Investing in yellow diamonds

Инвестиции в бриллианты

Investing in diamonds is very ambiguous, so the article is only introductory in nature. Investing in diamonds is attributed to venture investments for the reason that the value of diamonds depends not only on the world market (with the crisis luxury assets greatly fall in price), but also from the asset: purity, quality, cut, and weight of the diamond. Because when you say that the diamond market fell nominally by 10%, this is not true because it is equivalent to “average temperature in hospital”.

Investing in diamonds is a long-term investment that requires a deep knowledge. A high threshold of entry, large margin, the complexity of the transaction — all this makes the purchase of diamonds for investment purposes inappropriate. But still there are admirers of diamonds, and so we could not pass by this theme. Part of the topic has already been raised here.

Investing in diamonds: investing wisely

Over the past 10 years yellow faceted diamonds have risen in price almost 300%. Their investment value is rare. Colorless diamonds are much more common, colored diamonds are the stones with a mixture of nitrogen trapped in the diamond thousands years ago at the time of formation of the stone. And the value received yellow diamonds with different kinds of sparkling shades. There are also blue, green, pink, red diamonds, but they are so rare that the cost of hundreds of thousands of dollars per carat is available only to collectors and connoisseurs.

You may buy yellow diamonds on the diamond exchanges of Hong Kong, Mumbai, and Antwerp, but to get to the exchange, the investor must find a mediator, and this is 1-3% of the fee from the investment amount. Selling of diamond can take several weeks. The main condition of the deal is that the stone GIA certificate (US laboratory).

The price of diamonds depends on the saturation and purity of color, fluorescence, etc. for example, a stone weighing more than 5 carats of Fancy Intense Yellow category with the purity from IF to VVS2 in 2005 sold for 7-7,5 thousand dollars, in 2016 — 30-35 thousand dollars. Investing in diamonds without color would bring over 10 years only 70-80% of the profits, in yellow diamonds — 250-300%. Because of the rarity of the asset, the forecast of dynamics of growth remains at about 8-10% per year.

The nuances of investment in diamonds:

  • if the yellow diamond has a secondary hue, price of stone falls twice. In other words, the yellow color should be native, whole, while under the yellow stone, the seller can sell the normal brown tint. Issue is fixed in the certification. However, the investor should know how the original certificate looks in order not to obtain a fake;
  • the color of the diamond must be natural. For example, using pressure and temperature the natural color of the stone can be changed (HPHT technology);
  • clean stone without fluorescence (overflow of flowers under a bright light) is 20-30% more expensive.

Summary. Investing in diamonds can be an investment idea due to the specificity of the asset. It is impossible to quickly buy and sell, there are difficulties with its storage and evaluation. However, because the diamonds gradually rise in price, you can purchase more liquid asset, such as shares of ALROSA.

About the author