Hard Assets: The Returns on Rare Diamonds and Gems

16 Pages Posted: 26 May 2011 Last revised: 13 Mar 2013

See all articles by Luc Renneboog

Luc Renneboog

Tilburg University - Department of Finance; European Corporate Governance Institute (ECGI); Tilburg Law and Economics Center (TILEC)

Christophe Spaenjers

HEC Paris - Finance Department

Date Written: July 30, 2012

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.

Keywords: alternative investments; auctions, diamonds, gems, hedonic regression, luxury goods

JEL Classification: G11, G12, Q3, Z11

Suggested Citation

Renneboog, Luc and Spaenjers, Christophe, Hard Assets: The Returns on Rare Diamonds and Gems (July 30, 2012). Finance Research Letters, Vol. 9, No. 4, 2012. Available at SSRN: https://ssrn.com/abstract=1845446 or http://dx.doi.org/10.2139/ssrn.1845446

Luc Renneboog (Contact Author)

Tilburg University - Department of Finance ( email )

P.O. Box 90153
Warandelaan 2
5000 LE Tilburg
Netherlands
+13 31 466 8210 (Phone)
+13 31 466 2875 (Fax)

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Tilburg Law and Economics Center (TILEC)

Warandelaan 2
Tilburg, 5000 LE
Netherlands

Christophe Spaenjers

HEC Paris - Finance Department ( email )

1 rue de la Liberation
Jouy-en-Josas Cedex, 78351
France

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