Investment diamonds are a sophisticated way to diversify the portfolio of our investment portfolio and, at the same time, gain long-term security.
For most people, diamonds are primarily conceived as an ornamental element embedded within a jewel, whether it is a ring, a pendant, or a bracelet.
This gemstone rivals gold and silver as a form of long-term investment.
However, investment diamonds have a differentiating characteristic with respect to investment in these precious metals.
The strong fluctuations in these in recent years are not typical of the investment diamond market. On the contrary, the profitability obtained with the latter becomes palpable over the years, approximately 15 or 20 years.
Benefits of investment diamonds
Assuming we can afford it, investment diamonds has a number of benefits for the long-term minded investor Price stability and revaluation: Contrary to what happens with other movable property whose value may be reduced over time due to progressive aging, diamonds retain their value intact. In addition, price stability and a historical average annual revaluation of between 4 and 16%, make diamonds excellent insurance against inflation, as well as against economic crises.
– Convertibility: Investment Diamonds are an accepted commodity practically anywhere in the world. Now, in case we want to sell them, we will need to go to diamond experts or professional auction houses to make sure we get a fair price.
– Transportability and reduced maintenance : Small stones can be easily transported. On the other hand, and leaving aside the need to keep diamonds in a safe place, diamonds have zero maintenance costs.
– The property is not taxed: Unlike real estate, owning investment diamonds does not imply the payment of taxes.
Progressive shortages: Estimates suggest that by 2050, the world’s main diamond mines will be exhausted, which is an excellent indication of the appreciation that this gemstone may experience over time.
How can I invest in diamonds?
There are many alternatives when investment diamonds, although each of them involves very different factors.
– Purchase of “investment diamonds”
For some time, some entities have been trading what is known as investment diamonds. Diamonds with very specific characteristics in terms of weight, color, cut and clarity, which make them especially valuable gemstones.
– Purchase of rare and large pieces
Without a doubt, the best investment diamonds are those that take place on very rare or large pieces. Rare colored diamonds, such as the coveted black diamond, as well as multi-carat gemstones, represent a large investment because their scarcity allows for rapid appreciation, but it should be noted that these types of diamonds are only available to great fortunes.
– Participation in investment funds in diamonds and purchase of shares of listed mining companies
The former are exchange-traded funds, whose shares can be acquired by investors. Investment by mining companies can also be an indirect way of putting part of our capital in these precious stones.
Dangers in investment diamonds
As in any investment, there are a series of conditions that can affect profitability, especially if we are not experts in the field, that is why you must take into account several factors that could endanger not only profitability but the investment itself. Let’s see what these dangers are:
– Purchase diamond encrusted jewelry
Diamond jewelry cannot be considered a good form of investment. The exorbitant margins charged on design and brand quality result in the sale price far exceeding the intrinsic value of the diamonds or precious metal used. Jewelry should be purchased for a clear purpose of personal enjoyment and not as a form of investment. It is true that, in case of need, we can always pawn or undersell this type of goods, but we will hardly obtain a positive return.
– Controversy over the overvaluation of diamonds
The latter, in addition to trading diamonds, is responsible for the weekly publication of the Rapaport listings, which provide specific references to diamond prices in the professional sector.
According to the graduation criteria established in 1975 by the GIA (Gemological Laboratory American), and that are recognized throughout the world.
Therefore, extreme caution should be exercised if investment diamonds by paying for them a price referenced. We could be making an excessively expensive investment.
– Diamond price manipulation
It should be borne in mind that, like any other good, the price of a diamond is highly influenced by supply; that is to say, the number of precious stones that are in the market.
Diamonds have enjoyed extraordinary price stability as producers drastically cut production when demand is tight. The largest manufacturer and marketer of diamonds in the world – is in charge of limiting the supply of diamonds and was responsible, that this precious stone was linked to the idea of a couple’s engagement and hand requests.
It is true that diamonds are in considerable demand by the industry (in fact, only 20% of the diamonds mined are destined for jewelry) and world reserves are gradually being depleted. However, it should be noted that its price has been and continues to be subject to manipulation.
– Online shopping
Although almost all reputable diamond houses have an online presence, the buying process should always be done in person and through an expert. Otherwise, we can fall victim to the sale of synthetic diamonds or fake diamonds for the price of real diamonds.
As you can see, Investment Diamonds are an interesting alternative for anyone who wants to diversify their portfolio and reduce risk.
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