Diamonds might be a girl's best friend, but they aren't the best investment. Here's why

Though diamonds are always positioned on a pedestal, they are not really considered investment-worthy like gold. This is because there is no set global standard to value diamonds, no price transparency, and a lack of tradability when it comes to re-selling them.

When a girl walks in with a big rock on her finger, people cannot help but raise their eyebrows, turn their heads and go ''whaaaat!''... But if the same girl walks in with a gold band, it probably goes unnoticed.

Diamonds have been sold to all of us under the phrase ''love is forever, just like a diamonds''. Also, a couple celebrating their diamond jubilee after 75 years of togetherness is considered to be looked upon more than a couple who is celebrating their golden jubilee. So, if gold is considered to be ''a general symbol of the rich'', diamonds are considered to be ''a unique symbol of the premium-ness of the rich'' and always a step higher than gold. 

But here are some questions to ponder: But when it comes to money, why did countries never back their currencies with diamonds? Why is their money always backed by gold?

Also, why is diamond not considered to be the most popular stream of investment if it is actually super premium? Why don't people get diamond loans instead of gold loans? Why don't newspapers & digital magazines publish every day's diamond rates on the top most corner? Why aren't Indians importing loads of diamonds instead of gold when it is more expensive and shiny. 

Here's why: 

1. Diamonds don't have a fair standard value: Diamonds aren't really considered an asset in the financial world since it does not have a fixed value. (Look at it just the way you look at Global Oil prices).

All these years, there has been one global company - De Beers -  which has had a monopoly over mining and selling diamonds all over the world. One of De Beers' marketing techniques was to sell diamonds with an ad that would encourage people to spend their two months' salary on a ring, Though ''salary'' is quite a subjective matter, the company then changed the jingle a few years later to encourage people to spend their three month's salaries on a ring. De Beers would also artificially reduce supply in the market to increase the prices for diamonds and since they did not have a standard, the same has continued as the way the market operates. 

2. There is no price transparency: Since there is no standard to price diamonds, there is no price transparency, which makes it difficult to evaluate the value of a diamond.

The price pretty much depends on the market's demand and supply conditions. 

3. Lack of tradability: Buying diamonds is much easier than selling them since companies sell you diamonds at a 100 to 200% profit margin. Though some companies do buy diamonds, they usually pay you a much lesser price.

At times, when retailers buy diamonds from wholesalers, they don't have to pay the wholesalers until the diamond is sold. If you try to resell your diamonds to your retailer, your retailer might most likely hesitate, since there is no guarantee that his capital risk by buying your diamonds will be taken care of by someone else. It is even said that diamonds are only valuable to the extent someone is willing to pay you.

4. They don't behave like your stocks: Do you know how share prices go up when a company does well or makes better profits than expected? Though your stock investment may give you amazing returns if the company does well, the same cannot be said for diamonds. Only companies that have a monopoly over diamonds influence the price.    

Would you still invest in diamonds?