Diamonds as a form of Financial Investment
Diamonds can be considered a form of financial investment due to their rarity, long-term value potential, and ability to act as a hedge against inflation.
As a tangible asset, diamonds have historically maintained their value and even appreciated over time. Their scarcity and limited supply, specifically with coloured diamonds, contribute to their inherent value.
For example, over the last 10-15 years, the prices for pink and blue diamonds have risen by over 400% . This is the result of an increase in demand, together with the closing of the Argyle Mine that supplied roughly 90% of the globe’s rare pink diamonds causing the market to be limited and the prices to sky-rocket.
Why should you invest in Diamonds?
Investing in diamonds can be an appealing for several reasons:
Rarity and Scarcity – Diamonds are rare and their supply is limited. Given the complexity of the diamond mining process that also requires significant amount of resources, the availability of new diamond sources is limited.
Long-term Value – Historically, diamonds have maintained their value and shown appreciation over the long term. Similarly to other market, short term fluctuations in diamond prices can occur, however diamonds have shown resilience and potential steady appreciation over the long term.
Tangible and Portable Asset – Diamonds are portable and highly liquid assets. They are physically tangible and can easily be transported, stored and traded.
Hedge against Inflation -Like other tangible assets, diamonds can serve as a hedge against inflation (i.e. the general increase in prices of goods over time). As the value of fiat currency erodes due to inflation, the value of tangible assets such as diamonds can potentially increase, preserving the purchasing power of your investment during inflationary periods.
How do you Invest in Diamonds?
Investing in diamonds can be straightforward and simple, but before you jump into it, here are a few basic guidelines we recommend you follow.
Research and Education – Familiarize yourself with the diamond market and learn the basics of diamonds grading and pricing.
Set a Budget – Determine your investment budget. Avoid overspending and investing beyond your means.
Diversify your Portfolio – Avoid putting all your money in one diamond. Diversify your diamond portfolio by investing in different colors and qualities.
Emphasize Rarity – Avoid buying diamonds that are easily purchasable. The fewer there are on the market, the rarer and hence the better.
Certified Diamonds – Invest in certified diamonds from acknowledged laboratories such as GIA or HRD. This provides assurance of the diamonds quality and authenticity.
Inspect the diamond – Always inspect the diamond loose, not mounted. Settings can hide inclusions and make the diamond look more appealing.
Seek Professional Guidance – Get help from a professional diamond expert who can help make informed decisions.
