Gold vs Diamond: Which is Better Investment? (Value & Pricing)

Gold and diamonds have some of the best value in the jewelry industry. Many investors choose to invest in gold and diamonds because they’re the safe choice. Even if you think you’re 100% certain that you’ll get a good return on your investment, it’s still important to understand what goes into investing in them and how much you’re actually going to spend vs how much you’ll get back. 

In terms of price, diamonds are more expensive than gold, even though they’re not as rare as pure gold. However, diamonds and gold are valued differently, so one day gold may be worth more than the next day, but diamonds remain generally the same. If you plan to re-sell your investment when needed, gold is the way to go 

You should know that the price of gold fluctuates with its demand and diamonds are priced based on the 4 C’s, which I’ll explain later on. I will explain everything regarding gold vs diamonds and which are more expensive, worth more, and which is the better investment. 

What Is The Difference Between Gold and Diamond?

Gold 

Gold is a precious metal that came from the debris of dead stars. When asteroids hit Earth some 4 billion years ago, they stirred the deep layers of the planet and forced some of the gold into the mantle and crust. 

Gold can also be found in rock ores as flakes and since it’s so heavy, it accumulates in stream beds, the ocean, and alluvial deposits. Earthquakes can also decompress mineral-rich water and when the water vaporizes, veins of quartz and gold will deposit onto the surfaces of some rocks. 

Since gold is so rare to find naturally, it’s more expensive than the cost of a diamond. The current price of gold as of November 1st, 2022 is $1,646.66 per ounce. This price will fluctuate daily depending on its demand. In 1990, the price of gold was roughly $386.20. So it certainly does hold its value. 

Even though solid gold is valuable, when turned into jewelry, it loses hardness. The Moh’s Scale of Hardness ranks minerals, materials, metals, and gemstones on a scale from 1-20 with 10 being the most durable and best. Diamond is a 10, but gold is only 2.5-3. Gold is easy to work with, but it bends, breaks easily, and breaks down, unlike a diamond. 

There are different karats of gold as well and 1 karat is 1/24 part of the whole. 

24-karat gold is the most expensive and pure, but also the most delicate. It’s not recommended for everyday wear. 

18 karat gold contains 18 parts gold and 6 parts alloy. It’s more durable than 24-karat gold and a little less expensive. 

14 karat gold contains 14 parts gold and 10 parts alloy. Since it’s so strong, it’s considered the most wearable type of gold. 

12 karat gold is half metal alloys and half pure gold. It offers fantastic durability and is perfect for everyday wear. 

10-karat gold is the least expensive, but most durable form of gold and is widely used in jewelry. It contains just 41.7% gold and the rest is silver and copper. 

Although gold is less hard than diamond, it ranks relatively high on the rarity list. It comes in at number 3 behind Rhodium and Platinum. It’s the first metal on the list that is gold in color. Rhodium and Platinum are both silver. So I can safely say it’s the rarest gold-colored mineral on the planet. There are a few 

The thing with gold is that it’s not all just regular gold colored. There are several different colors of gold jewelry. Yellow gold is in its original naturally occurring color and white gold is created from yellow gold that is alloyed with nickel or palladium and zinc. Rose gold is a beautiful pink color and is made from a combination of gold and copper alloys. 

Anything labeled as “plated” or “filled” is essentially worthless and not as pure as solid gold. There are several ways gold is valued as well. 

How Is Gold Valued?

Gold is valued based on supply, demand, and investor behavior. Studies have consistently shown that gold prices have positive price elasticity, which means the value will increase with demand. Since gold moves higher when economic conditions are worse, it’s been viewed as an efficient tool that diversifies a portfolio. 

Gold is priced using two pricing models that estimate the potential investment value of gold. The first is the Gold Futures Price. This is the basis for the LBMA Gold Price. They’re contracts for the physical delivery of a specific amount of gold on a certain date in the future. 

The Gold Spot Price is what’s delivered immediately after purchase. The Gold Spot Price is the average of the net value of all currently traded gold future contacts for the closest month. The future prices are higher than the spot price of gold, but in times of major demand, the spot price can be higher than the future price. 

When purchasing gold, you should examine it to determine whether it’s reel or fool’s gold so you aren’t duped out of your money. 

How to Tell Fools Gold from Real Gold?

There are so many people in the world who are fooled by resellers claiming they have real gold, but it turns out they gave them fools gold. 

While both are minerals, there are distinct characteristics that set each other apart. The easiest way to tell the two apart is to look at the shape. Real gold will have a smooth texture and round edges. Fools gold, or pyrite, will have a crystalline structure. It will have sharper edges and a rough texture. It will also emit a sulfur smell. Real gold has no smell. 

You can also do the shine and magnet test. Gold will shine whether or not it’s in direct lighting, but fool’s gold won’t shine when not exposed to light. 

As for the magnet test, real gold doesn’t attract a magnet. If you put a piece of gold up to a magnet and it’s attracted to it, it’s not real gold. 

Now, let’s take a look at diamonds. 

Different Color Diamonds & Their Pricing

Diamonds were first discovered and mined in India and date back to the 4th century BC. Over time, diamonds were located in other areas around the world including Africa, Australia, Russia, and Canada, where they’re the most produced. 

Their price depends on a couple of things such as their shape, cut quality, clarity, and color. 

The price of a one-carat diamond can range from $1,500-$16,000 for a very well-cut, high-quality diamond, whereas a two-carat diamond could cost $6,000 to $80,000 depending on its shape, cut, clarity, and color grades. 

As with gold, diamonds are rated on the Mohs Hardness Scale. Diamonds rank higher than gold, coming in at a 10 out of 10. Absolutely nothing can scratch a diamond except for another diamond. 

