Investing in Diamonds

Diamonds can be great stores of value, making them a great option for investors looking to weather a tough economic climate. People have admired their beauty since antiquity and they have been treasured and highly valued since they were first mined and used in India. Ancient India used the brilliant stones in its religious iconography. Since then, the popularity of diamonds has exploded.

Nowadays, the precious stones are renowned for their high value per unit weight. You would need 100 kilos of gold to purchase a high quality diamond weighing as little as two or three grams. Since their size makes them very easy to store and transport, diamonds have been a source of emergency funding throughout history. Not only is their value extremely condensed, the stones are very portable. Some people point to synthetic diamonds—which have been produced industrially since the 1950’s—as a potential threat to the value of diamonds. Nonetheless, synthetic diamonds have yet to impact the price and desirability of the real diamond market and it remains highly unlikely that they will in the future. So far, they have behaved exclusively independent of one another, as they respond to different market forces.

Diamonds are popular investments during times of uncertainty. They are essentially protection against the unexpected, and the unexpected is what we are facing in today’s world economy. They are also great commodities to own during periods of hyperinflation. During the period between 1978 and 1980, inflation was at record levels. White diamonds were approximately 4 times more expensive than they are now. With the dollar and our purchasing power falling almost monthly, this could become a reality very soon. Important diamonds, such as those in unique colors, large sizes, or exceptional clarity, can be incredibly easy to sell. There always seems to be a market for extraordinary diamonds, making them an excellent investment for those looking for a quiet, private source of wealth.

Diamonds make great long term investments, especially diamonds in special colors such as blue, green, yellow, pink, purple and red. In fact, these types of diamonds have never fallen in price! Instead they have an amazing track record, as they have only spiraled upward in price. For example, blue diamonds have consistently doubled in price every 5 years since diamond prices started being recorded in 1970. Even the finest cut and quality white diamonds cannot compete with their rarity and beauty.

Although diamonds are not generally bought and sold with the intent of making huge profits, they are a great way to protect yourself in today’s unstable economy. While retail diamonds are not a good investment due to huge premiums and mark-ups, wholesale diamonds are a different story. Diamond prices are not volatile; they are incredibly stable. Even if you choose to invest in white diamonds in the one to five carat range, you will find them easy to sell to jewelers when the time comes and you decide to liquidate your assets.