Investing in Diamonds

Are you looking to invest in a commodity that holds it’s value and has the ability to increase in value during recessions and major stock market fluctuations? Have you looked at investing in diamonds as part of your diversified investment portfolio? All diamonds increase in value over the years, however only diamonds of an exceptional quality really stand out in terms of added value.

Characteristics of investment diamonds

The following are the quality criteria that are deemed necessary if the diamonds are to be a good long-term investment :

  • Weight: 1 carat and above
  • Shape: Round brilliant cut
  • Colour: from D to F
  • Clarity: from IF or LC (Loupe Clean) to VVS2
  • Proportions, symmetry, polishing : Very Good or Excellent
  • Fluorescence : None or Slight/Faint
  • Certification : GIA, HRD, IGI

Investing in Diamonds offer a number of advantages:

  1. Diamonds don't take up any space - Diamonds have forever been used as an excellent means to transfer wealth. The fact that such a small item can be worth so much money is amazing. 
  2. A diamond is durable - As the hardest substance on earth. It will not break or wear off. Just ensure you don’t lose it. Therefore you should always make sure you insure it.
  3. Inflation proof - As is true with most physical commodities. Real estate, gold, silver and diamonds usually appreciate with inflation. Unlike the others, diamonds are more durable and movable. 
  4. Diamonds can be bought and sold worldwide.
  5. Investment diamonds require no management service.
  6. Enjoyment is derived while you own it - you can mount it and wear it while you use it for investment purposes.
  7. It's a physical object - You can hold it, look at it and even wear it. It makes you feel safer unlike stocks and other financial instruments and stocks

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 portion of your investment portfolio The recommendations here are the basic guidelines.

  1. Learn the basics - The diamond language. Start with the 4 Cs of Diamonds. 
  2. Set a budget - This should be a part of your diversified portfolio.
  3. Diversify your diamonds - In diamond investment like in other investments it may be wise to diversify your portfolio. E.G. don't buy two / three diamonds of the same type. If you had your heart set up on a pink diamond 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. 
  4. Compare Prices
  5. Buy rare yet desired - don’t buy something that everyone has. When the time comes to liquidate your investment, you don’t want to sell something that can easily be bought elsewhere. You are competing with many other sellers. However, if you have a special natural colored diamond, for example a blue diamond or a pink diamond, you are on a league of your own. Use common sense and trust your instincts about what to stay away from.
  6. Know what you are getting - Buy only certified diamonds. Every little change in a diamond's attributes means a lot of money.
  7. Be patient
  8. Don't be shy - Ask questions! Lot's of questions!

It is important that you adhere to a few security checks when purchasing a diamond. Unfortunately there are a number of dishonest merchants sell diamonds that do not correspond to the certificates that accompany them.

Ensure you require two guarantees on the part of any seller:

  • a laser-engraved certificate number,
  • as well as laboratory sealing of the stone.

The latter condition will enable you to detect a fraud.

Laser engraving must not to be overlooked. Once the diamond is mounted in a piece of jewellery, you will be able to recognise your diamond thanks to this engraving by using a simple magnifying glass. The certificate number must be preceded by the company logo of the laboratory that performed the appraisal, the certificate should mention the engraving.