What is investment diamond?
There are many ways to invest. We buy houses, apartments, works of art, cars... Les diamants font, eux aussi, partis des investissements.
Yes, despite their small sizes, they are the most sought after and demanded precious stones.
Why choose diamonds as an investment?
Diamonds have been used as an investment and financial hedging tool for several years. Indeed, their use in this field has evolved exponentially.
There are 5 obvious reasons to choose diamonds as an investment:
- Diamonds do not take up space:
Diamonds have always been used as an excellent means of transfer. Moreover, the fact that such a small object can be worth so much money is quite astonishing! The advantage of its small size is that you can easily keep a million-dollar diamond in the smallest of safes. This small stone will be safe from the weather while a house is exposed to it daily.
- A diamond is durable:
The diamond is the hardest substance in the world. It does not break and does not wear out. The only risk it can have: it is a shock with another diamond, which is why it is important to separate each diamond in individual pouches or cases. A diamond is very resistant, you just have to make sure not to lose it! But again a diamond can be insured thanks to the certificate of authenticity. To learn more, click here. (Put link article Certificate of insurance of your diamond.)
- A diamond is proof of inflation:
Inflation proof is true for most physical products like real estate, gold, silver and therefore diamonds. But as we have seen before, diamonds are more mobile and durable. This quality can sometimes be a reason not to choose diamonds for an investment. You must then consider the diamond as a means of saving money.
- You can enjoy it while you have it:
What is fantastic about diamonds is that you can enjoy them! Indeed, you can mount the stone on a setting of your choice. Be careful, technically there is no sense in selling a "used" diamond. If the stone is used for investment purposes then mounting and wearing it is quite possible.
- A psychological reason:
A diamond is physical, it's something you can hold, look at and even wear. Thus one can feel more secure unlike stocks which are stored on a computer screen. We hold this investment with us, it is very reassuring.
How to invest in diamonds?
Investing in diamonds should be part of your alternative investment category with all that it implies.
The idea of such an investment is simple. This investment is based on the fact that diamonds are physical commodities. So, it's easy to buy diamonds anywhere in the world and even online. However, be careful of counterfeits and scams.
Here are the 9 important points to know when investing in diamonds:
- Learn the basics
The world of diamonds is a world apart, so understand, it has its own language! The diamond has many characteristics but there are 4 that are the most specific. We commonly call them the 4C: Color, Cut, Carat and Clarity. (Put on each of the 4C the link of their respective articles).
You can find all the detailed characteristics of the diamond on our diamond guide (put link home page diamond guide)!
- Establish a budget
You should keep in mind that this should be part of your portfolio. Indeed, unlike stocks, the initial amount required is a bit higher. But that's no reason to exceed the budget or the ratio of your portfolio that you had in mind.
- Diversify your diamonds
In diamond investment and as in other investments, it is sometimes wiser to favor a quantity. For example, if your budget is €20,000 buy 2 diamonds at €10,000 or even three. Thus, instead of having a single diamond you own several. Be careful, you must buy different types: a pink diamond, another yellow then a colorless one.
Indeed, you do not know what will increase the most or what will be easier to sell later
- Compare prices
Keep in mind that a diamond is not a stock. The price of a diamond is not set by thousands of buyers and sellers bidding online on a transparent platform.
However, you can easily compare the prices of many online retailers. Thus, you can get a first idea. (Fun fact: comparison is more difficult to do when it comes to colored diamonds.
Indeed, these colored diamonds are different).
- Buy rare but desired
For an investment, the interest of buying something that everyone already has is nil. If you buy a very common diamond, you will find yourself in competition with many other sellers and manufacturers. But, that's not the goal.
While if you own a "special" natural color diamond like pink or blue, you are apart. However, you must think about all aspects: perhaps favor a cushion or round cut diamond that will sell more easily rather than a marquise cut. Favor a VS clarity diamond rather than an I2 clarity diamond.
The trick (even though there isn't really one) is that you need to be attentive and patient. Don't rush on the first diamond you see, compare several diamonds... Use common sense and trust your instinct.
- Know what you get
Diamonds are the most demanded and sought after stones, so there are counterfeits and scams. In order not to fall into this trap you must make sure to buy a diamond certified by an independent laboratory or a recognized diamond dealer. (Fun fact: Celinni is able to issue certificates carried out by our qualified diamond dealers).
