Hard assets: The returns on rare diamonds and gems |
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| Authors: | Luc Renneboog Christophe Spaenjers |
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| Affiliation: | 1. USEK Business School, Holy Spirit University of Kaslik, Lebanon;2. Department of Economics, University of Pretoria, South Africa;3. Department of Finance, Asia University, Taiwan;4. Department of Economics and Finance, Hang Seng Management College, Hong Kong;5. Department of Economics, Lingnan University, Hong Kong;6. School of Statistics, Shandong University of Finance and Economics, China;1. V.C. Consultants, Los Leones 1300, Suite, 1202 Santiago, Chile;2. Columbia Business School, Division of Finance and Economics, New York, NY 10027, USA |
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| Abstract: | This note examines the investment performance of diamonds and other gems (sapphires, rubies, and emeralds) over the period 1999–2010, using a novel data set of auction transactions. Over our time frame, the annualized real USD returns for white and colored diamonds equaled 6.4% and 2.9%, respectively. Since 2003, the average returns have been 10.0%, 5.5%, and 6.8% for white diamonds, colored diamonds, and other gems, respectively. Both white and colored diamonds outperformed stocks between 1999 and 2010. Nevertheless, gem returns covary positively with stock returns, underlining the importance of wealth-induced demand for luxury consumption in collectibles markets. |
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