Investment in Diamond
Is investment in diamond a good option? Well, answer can be both Yes and
No. It will depend on investor’s financial objective and as well as
basic knowledge of diamond characteristics like 4 Cs.
After reading this page you should be able to identify whether diamond can be an investment option for you or not.
People’s sentiments towards diamond have
changed with passage of time. In ancient times, it was considered sacred
and was used to decorate statues of deities.
Around 14th – 16th
century, diamond was not only used in jewelry, but was also treated as
Amulet. With advent of 19th century, diamond became synonymous to
jewelry. For more, read diamond history.
But nowadays, with changing mindset of
consumers, diamonds are being seen as good investment option. People are
buying diamonds not just for adornment purpose but also for making
Diamond will not pay you dividend or
interest every month for a given period, but there is definite increase
in its intrinsic value over the period of time.
If you are aiming for a secure investment
then diamonds are great way to diversify your portfolio as tangible
assets. But before that read pre-requisites of diamond investment.
Diamond can become good investment only
through proper education and research. I have provided below the
holistic picture of investment in diamond along with its advantages and
disadvantages. But, readers are requested to do a proper market research
before doing any investment.
Advantages of Investment in Diamond
- Increase in Demand: Popularity and demand of
diamond is rising all over the world. There is continuous increase in
number of high net worth individuals in emerging markets like India and
China leading to increase in its demand. The economic boom in these
countries gave birth to new upper middle class leading to high demand in
good quality diamonds. This rise in price is based on demand and is
here to stay.
- Price Stability: Price of diamond is generally
stable and is not affected by inflation, international financial crisis,
market collapse, currency reforms etc. It’s generally observed that in
turbulent times, value of real estate dips while there is notable
increase in value of diamonds.
- Low Maintenance: Diamonds are hardest natural
substance and are highly durable. If you take proper care of your
diamond then there is no loss or erosion with passage of time and less
maintenance cost is involved.
- No Depreciation in Value: Luxury items like cars,
furniture, etc require maintenance and depreciate over period of time.
On the contrary, price of diamond appreciates with time. The reason
being, supply of diamond is not increasing in same proportion as its
demand, after all not many major mines are being discovered around the
- Anonymity: Not much paper work is required at the
time of buying diamonds. So, it can be said that this provides financial
privacy. Also, diamonds in most of the countries are tax free and you
don’t have to pay tax on capital gains.
Disadvantages of Investment in Diamond
- Less Liquidity: It’s difficult to sell diamonds in
times of urgent need. Though, diamonds have more liquidity than real
estate but have less liquidity than fixed interest securities and bonds, and even gold.
Quite often, process of selling diamond takes time because a buyer is
needed who may buy what you are willing to sell. It’s easy to sell to
established jewelers but they may purchase your stone at a price lower
than it’s worth.
- Price Variation: The price of diamond depends on many factors like 4 Cs (cut, carat, color, and clarity) and diamond shape.
As gold has fixed universal price per gram, it’s easy to sell gold
anytime and anywhere, whereas in case of diamond same does not holds
- You lose premium you paid: When you buy from a
reputed jeweler, you also pay premium for its brand value and the trust
factor associated with its name. You lose this premium at the time of
selling as you don’t offer any brand value.
- High Investment: If you are looking for diamond as
investment, then it will require large capital. An investment in $10,000
diamond ring will give more return on investment than a $1000 ring.
- Less Awareness: Generally, before any investment
we compare with what others have paid for the similar product, like you
compare for similar cars or real estate. Such a comparison is not
possible in case of diamond. This is because people are often not so
open about their investment in diamond.
- Loss due to Setting: You may have invested in a
diamond ring with a particular setting of your choice (e.g. Prong
Setting). But at time of selling, buyer may not likely pay for your
setting of choice because he may have is own taste. So, ultimately you
will be in loss as you won’t get anything for setting.
So, it can be said that, diamond
can be an investment choice if you are not looking for quick cash
benefit but want something which will eventually appreciate in intrinsic
value and is secure.
Those, who like the idea of investment in diamond, before proceeding further please read pre-requisites of diamond investment.
Diamond–Jewery-Pedia.com is not responsible for any losses or profit
made directly or indirectly by investment in diamond. Purchase of a
diamond must be done carefully through proper study and professional
consultation is highly recommended.
Return from Investment in Diamond to Diamond Market page
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