How to Buy Diamonds Properly for Investment Purposes

How to Buy Diamonds Properly for Investment Purposes


Diamond Price Stability

Controlling diamond prices suits all concerned, the primary producers, the governments of the mining countries, the diamond market, the jewelry trade, and the consumers. Since its inception De Beers Consolidated Mines, through its +70% market control (through 1980), has directed great energy toward stabilizing prices paid for stones by matching the market’s ability to absorb production while mirroring current inflation rates. Today there are four major diamond producers: DeBeers at 40%, Russia at 30%, Rio Tinto and 10%, and BHP Billiton at 10%.

Diamond Investment Profile

Generally it is the policy of those whose actions determine the prices of diamonds to keep these prices as stable as possible. A free market in diamonds would destroy its price stability. Through time diamond prices have remained more stable than any paper currency while keeping pace with inflation. Diamonds regarded as a currency have not only remained more stable then other currencies, but have the same advantage as they are portable, durable, and can be exchanged over the world for local currency or for goods and services. An important investment diamond profile is diamonds are quoted in US dollars. It has been said that buying diamonds is like buying dollars. As currencies fluctuate in the global economic crisis rumbles on, wealthy investors have increasingly focused on commodities for protecting their assets.

Avoid Hedge Funds and EFT’s – Take Custody of Your Hard Assets

Currently there are several initiatives in the financial world seeking to take advantage of investments in diamonds. These initiatives include hedge funds and exchange traded funds currently seeking approval by the Securities and Exchange Commission. These initiatives are counterproductive and frankly make no sense because the investor never takes possession of the assets. In addition of not taking possession you constantly encounter ongoing fees such as storage, and insurance, while not being able to move your hard assets to a more desirable location. In fact when investing in an hedge fund or EFT environment you never know exactly what asset you own which is the whole idea of investing in diamonds! It would be prudent to remember that hedge funds require yearly commissions and diamonds are not a commodity we intend to buy and sell frequently!

Best Diamond Qualities For Investment

Keeping the strategy of investing in diamonds simple I suggest the following:

  • All diamonds must have GIA Diamond Grading Reports
  • Diamond color¬† “D – Colorless”
  • Diamond clarity “Flawless – Very Slightly Included One
  • Diamond carat weight 1.00 carat –¬† 5.00 carats
  • Diamond cut Round Brilliant Cut
  • Diamond cut quality Excellent Polish, Excellent Symmetry and Excellent Cut Grade

The reason for the above parameters is simple you have just selected the best of the best meaning when it comes time to sell your investment you will have many ready willing and able buyers. Our objective is to apply the 80/20 rule.

Author: Frank Fisher

Frank Fisher (Sasha Evdakov) started learning about diamonds at a young age through his cultural background and family influence. He spent years being mentored by the best diamond dealers and has been studying diamonds and the diamond market since 1998.