The Viability of Diamonds as an Investment option

Diamond investment has remained an elusive investment prospect far out of the reach of many for years, but as times are changing, how is the industry adapting to cater to a larger audience?

Historically, gold has been considered to be a viable investment option for many despite there being the availability of a smaller and more valuable item. While gold prices show much volatility, diamonds are relatively much more stable. On average, a 1-carat piece of D color and FL purity (highest rank of purity) shows an annual 14.47% appreciation in value during the last 60 years.

There is also an increased demand for diamonds from China and other emerging economies, which tilts favorably towards the value of diamonds appreciating over the coming years. In addition to this, there is an increased scarcity of diamonds in the market, with diamond excavation becoming more costly and therefore driving the price of diamonds up.

Why Do People Not Go for Diamond Investment?

Despite all these factors tilting favorably towards diamond investment, the prospect still seems elusive and uncertain for many. Historically, diamond investment had been exclusively reserved for large and wealthy investors, but with the increasing force of digitalization, new methods are being adopted and incorporated that add in an increased layer of accessibility and convenience.

Most investors (for the lack of better options) head towards jewelry stores for investment diamonds. There is no doubt a looming uncertainty on the way the diamonds are being priced, and in most scenarios, diamonds end up losing most of their worth as soon as they leave the jewelers store. There are also very few jewelers that repurchase diamonds simply because they do not want to disclose the detailed margin that they keep.

While diamonds may not appreciate as much as other assets, they are still well known for holding their value even in times when paper money starts dropping its value rapidly. Diamond investment has also become increasingly more accessible for private investors with increasing digitalization and with the introduction of a token system that ensures the quality and value of a diamond. Diamond investments can be an excellent medium for investors to diversify their portfolio and hedge against inflation.

?What Has Changed Over the Past Couple of Years?

Different agencies have worked around and crafted innovative ways through which diamond investment can take place. The customer does not need to have detailed knowledge of the process and needs to prompt the company to purchase the product on his behalf. The company selects the diamonds, sends them to laboratory testing where they are inscribed, sealed, and packaged, after which they are transported to their destination or a free zone storage facility. Multiple conversion processes take place, leaving the end customer with a token.

The increased efforts to simplify and ease out the process have begun to bring about multiple changes and are arming customers with higher bargaining power and also lower entry barriers. Steps have also been taken to increase the level of transparency available to customers, and there have been efforts to bring in a standard, streamlined sales system.

The IDIS standard is one that is being followed by many and contains clear guidelines that help ascertain the value of the diamonds. GIA is also famously known to be an excellent laboratory with proper quality checks that incorporate the 4Cs as well as multiple different elements that ensure a fair price is assigned to each gemstone.