Did You Know That Investing In Diamonds Is Well Worth Your Money?
The most cliche saying is that diamonds are a girl’s best friend. However, that is not totally true as it is also an investor’s best friend. Amidst an unstable market and inflation, investing in diamonds can be profitable. In fact, they are considered a safe investment in that they maintain their value even in economically uncertain times.
Diamonds have always been attractive to investors and yet stubbornly out of reach due to the fact that a good quality diamond is expensive and rare. Diamonds are a $1.2 trillion natural resource, uncorrelated to stocks and negatively correlated to gold and silver with significantly less volatility than these asset classes.
As diversification is essential for asset preservation, risk management and consistent returns, investors seek to combine uncorrelated assets and, for this reason, diamonds are an extremely attractive asset. They often produce returns when other assets fall.
When you invest in diamonds, you are buying tangible assets that will be in your possession. Diamonds’ scarcity and the widening gap between supply and demand are what will drive prices high and provide high return on your investments.
Research has been done and on average, diamond prices have increased by more than 14% per annum for over 50 years.
As we can see from the graph above, the prices of diamonds per carat has been increasing steadily through the years since 1960 and no other commodity has shown such a result. Diamond prices have increased about 14% each year since 1960 and the prices will keep increasing due to the demand for diamonds worldwide. With the diamond industry having an estimated $80 billion annual turnover, diamonds are primed to become financial investors’ next treasure trove.
Today, investors are turning to diamonds for their long-term value, as well as their aesthetic qualities. Returns for the gems beat those of equities for much of the past 15 years. From 1999 to 2011, three-carat diamonds increased by 145%, while five-carat diamonds rose by 171%, as measured by the Rapaport Diamond Trade Index.
According to Vashi Dominguez, Chief Executive of diamond trading company Diamond Manufacturers, certain types of diamonds, including coloured varieties, have held their value over the past few years better than other more volatile equity investments. He further added that investors in diamonds should spend at least £5,000 on a diamond and keep it for five years or longer. Advisers say the best way to buy a gem is through a diamond trader.
To most people, investing in diamonds actually makes lots of sense. Diamonds have forever been used as an excellent means of transfer. The fact that such a small item can be worth so much money is astounding. You can easily keep a one million dollar diamond in the smallest of safes.
Throughout history, diamond is the most durable and physical among any commodities. Real estate, gold, silver and diamonds usually appreciate in compliance with inflation. Unlike the others, diamonds are also more durable and movable. The most obvious reason among ladies is that they can enjoy the aesthetic value of the diamond. Furthermore, it is physical. You can hold it, look at it, appreciate it and even wear it. It makes you feel safer unlike stocks and other financial items which are rows on a computer screen.
Venessa Diamonds carries Mira, one of the most extensive diamond collections of the finest quality. All of the loose diamonds are Gemological Institute of America (GIA)-certified and guaranteed to be authentic. If you wish to learn more about the value and investment potential of diamonds, our professional diamoneers are always available to guide and advise you.