June 18, 2016

Diamond Investment | Diamond Online | Diamond cuts

Diamond Investment | Diamond Online | Diamond cuts | Precious stones

Investing in Diamonds?
All about Diamond Investment

investing in diamonds and colored diamonds
investing in diamonds and colored diamonds

Diamond investment used to be for experts – or mugs. Now the market is opening up to DIY investors.

It is also during these times that we learn and appreciate the advantages of physical commodities. This is why we see the increase in the value of gold, silver and lately… diamonds and natural colored diamonds.

Diamonds as an Investment | Investing in Diamonds

The use of diamonds as an investment and financial hedging tool has grown rapidly over the last few years to point that there is even an interesting section about it in Wikipedia.

The reason is quite obvious and actually makes lots of sense:

  1. Diamonds don’t take up room –
    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.
  2. A diamond is durable – It doesn’t break or wear off –
    As the hardest substance on earth you do not have to worry about anything happening to it. All you have to do is to make sure you do not lose it! (and even that can be insured).
  3. Inflation Proof –
    This is actually true to most physical commodities. Real estate, gold, silver and diamonds usually appreciate in compliance to inflation. Unlike the others, diamonds are more durable and movable. This is also why even if you do not want to buy diamonds for investment buy just considering an alternative form for putting some money aside diamonds make a good choice.
  4. You can enjoy it while you have it –
    Since diamonds do not wear off and technically there is no meaning to selling a “second hand” diamond, you can mount it and wear it while you use it for investment purposes.
  5. Psychology –
    It is physical. You can hold it, look at it and even wear it. It makes you feel safer unlike stocks and other financial items which are rows on a computer screen.
  6. Advantages of
    diamond investment

    • Asset Appreciation
    • Easy to Transport
    • Highly Private Asset
    • Internationally Recognized
    • Extremly Durable
    • Very Easy to conceal
    • Demand Exceeds Supply
    Diamond Demand & Supply Chart
    Diamond Demand & Supply Chart

Besides the psychology and physical aspects there are also financial advantages to buying diamonds for investment purposes which we’ll show below. But first thing first.

investing in diamonds
investing in diamonds

How to Invest in Diamonds?

Diamond investment should fall into your category of alternative investments with all it entails.
This means that they should be a small portion of your portfolio etc.

The idea is actually quite simple. As I mentioned, investing in diamonds is based on the fact that diamonds are physical commodities. As such, you can easily buy them everywhere, even online. The recommendations below are the basic guidelines, a how to invest in diamonds tips and tricks if you wish. But most important we also cover the risks so please read thoroughly till the end…

  1. Set a budget
    Keep in mind that this should be a part of your portfolio. True, unlike stocks, the initial amount that is required is a bit higher but this is no reason to go over the budget or over the ration of your portfolio that you had in mind.
  2. Diversify your diamonds
    Don’t put all the eggs in one basket. Even though it was Warren Buffett who said “Diversification is protection against ignorance, it makes little sense for those who know what they’re doing”, we can’t all be Buffett. In diamond investment like in other investments it may be wise to diversify your “portfolio”. If you had set your diamond investment budget on $20,000 then you should consider buying 2 x $10,000 diamonds or even split it into three. On top of that, don’t buy two / three diamonds of the same type. If you had your heart set up on a pink diamonds, then it might be smart that the second diamond will be blue, green or even yellow. You don’t know which will rise more or alternatively which will be easier to sell later on. Also, this is great since it will enable you to liquidate a portion of your portfolio in case you need to allocate some of your investment funds.

    Diamond Investment
    Diamond Investment
  3. Compare Prices
    Forgive me for repeating the obvious comparison to stocks but a diamond is not a stock. The price is not set by thousands of buyers and sellers bidding online in a transparent platform. However, with the huge amount of online retailers you can easily compare asking prices for similar diamonds (this is harder to do when it comes to colored diamonds where each diamond is different).
  4. Buy only certified diamonds. Do not trust what the seller is saying (or writing in case it is online). Keep in mind that every minor change in a diamond’s attributes means a lot of money. We highly recommend buying diamonds specifically with GIA certificates. This is probably the most known gemological laboratory and also a very strict one.Besides for the buying part of the investment, consider that when it is time to sell your diamonds your buyer will probably also want to see a GIA grading report.
  5. Buy Your Diamonds Cheap
    This Paragraph is in continuation to the above section. Buying at a retailer means that you bought your diamond after many brokers and mediators got their share. By buying cheap we do not mean to buy cheap diamonds (on the contrary). This means buying as high up the chain of distribution as you can. Skip the mediators. Try buying directly from manufacturers. Many diamond manufacturers  now have online stores and are happily willing to sell directly to the end customers.
  6. Don’t be shy
    Ask many questions. Try to reach diamond experts and consultants. Use diamond forums. It is the age of sharing and carrying. Social networks are full of people that would be more than happy to assist. Some probably already invested in diamonds and can share their personal experience.


 Natural Yellow Diamonds – standing out in the crowd

This also takes us directly into the second advantage which is (to our opinion) that there are more reasons for colored diamonds prices to increase than in regular colorless diamonds.
Consider yourself – Did you know about colored diamonds 20 years ago?

There is an expectance for a strong increase in demand for diamonds (all diamonds) from the evolving markets such as China and India where the middle class is growing every year. Regardless, there is also a strong increase in demand for natural colored diamonds in matured and evolved markets that are now getting more familiar with it. Colored diamonds are by far rarer. When we connect the dots, investing in colored diamonds makes sense.

Are Diamonds a Good Investment?

Any investment involves a portion of speculation. All you can do is try to make a smart one based on all of the information you can obtain.

If we try to conclude all that was written above, not surprisingly, diamonds as an investment have their pros and of course their cons. I strongly believe that their upside and potential easily overcomes their cons.

As Anja Winikka, site director of TheKnot.com recently told CNBC, approximately 93% of couples get married with a diamond engagement ring!

Think it will change anytime soon? 😉

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