The increasing demand for diamonds as an investment made us collect and display useful information on the topic for diamond lovers and our customers:
Why diamonds as an investment?
- Inflation hedge as a tangible asset
- Stable performance
- Tradable worldwide
- High concentration of value
- High mobility
- Untouchable for the taxing machinery compared to real estate
- Few large companies control production and hence the supply of diamonds
Diamonds are suitable as an inflation hedge like other tangible assets. Another plus is the stable development of diamond prices over the decades. Many investors also appreciate the fact that one can trade diamonds all over the world. By highly concentrating value diamonds are easy to both store and move. Comparing diamonds to gold: 1kg of gold costs about 35.000 EURO while the same value in diamonds can be achieved already by 1 to 1.5 carats (0.2 to 0.3 grams). In comparison to real estate there is no dependency on location. And tax authorities cannot raise any fees like on property.
Even though the well-known diamond mining company De Beers does not have a monopoly in the diamond trade any longer, there are only a few large companies that control the production of rough diamonds. De Beers together with the Russian company ALROSA account for about 70% of all diamond production worldwide. In case demand for diamonds is weakening it is in the interest of these two big players to shorten supply and support diamond prices by doing so.
Historical Data: Rough Diamond Prices
An investment in diamonds is suitable for who?
Investors in diamonds agree to the following statements:
- You are looking for a long term investment and not the short-term profit
- Highest priority is the maintenance of value in times of crises
- You already have a diversified portfolio
- You do not depend on frequent dividends from your investment
- Before putting your money down you have done your research on diamonds and the diamond trade. You know that jewelry is as old as mankind itself and diamond being the most popular precious stone. Furthermore, you are familiar with the current market situation and know about possible future trends and scenarios. At the end of the day you are happy to own a brilliant asset class and know, that the highest ROI (return on investment) is making your wife happy. Worse comes to worse, you can always use the diamond in jewelry to make a very very special present.
Historical Data: Polished Diamond Prices
Possible disadvantages of diamonds as an investment
Although every diamond can be used in jewelry at any time, there are risks that one needs to take into consideration.
- The complexity of the matter. Which diamonds are suitable for investments? What are possible price developments in the future and what do they depend on? Our advice: Ask an expert for counsel. How do you explain price differences by the different parameters and qualities? A one carat diamond is not like any other one carat diamond. Investors should know more than jewelry lovers.
- Diamonds are subject to VAT. That is, when liquidating your brilliant asset selling to a third person you can also claim this money. However, if you are selling to the trade you will lose the VAT you have paid. In case you have questions on how to sell a diamond talk to us. We can always make you an offer and/or help you sell to a private third party. Our contacts into the industry have proven useful here.
- Diamonds are not suitable for short-term investments only due to the VAT. Their prices grow steady, but slowly. Every percent of inflation over the years works towards your increasing value of diamonds.
Price Comparison: Rough and Polished Diamonds
Possibilities and Strategies
Essentially, there are two main strategies to invest in diamonds:
I. Buying diamonds of commercial quality for which there is constant high demand.
II. Buying diamonds of premium quality only that are extremely rare.For both strategies you should consider the following parameters:
- Round brilliant is by far the most popular diamond shape. More than 75% of all customers decide for a round brilliant diamond.
- Common sizes: 0.5 carats, 0.75 carats, 1 carats, 1.25 carats, 1.5 carats or 2 carats
Most diamond lovers prefer these standard sizes.
- No fluorescence. Even though many customers are enthusiastic about the phenomena of fluorescence and it can actually have a positive effect on diamond color: The market discounts fluorescent stones. When thinking about an investment, stick to what the market believes is right.
- GIA Certificate. Other certificates can be just as good, however, we advise you to only go for GIA certificates when you buy as an investment.
Adjust your diamond portfolio for above-average, but not for the highest qualities.
|Carat weight: 0.50 to 2 ct||Cut: Very good – excellent|
|Clarity: VS1 – VS2||Polish: Very good – excellent|
|Clarity: VS1 – VS2||Symmetry: Very good – excellent|
These combinations are preferred in the production of jewelry and hence there will always be a demand for these types of diamonds. Every jeweler can make use of them and the chance of finding a private buyer is comparably high.Strategy II:
Only buy diamonds of the highest quality.
|Carat weight: 1 to 3 ct||Cut: Excellent|
|Color: D – E||Polish: Excellent|
|Clarity: FL – IF||Symmetry: Excellent|
This combination is rare by nature, upscale and stable in value. The potential buyer clientele is smaller than for commercial diamonds which makes the investment rather long-breathed. At the same time the increase in value tends to be greater among stones of the highest quality.
Investment Diamonds at Diamant Agentur:
Why should I buy from Diamant Agentur in Germany?
- Our company policy regarding transparency and councel as well as our company philosophy make us the right partner for buying diamonds: „Only the informed customer is a happy customer."
- Our investment diamonds have without exception a GIA certificate and a laser inscription of the certificate number. That means: At all times the diamond can be identified as corresponding to the certificate.
- Highest quality of diamonds only
- Best price guaranteed when choosing from more than 300.000 diamonds that are being traded worldwide by our partner network.
What we do not recommend:
Diamonds that are most suitable to be set in jewelry might not be the best choice for an investment. For instance a pear shape diamond with strong fluorescence of 1.34 carats and a low color degree. This can fit perfectly in a beautiful piece of jewelry and look fantastic, yet, it might be difficult to sell. The same goes for objects of vertu: Very large or colored diamonds that are among the most expensive precious stones that exist, are very valuable, but not fungible when it comes to selling it again. One might consider it a quite specific market niche and not a mainstream product.to the top
Disclaimer: The information on our website is not financial or investment advice or consultation. The information and data we provide is merely for the purpose of information, to quench curiosity and help our visitors to gain a better understanding of how the diamond market and industry function. We believe that the biggest ROI (return on investment) is to make the love of your life happy with a beautiful diamond or diamond ring.