Rare Diamonds and Large Diamonds for Investment Diamonds
1. Basic Requirements for Diamond Investment
Before you invest in diamonds make sure your investment meets the following minimum requirements: Price transparency, resale liquidity, market access, quality certification, and expert guidance.
An investment diamond needs to be purchased at a price that is reasonably close to the price that you can easily resell it. Buying at retail and reselling at wholesale is a bad idea, so you need to connect with an expert that can give you direct access to international dealer prices and markets.
You also have to confirm the quality of your investment diamond through independent third party grading and expert confirmation. It is important that you establish a relationship with a trustworthy investment diamond expert that can advise you about timing, ensure quality control and handle your transactions.
2. Invest in the Basics
While very large and expensive fancy color diamonds attract the attention of super-wealthy collectors, they are thinly traded and do not offer the price transparency or timely resale liquidity. Unless you are a billionaire investor and/or expert collector, stay away from spectacular diamonds. Their pricing is highly speculative and they are often difficult to resell.
The Rapaport Group recommends initial investments in Round, 1.01 to 1.49 carat, D-H color, IF-VS2 clarity, Excellent to Very Good Cut, Rapaport Specification 2+ diamonds. These diamonds trade on a daily basis, their prices are well known and they are easy to purchase and sell.
Depending on the investment budget, strategic objectives and diversification requirements, diamond investments can include additional sizes such as one-half carats (0.51 to 0.69 carat) and two carat to five carats.
While various investment portfolios using different size diamonds may be considered, we advise restricting investment to the well-defined and standardized round investment diamonds as described above.
3. Quality Certification
Investment diamonds should be graded by the Gemological Institute of America (GIA) and confirmed by your expert.
While the GIA is the primary grading authority, they grade all types of diamonds including substandard poor quality diamonds. Just because a diamond has a GIA grading report does not mean it is a good diamond. Have your expert ensure the diamond meets the Rapaport Specification 2+ quality standard in addition to having a GIA grading report.
4. Transactions Costs and Bid/Ask Spreads
Reasonable investment diamond transaction costs involving physical delivery of the diamonds can run in the 2 percent to 5 percent range depending on the size of the investment. The Rapaport Group is developing a new investment model that will provide investment diamond opportunities that do not require the physical delivery of the diamonds to investors at a one half percent (0.005) transaction cost.
Investors should investigate the bid/ask spread (the price difference between buying and selling prices for investment diamonds). When buying a diamond as an investment it's a good idea to find out what you would get if you were selling the diamond on the same day.
5. Expert Advice and International Market Access
You should establish a relationship with a sophisticated investment diamond advisor knowledgeable in the nuance of diamond quality as well as international diamond pricing and markets. Your investment advisor should also have direct buy/sell trading access to the global diamond markets in order to ensure fair market value bid/ask pricing.
How a Diamond Attains Value
Diamonds are a natural resource composed of 100 percent pure carbon. They are the lightest, toughest, smallest and most valuable substance known to the human race. History is replete with examples of royalty and people of wealth surviving natural and political holocausts and making a new life because they possessed the world's most concentrated form of wealth... investment quality diamonds. DeBeers: 80% of the world's supply of diamond rough is controlled by one organization, DeBeers Consolidated mines, a legal cartel formed in 1934. DeBeers sells diamond rough and maintains global prices by adjusting the supply of diamonds through their central selling organization. Through their long-standing control a stable and orderly market is maintained. This fact has held true during recessions and inflationary times.
Why Should You Invest In Diamonds?
Since 1934 prices have increased more than the rate of inflation thereby protecting the real value of capital. In recent years diamond prices have remained stable due to a benign inflationary period. Thereby offering solid capital protection in addition to capital growth. Diamonds are the most concentrated form of storing wealth. They also offer you financial privacy not available elsewhere. Unlike other investments a diamond investor has 100 percent direct ownership of a portable tangible asset of proven value. Diamonds require no ongoing management or upkeep. Nor do they draw property taxes or require liability insurance. 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. Because the international demand for collectible diamonds greatly exceeds the supply they are easily liquidated anywhere in the world. Unlike other hard money investments, no government stockpiles diamonds and they have no control of or influence over the free market in which diamonds operate. Should an investor so desire, investment grade diamonds can be mounted and worn.
WHAT YOU REALLY NEED TO KNOW:
In anticipation of, or during inflationary periods, the diamond investment market goes on its own tear. The diamond market outperforms paper investments while creating extraordinary personal wealth. Important ingredients that can ignite an inflationary scare are the high cost of oil, excessive credit card debt, political turmoil and the continued above average financial liquidity in the marketplace.
Today there is a new demand for investment collectible diamonds (Round Brilliant, D - H in color, FL - VS 2 in clarity). They are aggressively being purchased in the Asian markets. The last big move on diamonds started in the 1970's with buying from outside of the United States!
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