Investment Diamonds have been the object of desire since time immemorial. His figure is associated with romanticism, passion, and luxury. They’re also considered a guaranteed appreciation safe haven, but are they really a good investment?
Investment diamonds are a sophisticated way to diversify the portfolio of our investment portfolio and, at the same time, gain long-term security.
For most people, diamonds are fundamentally conceived as an ornamental element integrated within a jewel, whether it is a ring, a pendant, or a bracelet.
This gemstone rivals gold and silver as a form of long-term investment.
However, investment diamonds have a differentiating characteristic compared to investment in these precious metals.
The strong fluctuations in these in recent years are not typical of the diamond market. On the contrary, the profitability obtained with the latter becomes palpable over the years, approximately 15 or 20 years.
Assuming we can afford it, investment diamonds has a number of benefits for the long-term investor.
Price stability and revaluation: Contrary to what happens with other movable property whose value may be reduced over time due to progressive aging, diamonds retain their value intact. In addition, price stability and a historical average annual appreciation of between 4 and 16%, make diamonds excellent insurance against inflation, as well as against economic crises.
– Convertibility: Diamonds are an accepted commodity practically anywhere in the world. Now, in case we want to sell them, we will need to go to diamond experts or professional auction houses to make sure we get a fair price.
– Transportability and reduced maintenance : Small stones can be easily transported. On the other hand, and leaving aside the need to keep diamonds in a safe place, diamonds have zero maintenance costs.
– The property is not taxed : Unlike real estate, owning diamonds does not imply the payment of taxes.
– Progressive shortages: Estimates suggest that by 2050, the world’s main diamond mines will have been depleted, which is an excellent indication of the appreciation that this gemstone may experience over time.
There are many alternatives when it comes to investment diamonds, although each of them involves very different factors.
– Purchase of “investment diamonds”
For some time now, some entities have been trading what is known as investment diamonds. Diamonds with very specific characteristics in terms of weight, color, cut, and clarity, which make them especially valuable gemstones.
– Purchase of rare and large pieces
Without a doubt, the best investment diamonds are those that take place on very rare or large pieces. Rare colored diamonds, such as the coveted black diamond, as well as multi-carat gemstones, represent a large investment diamonds because their scarcity allows for rapid appreciation, but it should be noted that these types of diamonds are only available to great fortunes.
– Participation in investment funds in diamonds and purchase of shares of listed mining companies
The former are exchange-traded funds, whose shares can be acquired by investors. Investment by mining companies can also be an indirect way of putting part of our capital in these precious stones.
Dangers in investment diamonds
As in any investment, there are a series of conditions that can affect profitability, especially if we are not experts in the field, that is why you must take into account several factors that could endanger not only profitability but the investment itself. Let’s see what these dangers are:
– Purchase diamond encrusted jewelry
Diamond jewelry cannot be considered a good form of investment diamonds. The exorbitant margins charged on design and brand quality result in the sale price far exceeding the intrinsic value of the diamonds or precious metal used. Jewelry should be purchased for a clear purpose of personal enjoyment and not as a form of investment. It is true that, in case of need, we can always pawn or undersell this type of goods, but we will hardly obtain a positive return.
– Controversy over the overvaluation of diamonds
The latter, in addition to trading diamonds, is responsible for the weekly publication, which gives specific references to diamond prices in the professional sector.
Therefore, extreme caution should be exercised if investing in diamonds by paying for them a price referenced certificate. We could be making an excessively expensive investment.
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