White Diamonds for Investment
A trend that has been gaining strength since around 2009 has been to invest in diamonds. Previously, it was considered difficult to persuade investors to place their money in diamonds due to the thousands of different categories of diamonds that are available.
Unlike gold, for example, where investors could see price changes at any minute of the day, the situation was different regarding diamonds where prices were based on supply of a very particular type of stone. Now, however, there are increasing numbers of diamond investment funds. They propose an overall investment in diamonds by the investor while they decide, based on their expert knowledge, which type of diamonds should be acquired by the fund.
Investing in diamonds has also been aided by the "democratization" of the process that actually started more than 25 years ago. That was the period when diamond pricelists started to become widely used. Before that, the price of diamonds was a closely held secret known only to the small number of diamond producers and their clients and dealers. Without knowledge of the changes in prices, buyers were at their mercy.
The advantage of investing in diamonds, moreover, is two-fold. Not only can they be worn and are easily portable, they also retain their value. Indeed, their value has risen spectacularly in the past 30 years. Following the global financial crisis of late 2008 and the economic slowdown in 2009 and the sharp volatility in stock prices, the attraction of diamonds as an investment has grown even more.
Diamonds can be also be taken advantage of for long term estate planning, with the sale of diamonds and the division among family members.
- Investing in diamonds is not as simple as choosing a stock or bond.
- Investors need to be able to identify the price, its resale possibilities, and if it has a certificate.
- The diamond must be bought at a price that is fairly close to the price that it can easily be resold for.
- Expert advice is critical.
- The quality of the diamond must be verified via an independent third party grading.
- Some very high-end diamonds are difficult to sell on because the market for them is small.
- Restrict investment to well-defined and standardized round diamond investments - the type of diamonds that are traded day in and day out.
- Investment diamonds should be graded by the Gemological Institute of America (GIA)
- Reasonable investment diamond transaction costs involving physical delivery of the diamonds can run in the 2-5 percent range depending on the size of the investment.