Top-quality diamonds are more liquid than real estate but less liquid than stock or gold. The more rare and expensive the diamond, the easier it is to resell as there are so few truly magnificent diamonds. For example, it is much easier to sell a $100,000 diamond than a $1,000 diamond. Colorless or white diamonds that cost under $50,000 are not rare enough to be considered an investment except in highly inflationary markets.

Buying an investment diamond at the right price is critical. The world's diamond community uses the Rapaport Diamond Report as a guide for buying and selling diamonds. No consumer can expect to make a profit on a diamond in a few years if they are buying at retail prices.

The diamonds with the best appreciation are natural fancy color diamonds such as yellow, pink, blue, green, purple and red. Since the price of colored diamonds prices was tracked starting around 1970, fancy color diamonds have never fallen in price.

In recessions, these diamonds tend to move laterally in price and in healthy economies they tend to move up in price. Blue diamonds have approximately doubled in price every five years, pink diamonds have doubled in price about every seven years and yellow diamonds have doubled in price about every 10 years since 1970. The reason for this is that colored diamonds are much rarer than even the finest D grade colorless diamonds. As an example, most of the world's famous diamonds are not white.

Another way to profit from diamonds is to invest in diamond exploration and mining companies - particularly Canadian diamond mining companies.