Investing in diamonds is a practice that dates back centuries, with kings and queens of yore hoarding diamonds and other precious gems. Diamonds have long been viewed as the ultimate status symbol, a display of power and luxury that comes from gemstones being so rare and valuable. It’s no wonder, then, that the largest of these sparkling stones ends up being passed down through the generations, remaining in the hands of wealthy families, some of whom are of royal blood, for centuries. Unlike stocks and bonds, which can often be short-term investments, diamonds are a long-term investment. These gemstones only get more valuable with each passing year. For example, a diamond found in the 19th century can now be worth 150-200% more than when it was first discovered. Is it any wonder that the owners of these gems are so keen on keeping them?
While we are not suggesting that you should have nothing other than diamonds as your only investment, they certainly should be part of a larger investment portfolio. It’s good to have a mix of short-term and long-term investments, with the latter likely to see you through tough economic times. A good balance is what you should be looking for, but we have some very specific reasons why diamonds are an essential part of your investment strategy.
1. Extremely resistant against all that Mother Nature can throw at it – In addition to depreciating in value, there are some commodities that can actually decline in substance over time, either through changes in the environment or pollutants. Diamonds are a ridiculously strong and resilient stone that won’t be affected by anything Mother Nature throws at them, which is why they don’t depreciate. They are, without a doubt, the most resistant stone found on earth. Plus, they don’t lose their shine or luster over time, and will continue to shine and shine no matter what happens to them. They are an appreciable asset that will prove to be a truly stable investment.
two. They are a truly universal currency – Most people don’t know that diamonds are widely accepted as a form of payment in a business transaction. It’s easy for travelers to liquidate their diamonds in any country, while the same cannot be said for local share certificates, which cannot be converted to cash in a foreign market.
3. Its price is universal – Free trade means that each country in the world can charge whatever price it deems appropriate for a given product. This is not the case for diamonds, as the Rapaport Diamond Price Report provides the weekly average price for each of the different types of diamonds that exist. The report has created a situation where the price of diamonds has now been standardized throughout the world. You can expect to receive fair market value from a diamond buyer, no matter where you are in the world.
Four. Diamonds are rare While approximately 20 tons (100 million carats) of diamonds are mined annually, around 80% of that amount is actually of low quality and not considered usable for the jewelry industry. The remaining 20% of those diamonds are used to create the jewelry we love so much. Of the surviving diamonds, only about 5% weigh more than one carat. Adding to the scarcity factor is the fact that supplies are running low, with De Beers suggesting that diamonds could be depleted in 40 years if no new mines are discovered in that time. It is their rarity that makes them such a memorable gift, while their strength and power serve as the ultimate symbol of everlasting love when worn on a wedding ring.
5. Diamonds Provide Security During Economic Downturns – We’ve all seen stock markets crash and crash, leading to a recession that can quickly wipe out personal wealth. Since the value of diamonds is not tied to the performance of the stock market, their value remains intact. Diamonds are also used as an inflation hedge at times when hyperinflation causes the price of commodities to skyrocket.
6. Use diamonds as insurance for the future –While many different people collect diamonds, women tend to use them as a sort of insurance policy, in case they need to get away from a bad husband. Diamonds are a valuable commodity that can be quickly turned into cash.
7. Wearable and valuable – When you have a precious asset that is valuable, you tend to keep it in a safe place, away from harm. Diamonds not only appreciate over time, but have an aesthetic that makes them beg to be displayed. This is the perfect win-win scenario for investors, as they can have something that will continue to hold its value, or even become more valuable, over time, while also being the perfect fashion accessory.
8. Diamonds can be kept close by with no maintenance required – Diamonds are an investment that can be kept safe and secure with a minimum of fuss. Once you have them stored in your home safe, you can access them whenever you need them and you never have to worry about their value as they will do nothing but appreciate in value. You don’t need to spend your time on the markets as they have nothing to do with the value of your beautiful investment.
9. The market is open to new investors – Not so long ago investing in diamonds was a business for anyone but a professional diamond dealer, most of whom were a tight-knit circle unwilling to let anyone else in. Things began to change with the advent of the Internet and the globalization of the diamond market. This has allowed amateur diamond investors to quickly learn the ins and outs of the business. They now routinely do all the things diamond dealers of yore did, including setting up trusts, mutual funds, and buying diamonds for their own personal collection.
10 Portable and tax free – Big things sometimes come in small packages, as is the case with diamonds. They are incredibly easy to carry from one place to another due to their size. Diamonds are also not subject to possession tax or capital gains. There are very few other commodities that allow your investment to grow without you having to pay taxes.