The Value of Loose Diamonds as an Investment
Diamonds are often discredited as an investment instrument. Take a closer look at those who are rejecting the concept of buying loose diamonds as an investment and you will see that almost all of them have no prior experience – or have tried and failed – in investing in diamonds.
Investing in loose diamonds is not an easy thing to do. Do it wrong and it will be rather difficult to make a profit. Do it correctly, however, and your investment will bring returns like no other.
Diamond Prices: How They Are Calculated
The first thing you need to keep in mind when investing in diamonds is how the prices are calculated. Diamonds, unlike precious metal, isn’t priced by weight; there is no standard price to lean on at all. Diamonds are priced based on the notorious 4 Cs: carat, colour, clarity and cut.
To make investing in diamonds even trickier to do, the valuation of diamonds using the 4 Cs is also not standardized. In other words, investing in diamonds is like investing in art; you need to go for the best, most refined piece in order to enjoy maximum gain.
A quick look at the historic data of diamond prices and we can also conclude that there is no defined trend; zoom the data further and you will find that there are years during which diamond prices fell. Unlike gold, diamonds don’t enjoy an increase in value as they get older. Retail prices depend on various things, including circulation and stock.
So how can I invest in diamonds?
The answer to this question is simpler than you think. In order to successfully use diamonds as an investment instrument, you need to buy low or by wholesale. Easier said than done? Not quite.
The market for loose diamonds is expanding rapidly over the past several years. Getting in touch with a wholesaler and buying loose diamonds at the right price is very easy to do now that you have plenty of resources to help you.
What you need to focus on is finding high quality diamonds at wholesale prices or lower. Make a profit as you buy them and you will find selling the diamonds later in the future to be much easier to do.
Never – and I seriously mean NEVER – buy diamond jewelries. Invest in loose diamonds only. Jewelries cost more to make, go through more middlemen and will have their resale value dropped as soon as they go out of style. Investing in diamond jewelries is perhaps the most common mistakes first timers make when investing in diamonds.
Treat diamonds as works of art. Use 4 Cs as your primary guide when choosing the right diamonds to invest in, but rely on your intuition when making the final decision. If the diamonds are not beautiful enough for you, they are probably not beautiful enough for future buyers.
Don’t hesitate to employ professional help, especially if you are not fully familiar with diamonds. Consultants that help buyers from around the world invest in diamonds are very easy to find these days.
Fancy colour diamonds are a niche to consider.As you venture into the world of gorgeous diamonds, you will come across fancy colour diamonds. They are diamonds that have natural or synthetic shades of colours other than the standard white-to-yellow shade. These fancy colour diamonds are worth investing in simply because the market for them is much easier to penetrate and very rewarding. There are even companies that specialize in fancy colour diamonds.
Protecting Your Investment
There is no investment that doesn’t come with a risk; investing in diamonds is no different. Before going forward with your investment plans, here are a few simple risk management tips you can use.
- Buy international certified diamonds only. Common certifications are issued by HRD, IGI or GIA. There are independent auditors that issue certificates for diamonds as well, but make sure they are internationally acknowledged before making any purchase.
- Use buyback guarantee to your advantage. A lot of wholesalers now offer buyback guarantee – some even include a lifetime buyback guarantee with their diamonds – so that investors can liquidize their investments quickly when needed.
- Bypass as many middlemen as possible. The more middlemen you deal with, the less chance you have in getting the absolute best price for diamonds.