Hard assets: The returns on rare diamonds and gems

L. Renneboog, C. SPAENJERS

Finance Research Letters

December 2012, vol. 9, n°4, pp.220-230

Departments: Finance, GREGHEC (CNRS)

Keywords: Alternative investments, Auctions, Diamonds, Gems, Hedonic regression, Luxury goods

This note examines the investment performance of diamonds andother gems (sapphires, rubies, and emeralds) over the period1999'2010, using a novel data set of auction transactions. Overour time frame, the annualized real USD returns for white and coloreddiamonds equaled 6.4% and 2.9%, respectively. Since 2003, theaverage returns have been 10.0%, 5.5%, and 6.8% for white diamonds,colored diamonds, and other gems, respectively. Bothwhite and colored diamonds outperformed stocks between 1999and 2010. Nevertheless, gem returns covary positively with stockreturns, underlining the importance of wealth-induced demandfor luxury consumption in collectibles markets