Let me second steve's note of caution : thanks to DeBeers diamond prices are about 10x higher than they would be under a free market. Diamonds are one of the most common gemstones, yet are priced the highest. And finally sythetic diamonds from Russia are hitting the market at $2500/carat and less for a near perfect diamond, any color (including the ruby red color that used to cost over $500,000/carat for naturally ocurring diamonds). This price is likely to fall to below $100/carat in the next 10-20 years. While natural diamonds can be distinguished from artificial ones (artificial ones are too perfect and any blemishes occur in a regular 3-D pattern), the price of all diamonds will go down. Moreover natural diomands (unlike other natural gemstones) are extremenly plentiful deep in the earth's crust and eventually when mining is able go deep enough they will be more plentiful than gold.

Diamonds are a horrible investment. If you must get a stone, consider a colored stone: A red beyl (red emerald) is found only in one mine in Utah (USA) is 50,000 rarer than a diamond and much rarer than red rubies or green emeralds yet costs about the same as a good quality natural diamond.

Since synthetic emeralds and rubies are already less than 5% of the cost of natural ones, I'd be real worried about being ripped off. Certain synthetic gemstones go under fanciful names that sound like natural gemstones (eg Swiss Topaz) and consumers often do not realize they are buying a synthetic stone.

The only safe jewelry investment is gold and platinum jewelry. I am told that the old testament injunction to use only a token of "unquestioned value" to give the bride, is interpreted by orthodox jews as requiring a ring made only of gold, since that is the only precious substance of "unquestioned value".