Investing in diamonds is a practice that stretches back centuries, with kings and queens from days long gone hording diamonds and other precious gems. Diamonds have long been viewed as the ultimate status symbol, a display of power and luxury that comes from the gemstones being so rare and valuable. It is no real surprise then that the largest of these brilliant stones end up being passed down through generations, staying in the grasp of wealthy families, some of who possess royal blood, for centuries. Unlike stocks and bonds, which can often be short-term investments, diamonds are an investment intended for the long haul. These precious stones only become more valuable with each passing year. For example, a diamond found in the 19th century may now be worth 150% to 200% more than it was when it was first discovered. Is it any wonder that the owners of these gems are so keen to keep a hold of them?
While we are not suggesting that you should have nothing but diamonds as your sole investment, they should certainly be part of a larger investment portfolio. It’s good to have a mix of both short- and long-term investments, with the latter being the ones likely to carry you through tougher economic times. A good balance is what you should be looking for, but we have some very specific reasons why diamonds are an essential part of your investment strategy.
1. Extremely resilient against all that Mother Nature can deliver – Besides depreciating in value, there are some commodities that can actually decay in substance over time, either through changes to the environment or pollutants. Diamonds are a ridiculously sturdy and resilient stone that will remain unaffected by anything that Mother Nature throws their way, which is why they do not depreciate. They are unquestionably the toughest stone found on earth, Furthermore, they do not lose their shine or luster over time, and will continue to sparkle and be brilliant, no matter what happens to them. They are an appreciating asset that will prove to be a truly stable investment.
2. They are a truly universal currency – Most people are unaware that diamonds are widely accepted as form of payment in a trade transaction. It is easy for travelers to liquidate their diamonds in any country, while the same cannot be said of local share certificates, which cannot be turned into cash in a foreign market.
3. Their pricing is universal – Free trade means that each country in the world can charge any price they see fit for a given commodity. This is not the case with diamonds, as the Rapaport Diamond Price Report delivers the average weekly price for each of the different kinds of diamonds out there, The report has created a situation where the price of diamonds has now become standardized across the world. You can expect to receive fair market value form a diamond buyer, no matter where you are in the world.
4. Diamonds are rare – While roughly 20 tonnes (100 million carats) of diamonds are mined annually, about 80% of that number are actually of a low quality considered not usable for the jewelry industry. The remaining 20% of those diamonds are used to create the jewelry that we love so much. Of the diamonds that survive, only about 5% actually weigh more than a single carat. Adding to the scarcity factor is the fact that supplies are running out, with De Beers suggesting that diamonds might be mined out in 40 years if no new mines are discovered in that time. It is their rarity that makes then such a memorable gift, while their strength and power serves as the ultimate symbol of everlasting love when used in a wedding ring.
5. Diamonds provide security during economic downturns – We have all seen stock markets collapse and crumble, leading to a recession that can quickly wipe out personal wealth. Since the value of diamonds is not attached to the performance of the stock market, their value remains intact. Diamonds are also used as a hedge against inflation in those times when hyperinflation causes the price of commodities to spike.
6. Use diamonds as insurance for the future –While a lot of different people collect diamonds, women tend to use them as an insurance policy of sorts, just in case they need to get away from a bad husband. Diamonds are a valuable commodity that can quickly be turned into cash.
7. Wearable and valuable – When you have a precious commodity that is valuable, you tend to tuck that thing away in a safe place, far from harm. Diamonds not only appreciate over time, they have an aesthetic that makes them beg to be put on display. This is the perfect win/win scenario for investors, as they can have something that will continue to hold its value, or even become more valuable, over time, whilst also being the perfect fashion accessory.
8. Diamonds can be kept close with no maintenance required – Diamonds are an investment that can be kept safe and secure with a minimum of fuss. Once you have them locked up in your home safe, you can get to them whenever you need to, and you never have to worry about their value, as they will do nothing but appreciate in value. There is no need to focus any of your time on the markets, as they have nothing at all to do with the value of your beautiful investment.
9. The market is open to new investors – It wasn’t so very long ago that investing in diamonds was a business for anyone other than professional diamond traders, most of whom were a tight knit circle unwilling to let anyone else in. Things started to change with the arrival of the Internet and the globalization of the diamond market. This has allowed amateur diamond investors to quickly learn the ins and outs of the business. They now routinely do all the things that the diamonds traders of old did, including creating trusts, investment funds, and buying diamonds for their own personal collection.
10. Portable and tax-free – Great things sometimes come in small packages, which is very much the case with diamonds. They are incredibly easy to get from place to place because of their size. Diamonds are also not subject to possession tax or capital gains. There are very few other commodities that allow your investment to grow without you being hit with a tax bill.