affordable flat fees, and clients can choose between segregated and non-segregated storage. But you're limited to only gold and silver. 

American Hartford Gold prides itself in offering quality precious metals investments, whether through direct purchase or an IRA, for those on a budget. You can get started with a minimum of $5,000 for IRAs and even lower for cash purchases. Keep in mind that the company does not keep transparent pricing on its website.

Investing In Gold vs Diamonds

Investing in Diamonds 

Diamonds are a great commodity investment as they are known for their prestige and high value. While they are not as scarce as gold, there is a lot of demand for this precious metal, and this increases its value. Diamonds are tangible assets that can even be worn in the form of jewelry, providing a sense of assurance for the owners.

You can easily transport and store your diamond. The price of a diamond depends on its weight, clarity and cut. Diamonds are also great as a store of investment, although not strong against inflation like gold, and they are rare and can be passed down to the next generation. 

Pros and Cons


If you're considering investing in diamonds, there are some advantages you should keep in mind. These include:

  • Highly Rare: Diamonds, especially colored diamonds, are extremely rare and always in high demand. The rarer the diamond is, the more valuable it becomes. Diamonds can also have unique sizes and qualities.
  • Durable: Diamonds don't wear down easily like many precious gems, so you can store them for a long time without worrying; they are the hardest naturally occurring substance in the world. But diamonds can chip or fracture if they are hit hard.
  • Easy to Store and Transport: Diamond pieces are usually small, unlike gold bullion, so they won't take up much space. You can easily store them in a jewelry box or safe.
  • Safe Investment During Economic Downturns: You don't have to worry about your diamonds losing their value during inflation and other market downturns. They are inflation-proof and will retain their value.
  • Beautiful to Wear: You can buy a diamond in the form of jewelry and wear it to events. 


Despite these advantages, there are some drawbacks that come with putting your money in this gem.

  • Poor Transparency in the Diamond Market: There isn't a proper price index for diamonds, so you would have to compare the prices among different retailers before making your purchase. In terms of colored diamonds, each one has a different value. 
  • Easy to Lose: Since diamonds are thin stones, they are easy to store but also easy to lose. They can also be easily stolen. 
  • Hard to Resell: It is hard to resell diamonds since the market is different than with gold. You have to look for a reputable dealer, and this is hard to find since the diamond market is rampant with scams. 

How to Invest in Diamonds 

If you want to invest in diamonds, the only way you can do so is to buy the diamonds and store them at home or in a private vault. Follow the steps below to invest in diamonds:

  • Set a budget and do your market research. You should shop around different diamond dealers and jewelers, check their prices and ensure that you are buying at the best price. 
  • Get a piece you like. Consider if the piece would be for investment or personal pleasure. If it's for the former, you will wait up to five to ten years to gain from reselling.
  • Choose your carat, color and clarity based on demand, especially if you want to sell it later. 
  • Check the certificate and authenticity of the diamond. This shows that it is real and will be needed when selling it later.
  • Decide if you will keep it at home, at the bank, or in a private vault.

Which Should You Choose? 

After considering the points made in this article, which should you choose between gold and diamonds? Gold is the best option since it can withstand inflation and maintain its value, and it offers different forms of investments. But diamonds are a good alternative because of their high resale value. It's important to do your research and check your investment goals before making your choice.