Although everyone appreciates the beauty of diamonds, not many see them as the investment that they are. Hints and tips on how to invest in diamonds
In tricky financial times, diamonds are a sound investment and should be considered as reliable as investing in fine art or gold. A growing number of people are purchasing larger stones as an investment, and you don’t have to be the billionaire investor that you might think to do so
The key to investing in diamonds is to know which specific factors will ensure high return on your investment purchase.
You should be aware of the 4 Cs in diamond grading and ensuring that the stone is properly certified (issued by a reputable agency, such as GIA, AGS, or EGL, or HRD ),valued and is a non conflict stone. Ensure you are sure of where the diamonds are sourced and suppliers should have extensive policies and warranties.
Although the 4 cs is useful on an individual stone level, this does not give an indication as to how much value increase you may get on a stone.
Largely, for investment purchases, the size of the diamond is important. Most experts would agree that the bigger the stone, the better the investment. However, do be wary of the quality of the stone, too, as poor quality diamonds will not increase in value, and may in fact decrease in price over the years. As a general rule, the higher the carat and the better quality the stone, the more value your investment will gain in the long term.
Be aware that diamond styles may move in and out of fashion, and it’s only the truly classic stones and styles (if set in jewellery) that will retain and increase its value. Think of an investment diamond in the long term, rather than the short term: what will its desirability be in fifty years’ time? High quality stones in simple, classic cuts will always perform better than their fashion or trend-based counterparts.
Last of all, like any other investment, an increase on your original amount is not a guarantee. Maximise your chances of recouping your money with a handsome profit buy making informed purchases, selecting the best size, cut and clarity of stone that you can afford, and sitting out the risks of the ups and downs of the global economy. If you can do this effectively, diamonds can prove to be an investment that is more than worthwhile.
‘Diamonds that originate from areas controlled by forces or factions opposed to legitimate and internationally recognised governments’ – Definition of conflict diamonds by the United Nations.
Conflict diamonds are diamonds that are traded illegally to fund conflict in war-torn countries, particularly in central and western Africa. Sometimes referred to as blood diamonds, they captured the world’s attention during the brutal conflict in Sierra Leone in the late 1990s. Illicit rough diamonds have also been used by rebels to fund conflicts in Angola, Liberia, the Ivory Coast and the Democratic Republic of Congo. At the time, it was estimated that 4% of the world’s diamond production was of conflict diamonds. Today, the flow of conflict diamonds has been reduced considerable to less than 1%.
On a more positive side, many people are unaware of the role that diamonds play in bringing real benefits to populations in diamond-rich countries – particularly in Africa. In 2002, a coalition of governments, non-governmental organisations and the diamond industry established the Kimberley Process Certification System, an UN-backed process that has helped reduce the conflict diamond trade. Today, over 99% of the world’s supply of diamonds is from sources free of conflict, and an estimated 5 million people worldwide have access to improved healthcare as a direct result of revenue from diamonds. In fact, diamond revenues enable every child in Botswana to receive free education up to the age of 13, an estimated 10 million people globally are directly or indirectly supported by the diamond industry, and the revenue from diamonds is instrumental in the fight against the HIV / AIDS pandemic.