Part I: Investing in Collectibles “It’s risky, especially with all the FAKES around”- Larry Haverkamp, 05 Aug 2013

Now we’ve got fake diamonds to worry about.  Worst of all, it turns out that the fakes are almost impossible to detect.  

As you might guess, the jewelry industry has no incentive to talk and hardly anyone knows about the problem.

So I took my collection of fake-diamond research to a talkative jeweler and asked: “What about this?  Will you guarantee that if the diamond you sell me turns out to be fake, you’ll give a refund?”

His answer: “No”.  The reason, he said, is unscrupulous customers. A person could buy a real diamond, substitute a fake and then return the next day for a refund. How to prevent that?

Yes, I can see how that could be a problem. OK, offering guarantees may not be a good solution.

I then asked the jeweler if he could identify a fake.  If I showed him two diamonds, one real and one fake, could he tell the difference?  I even offered to publish the results on this blog for thousands to read!

He said he thought he could identify the fake but wasn’t willing to take the chance of publishing the outcome.  He said: “Suppose there’s a fluke and my pick turns out to be wrong?”

 AN EASYFIX

That got me thinking: “OK, if it’s so hard to spot a fake, why buy real?” 

I mean, why not just give in and buy fake diamonds?  It’s 99 per cent cheaper and who will know?

It’s also legal if not sold as a real diamond.  Plus there is a small but active market for “genuine fake” diamonds, called synthetic cubic zirconia and its newer, lesser-known competitor called synthetic moissanite.  I even visited a jewelry shop in Lucky Plaza that sells them.

These artificial diamonds look at least as good as real ones, and the only sure way to spot the fake is with specialized equipment to measure how well each conducts heat.

In a public setting, of course, no one is likely to have one of those machines in their back pocket, so no will know if your diamond is fake.

The jeweler I spoke to didn’t like my cubic zirconia suggestion although he conceded that an average person couldn’t tell fake from real.  Most people just admire a diamond’s sparkle and assume it’s authentic.

My advice: Save money.  Buy fakes.    
Next posting: Fool-proof ways to avoid being fooled.

Larry Haverkamp

Source: http://www.btinvest.com.sg/blogs/2013/08/05/part-i-investing-in-collectibles/