There are certificates made by large private laboratories. There is the GIA, the HRD and the IGI. Know that Celinni delivers diamonds and their certificates from these three laboratories. To learn more about these, click here. (Put link article International Certificates)
- Mounted or loose
You also have to make the choice to buy a diamond either mounted on a jewel or alone. Be careful, if you decide to sell your diamond that you had decided to mount on a jewel, you must keep in mind that when reselling, the setting may be counted as null. Only the diamond and its price will count.
Does this mean you shouldn't mount it? Not necessarily. Not everyone can imagine what a diamond looks like when it's mounted. A good and smart setting can be an excellent tool to help you sell the diamond.
Good settings can accentuate the color and hide inclusions for example. (Fun fact: inclusions are internal features of diamonds created during their crystallization. Inclusions are not flaws).
- Buy your diamonds at a low price
You should know that when you buy a diamond from a retailer, the stone does not pass through many intermediaries, who take a percentage of the price you pay... So the stone becomes more expensive than its base price.
In order not to lose money and to buy as smartly as possible for you, you need to buy as high as possible in the distribution chain. This way, you won't have to pay the intermediaries.
The Celinni is a Member of the Rough Diamond Exchange in Antwerp, we guarantee our customers direct priced diamonds without intermediary margin.
- Don't be shy
Don't be afraid to ask a lot of questions, this purchase is an investment you need to be sure of your choice and your desires. Become almost more expert than the expert diamond dealers, look, ask and compare.
The experts at the Celinni would be delighted to give you as much advice as possible to help you in your research. Don't hesitate to contact us for any information on this subject.
What are the disadvantages and risks of investing in diamonds?
As with everything, there are always disadvantages and risks. There are specifically 3 in diamond investment:
- Price transparency
Some goods like silver and gold have a price index that can be tracked and verified on the stock exchange while diamonds sometimes do not. There is a Rapaport price list on which most diamond dealers base themselves, but it is not enough on its own. So it's hard to get a price idea. Especially if you want to invest in a colored diamond as these are not on the list.
The Celinni being a member of the Rough Diamond Exchange in Antwerp, our diamonds have a price index that can be tracked.
- You need to be patient
Again, diamonds are not stocks. So there is little or no chance that the value of the diamond you bought will climb 40% next year. You need to keep in mind and be aware that the investment of a diamond should be seen in the long term. You're not going to buy a diamond to sell it only 1 year later. That's why patience is an important virtue in this kind of investment. (Fun fact: good things come to those who wait).
- A talent for negotiation?
Buying a diamond is relatively easy. But where it starts to get difficult is when selling it! That's a whole other story. The gift of negotiation is then sometimes necessary in order to sell your diamond at a fair price and not lower.
You can act alone or call on an expert who can help you in this negotiation. That's why you need to monitor the diamond market throughout your investment, don't hesitate to meet people who would be able to buy your diamond (even if you don't want to sell it right away) in order to know their prices and compare them.
Are diamonds a good investment?
Every investment involves a degree of speculation. All you can do is try to make it a smart investment based on all the information you can get.
As you have noticed, diamonds as an investment have their advantages and of course their disadvantages. However, their advantage and potential easily overcome their disadvantages. Of course, be aware of the disadvantages and use them wisely to minimize the risks involved.
It should not be forgotten that for decades the diamond has been used as an engagement ring. Every day of every year, a man is looking for the perfect diamond to propose to his soul mate.
(Fun fact: don't forget that the diamond is and remains an exceptionally beautiful and unique stone. No other stone in the world has the same characteristics as this one).
1) The lifespan of a rhodium layer depends on its thickness and the care given to the jewelry: 1 year, 2 years sometimes more
2) Recently a huge rough diamond of over 1,000 carats was discovered in Botswana, its discovery made headlines around the world and everyone was talking about it. This is yet another proof that diamonds cause a stir!
3) The diamond was formed shortly after the formation of the Earth, so most diamonds are billions of years old. Do you think this physical raw material will ever be abandoned?
Advice from the diamond dealer:
- If you are interested in diamond investment, we advise you to buy a loose diamond without a setting or at least insist on removing the diamond from the setting so that you can examine it from all angles
- We can never stress this enough, but ask questions and gather as much information as possible about diamonds from experts so as not to make a mistake!
- If you wish to invest in colored diamonds, choose rather "rare" colored diamonds and an investment in colored diamonds is smart as it is a growing market in certain countries such as China and India
Congratulations! You now know the basics of diamond investment. Know that it is possible to invest with Celinni diamonds. Do not hesitate to contact us for more information on this subject, we will be delighted to advise you.
