INVESTING IN DIAMONDS?

As the financial markets continually fluctuate, people are looking for other investments. And diamonds are an obvious choice. But why should you invest in diamonds? Here are a few different reasons:

1.    Diamonds are easy to handle. They don’t take up a lot of space and can be kept in your bank.

2.    Diamonds are durable, as the hardest substance on earth you don’t have to worry about anything happening to your diamonds, except losing them.

3.    You can enjoy and wear your invested diamonds, as they don’t easily get scratched, put it in a ring and enjoy it.

4.    Diamonds are a good investment thinking long term. 

 

But how do you invest in diamonds?

First of all you need to learn the basics. The quality of a diamond is determined by the 4 c’s, Colour, Clarity, Carat and cut. Recently another C has been added; Certificate.

1.    Colour. A White diamond is graded using the colour grades from D to Z, where D is the whitest colour, and thus the most valuable.

2.    Clarity, describes the inclusions found in a diamond, the diamonds are graded from:

  • Flawless
  • Internal flawless
  • VVS (Very very slightly included) 1 & 2
  • VS (Very slightly included) 1&2
  • SI (Slightly included) 1&2
  • and I Included 1,2 & 3

These grades describe the inclusions found in a diamond.

3.    Carat. The carat is the weight measurement of a diamond, one carat is 0.2 grams.

4.    Cut. A diamond has to be well cut to reflect the light best. The cut of a diamond is very important, a poorly cut diamond can look big, but lifeless.

Cut grades are given as

a.    Excellent

b.    Very good

c.     Good

d.    Fair

e.    Poor

5.    Certificate. Various grading laboratories are offering to grade your diamonds, and give a certificate. There are only 2 diamond grading laboratories that I will recommend; GIA and HRD. There are others on the market that are grading too positively, which means that you will assume that you have bought a diamond of a better quality. For coloured diamonds it is only GIA who can give you a grading report you can trust.

Then you have to set a budget, how much money do you want to spend on a diamond? It is easy to get carried away; there are many talented sales people in the diamond market.

Diversify your investment; there is no reason to put all eggs in one basket so to speak. Buy some different diamonds, maybe 1 white, one pink, one yellow. That way it is easier for you to meet the general demands of the market once you want to sell your diamonds. 

The shape of the diamond is also important, as there is more demand for a brilliant cut or cushion cut diamond, than for a marquise shaped diamond.

So which diamonds should you buy? My advice is to buy a rare yet desirable diamond. Not too big, but a medium sized diamond of 2-3 carat brilliant cut, of a very good quality.

A diamond of 1 carat, in the D colour, IF (internal flawless) will cost you apprx 20.700 USD plus VATA diamond of 2 carats, in in the same quality is apprx. 88.000 USD plus VAT. A diamond on 3 carats in the same quality is apprx. 245.000 USD plus VAT.

Coloured vs. white diamonds?

Should you buy coloured diamonds or white? When speaking of coloured diamonds, I mean pink, yellow, blue or green. Not brown or black which are cheaper and more common than white diamonds of an average quality.

Prices on coloured diamonds are much higher than on white diamonds, with the red and pink diamonds in the absolutely top. Expectations are that there will be a strong increase in the demand for diamonds (all diamonds) from evolving markets as China and India, with a continuously growing middle class.

And there will also be a strong increase in the demand for the coloured diamonds. Coloured diamonds are by far more rare than the white diamonds. Especially pink diamonds are very interesting as investment diamonds as the only source of the most beautiful pink diamonds, the Argyle mine in Australia, is expected to run out of pink diamonds in 5-6 years.

Pink diamonds have had an amazing increase in prices.

So what will I buy as an investment? I will buy a beautiful pink diamond from Argyle, of 0.3 carats, brilliant cut, in a beautiful colour, with a certificate from GIA . I will wear it and enjoy it, and maybe sell it in 5-6 years.