Diamond investment is not a new form of investment. It has existed long before our time. Collecting diamonds and rare jewels has always been a wealth keeping secret of the royals and the riches. Diamonds and gems are signs of honor, national pride, luxury, power and utmost wealth. It portrays a nation's strength and stability, showing that it will never be short of money, food and living. The most exquisite and large gemstones are always treasured and kept by the most powerful ones who pass them on from reigns to reigns. Without any other new investments such as stocks, bonds or derivatives which have only burgeoned over the past century, diamond investment has exhausted and prevailed for the past many centuries. History proves that diamond investment for the long term is more valuable over years. From the 19th century, diamonds value has gone up by 150% to 200% of the inflation rate in longer periods.
Investment is for continuous financial growth and protection of hard-earned assets. A prudent investor diversifies her investments across all sectors, from stocks, real estates to commodities so to hedge against inflation during times of hyperinflation and to preserve wealth at economic toughs. Diamonds is one of the best commodity investments for many tangible and intrinsic reasons and this article lists out ten reasons to invest in diamonds.
1. Durability and resilience against nature's vagaries – While many investment commodities can decay in substance or depreciate in value, diamond is a stable and steady investment since it is unaffected by atmospheric vagaries, environmental changes or other pollutants. Diamonds are formed underneath the earth's crust millions of years ago and it is one of the oldest substances in existence. It is the hardest rock on earth, being the only form of great hardness on the Mohs scale. Due to the uniformed properties, diamonds are still diamonds with the passage of time; they will possess the same shine and quality and will not degrade like those that do on the first day of its purchase (ie cars, advanced technological devices or red wines). Diamonds appreciate in value with time and investing in them offers stability, security and value.
2. Universal currency and unanimous form of payment – Although it is not commonly known that diamond is a widely acceptable form of payment in any trade transaction, its value is non-refundable globally. Diamond owners can liquidate their possession in any countries while investors can not turn their local share certificates into cash when they travel.
3. Universal pricing – Unlike the cost of other commodities where prices fluctuate according to free markets, diamonds are indirectly controlled by a universal price report, commonly known as Rapaport Diamond Price Report, which states the weekly average market prices for each type of diamond. As a result, diamond prices are generally standardized across all continents and diamonds' values are unified all over the globe. Investors do not have to suffer geographic price difference when liquidating their diamonds.
4. Scarcity – On average, 80% of the diamonds that actually get extracted (100 million carats = 20 tonnes) are not usable in the industry due to its poor quality. The remaining 20% (25 million carats = 5 tonnes) of extracted diamonds are used for making jewelleries but only a mere 5% of the 20% of cut diamonds have a weight that is more than one carat. De Beers also recently informed that if they are not able to discover new mines of diamonds, the worldwide supply of diamonds would run out in forty years. On the other hand, diamonds are often associated with memorable life events such as weddings, anniversaries, births and celebrations and they connote romance, love, strength, power and rarity at all times. Many crave for diamonds, especially the burgeoning upper-class from developing economies like China and India. Once diamonds become their possessions, they refuse from selling them which render an eternal shortage of diamonds in the trading market. Here, diamonds' value never drops. With such high demand and limited supply of diamonds, diamonds value is constantly on the rise and investors can depend on diamonds for high yield returns.
5. Security during recession and downfalls of financial institutions – In times of hyperinflation when all commodities rise in prices, diamonds, along with other intrinsic assets such as gold and land, increase in value, rendering diamonds as a hedge against inflation. While stocks and bonds are subject to political risk, operation and liquidity risks and market fluctuations, the value of diamonds are not directly linked to stock and bond markets. Fluctuations in stocks and bonds will not affect the value of diamonds directly.
6. Insurance for future – Many wise women collect diamonds and high quality gems as runaway money, or security money, so that if they are ever deserted by their husbands, they can turn their diamond possession into cash for security.
7. Adornment and Appreciation – Diamonds can be worn enjoyably and adorned while they appreciate in value with the rate of which money inflates. They have intrinsic value just like gold and land. Unlike fashion and other commodities, diamonds do not depreciate over time but increase over time. During financial turbulent times, while stock and real estate market prices drop, diamonds rise in value. Investors can also build jewelleries with the invested diamond so to enhance its collection value.
8. Physical closeness and low maintenance – Keeping your diamond investments safe and sound is no easier with diamonds. All you need to do is to put them at home or in safes and they will grow in value. The physical closeness is only offered in diamonds and not any other investment tools. People who invest money need to keep a close eye on the performance and current position of the invested markets or latest information about the invested company, but since diamonds are things of luxury and wealth, diamonds are accountable for steady growth in value without the need to keep a close eye on market trends.
9. More room for new investors – In the old days, diamond investment is only accessible by a small niche of professional diamond traders who work secretly within the trade so to ensure that their business is less fraught with dangers like theft or fraud. However, with globalization and the accessibility of internet, many amateur investors are learning skills of the diamond trade from diamond investment Advisors and wholesalers in order to diversify their investment portfolio. Given that the number of diamond investors is still reliably small worldwide, there is a wide variety of choice for investment for diamond investors, typically diamond investment funds, trusts, listed companies or simply purchasing diamonds for long term investment and personal possession.
10. Portability and tax-free – Diamonds can condense a large sum of wealth to a small item which can easily transported from one place to another. Investors can enjoy not having to pay capital gains tax or possession tax for owning diamonds as diamonds. And therefore, diamond investment has been a long time wealth earning channel for the riches and it is becoming more and more popular nowdays.