Some diamonds cost more than others depending on their rarity. The rarest diamond on the planet is the red diamond. There are only 20 to 30 natural red diamonds in existence and they sell for over one million dollars per carat. 

The next is the blue diamond. They have only been found naturally in mines in South Africa, India, and Australia. They cost $200,000 per carat on average with the most expensive being the Hope Diamond, weighing 45.2 carats with a value of $250 million. 

Pink diamonds are the next most valuable. They only exist in the Australian Argyle mine. They’re generally more expensive due to their romantic nature. One carat of these beauties costs $10,000 to $70,000+. The most expensive is the Pink Star totaling 56.9 carats and sold for $72.2 million. 

Yellow diamonds make up over half the market of colored diamonds. Even though they’re rare, they are priced lower because of their wide availability. One carat can cost $3,000 to $5,000 per carat with the Vivid Yellow diamond being the most expensive, totaling 100.90 carats and costing $16.3 million. 

Regular diamonds are the lowest on the totem pole, aside from simulated diamonds. They’re colorless and the price depends on their grade, which I’ll explain more about below. 

The 4 C’s for Gemstone Grading

The 4 C’s of gemstone grading are cut, color, clarity, and carat. Jewelers use this grading system to determine how much a diamond costs and its value. 

The first C is cut. A well-cut diamond will allow more light to go through the crown. A diamond that has a shallow depth or is too deep will allow light to escape through the sides or bottom of the stone. 

The second C is color. The color of the diamond is important. It ranges from an icy white colorless to a light yellow. It can be difficult to tell the difference from one color grade to another with the naked eye. The best way to determine the color is to put them side by side and compare them. Colorless diamonds are the rarest and most expensive. Yellow is the least rare and least expensive. 

The third C is clarity. Clarity affects the rarity and price. The clarity refers to the tiny markings within the diamond. Flawless is the rarest and most expensive. A diamond that has inclusions is less clear and therefore will cost less.  

The last C is the carat weight. A carat is divided into points. ¼ carat is 25 points, ½ is 50 and so on. The more points the diamond has, the more carats it has, and ultimately the more it’s going to cost. 

How Are Diamonds Valued?

Diamonds are valued based on the 4 C’s, which I described above. The four C’s are cut, color, clarity, and carat weight. Jewelers will take all of these into consideration when pricing a diamond. 

Diamonds that aren’t clear, have a bad cut, weigh very little, and have a yellow hue to them will sell for far less than a diamond that has a perfect cut, is crystal clear, has a lot of points, and is colorless. The more inclusions a diamond has, the less valuable they’re going to be. 

Are There Different Types Of Diamonds?

Yes. Diamonds are separated into five types that include Ia, IIa, Ib, and IIb. 

Type Ia diamonds are the most common and contain nitrogen atoms as their main impurity. Type Ia makes up around 95% of natural diamonds and has nitrogen impurities and differing fluorescent properties. 

Type IIa diamonds are the rarest and most valuable because of their outstanding sparkle and odd shapes. They have no nitrogen impurities and contain differing fluorescent properties. They sometimes have strange shapes due to the high pressures they were formed under. 

Type Ib diamonds are rare and have nitrogen atoms that are scattered throughout the stone rather than in clusters. This produces intense yellow, orange, or brown colors. 

Type IIb diamonds are another type of rare diamond with no nitrogen atoms. They contain boron in addition to their main carbon content. They will have a bluish or blue0gray tinge due to their ability to conduct electricity. 

Is Gold Rarer Than Diamonds?

Yes, gold is rarer than diamonds because of how it’s made and where it comes from. Gold is rarer also because the average concentration of gold in the Earth’s crust is extremely low at only 4 parts per billion. 

There’s also no such thing as lab-created gold, but there are lab-created diamonds, making diamonds more accessible than gold. 

Diamonds are a highly pressurized form of a common element called carbon. When it’s not pressurized, it’s known as graphite, which is found in pencils. 

The average concentration of carbon in the Earth’s crust is 200,000 parts per billion. Significantly higher than that of gold, making it less rare. 

Diamond vs Gold: Which Is More Expensive?

Diamonds are more expensive than gold. Diamonds are roughly $5,000 per carat, which equals to $25,000 per gram. Gold fluctuates around $55 per gram. However, gold isn’t the best when it comes to investments since the price fluctuates. Diamonds don’t lose their value and can are a great investment when it comes to things such as rings and other jewelry.

Don’t confuse this with value. Once a piece of gold is turned into jewelry, it’s valuable. The price will fluctuate depending on how many carats of gold there are. 

Which Is The Better Investment?

If you plan to re-sell your investment when needed, gold is the way to go. Gold may fluctuate in price now and again, but it sells for a pretty penny when needed and it can also be a form of currency. 

Many pawn shops won’t even buy diamonds anymore because it has no value once it leaves the jewelry store. Not only that but diamonds can be created when they’re needed, gold can’t. Gold is worth much more than diamonds 

To purchase gold, you need to ensure you have enough money for the amount you need. Gold prices will fluctuate daily, so you should have a little more than you think the gold is going to cost to purchase. 

Final Thoughts

Even though diamonds hold their value well when purchased on their own (not set in a piece of jewelry) and are more expensive to purchase, gold is still more valuable than a diamond. This is due to its rarity in its natural form.

As mentioned many times before, a diamond can be lab-created, but gold can’t. Gold is much harder to find and its price varies from day to day. Even though diamonds are a girl’s best friend, or so they say, gold is where the money’s at.

Luxury Lifestyle Team

Our Team of 10 includes jewelry experts, antique Buyers & Sellers, baseball card collectors, and other appraisal experts.