Diamonds as an investment

Diamonds as an investment alternative to the stock market and gold.

During a time when the only thing for certain seems to be economic uncertainty, have you considered investing in diamonds?  For months now, you’ve watched your stocks and other investments see-saw while watching gold prices rise.  Now, more than ever, is the right time for a diamond investment.

After all, wouldn’t it be great to enjoy a diamond both to wear in a piece of jewelry and for investment purposes?!

The diamond investment market has seen a robust recovery since the economic collapse devastated the luxury goods market just a few years ago.  Numerous factors play into rising prices, but among the most significant is the recent news of De Beers cutting diamond mining production. With a marked increase in demand from China and diamond supplies simply drying up, De Beers has reduced production in order to extend the life of their mines.  As a result, we expect to see prices continue climbing as the divide between supply and demand widens.

With scarcity comes increased value, making this the optimum time to consider a diamond investment strategy to round out your portfolio.

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Take a look at these Ten Year Annual Investment Results comparing diamond investments with other, more traditional, investment options* …

Gold … up 411%
Platinum … up 178%
5.00 carat diamond (RDI) … up 153%
3.00 carat diamond (RDI) … up 95%
$ per Euro … up 38%
Yen per $ … up 38%
1.00 carat diamond (RDI) … up 35%
U.S. interest rate … up 30%
NASDAQ … up 7.8%
Dow Jones … up 7.3%

According to the Merrill Lynch 2011 World Wealth Report, gemstones and jewelry account for 22% of all “investments of passion” for higher net-worth individuals.  Even the affluent urbanites in China are paying attention to the rising value and are “buying diamonds in droves” according to a recent article in Financial Times.

Diamonds are truly timeless, both in beauty and value.  The higher their rarity, the more valuable they become.  As a long term investment, natural diamonds not only maintain their value but appreciate at a far greater pace than most other investment vehicles.  Other advantages of investing in diamonds include:

  • Diamonds are the most concentrated form of storing wealth.
  • Diamonds require no ongoing management, nor do they incur property taxes or require liability insurance.
  • They offer financial privacy not available elsewhere. Unlike other financial investments, a diamond investor has 100% direct ownership of a portable tangible asset of proven value.
  • Diamonds retain their value even when the rest of the economy bottoms out and have performed consistently well throughout economic downturns.
  • There is a nearly universal belief that diamonds have enduring value.
  • Unlike commodities and other investments, diamonds are insulated from the daily fluctuations of the markets and are not as likely to reflect sharp price changes.
  • Demand for diamonds is international.

Diamond investment may not be for everyone, but during such volatile economic times wouldn’t it be wise to invest in an asset that not only stands a great chance of appreciating and looks great in a stunning piece of jewelry?

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(December 2000-December 2010, courtesy of Rapaport Diamond Report, 2011. RDI is the average price per carat for D-H, IF-VS2, VG+ diamonds)