Investing in diamonds
Investing in diamonds. Investing in diamonds requires a good deal of specialized expertise. There is no universal world price per gram for diamonds and up to possibly 15,000+ combinations of the four C’s that influence the price of each stone.
With the lack of price transparency and the lack of liquidity in establishing uniform standards of quality, diamonds are often seen as being largely unsuitable as a financial investment.
But there are many reports available online e.g. Ajediam Antwerp Diamonds Monthly Report that can be researched as a price guide, along with gemstone specialty organizations such as GIA or IGI which can be used to aid in diamond identification and pricing. Again, research is mandatory before purchasing any diamonds.
Antwerp is the largest International World Diamond Trade Center operating with 1500+ diamond companies, bourses and exchanges dealing in international wholesale diamond sales.
There are many advantages in buying a precious diamond through a diamond trader, who acts as a wholesaler, as opposed to sourcing a gemstone through a retail jeweler. Price and experience factors are at play. If purchasing a diamond solely for an investment it is recommended that it weigh at least 1- 5 carats and not be encased in a metallic setting. It must also bear a unique laser identification.
Colored diamonds, especially pink diamonds have risen 20% – 25% over the past 2 years and as the Argyle diamond mine is expected to cease production in 2018 these fancy colored pink diamonds may become rare and so continue to increase in value. However sales of colored diamonds are influenced by fashion which can be rather fickle.
Rare white diamonds of minimum 3 carats in weight are also much sought after and since the supply of top quality diamonds is slowing and the demand for them is still increasing the price will continue to rise exponentially.
Diamonds have outperformed the FTSE 100 frequently due to the rise in emerging markets such as China and India. As wealth in China has increased the population has discovered a new best friend - diamond engagement rings! However these gemstones do attract a wealthy clientele who choose to invest in hard assets to bring enjoyment to their lives.
With care, diamonds can last forever but this intrinsic value may well be fueled by a degree of subjectivity as seen through the eye of the beholder. Diamonds are often emotional and/or family investments and may form an important part of an inheritance. As such they may be considered as financial security. But as an investment a single stone may be more liquid than a collection of smaller stones and it also attracts reduced selling costs.
Beautiful diamonds are to be enjoyed and create an element of diversity in an investment portfolio. They should not be bought however with a goal of making money by reselling them in the short term. Supply and demand controls the market force and although precious stones last a long time, the possibility of them quickly rising in sufficient value may be offset by the difficulty in selling them - particularly in the short term.
Irrespective of color or size always obtain a GIA or similar certificate showing not only the details of the diamond but the laser inscription that appears on the diamond itself.
Diamonds will need to be a specified item on home and contents insurance Medium quality diamonds (with no visible imperfections or obvious discoloration) increase in value at a proportional rate to rarer more expensive diamonds. Round brilliant cut diamonds are the most popular shape and as such are the easiest to sell.
An individual buyer meeting you for the first time faces many concerns - since they do not know of you. Your trustworthiness is totally unknown to them and you are not able to offer any service – resizing, payment plan or certification.
With this in mind a buyer would expect a particularly good discount on the price. If you choose to sell through an agent you have a commission fee to pay.