Diamonds Investment Guide

After the subprime disaster and with economic uncertainty, investors are looking for low-volatility investments. Diamonds are less volatile, as they are resistant to speculation by the financial community, so there are no derivatives or tradeable products and no short selling is possible.

The above quotes only confirm that diamond investments have become an unquestionable and serious element of our investment portfolio. We all agree that to invest in diamonds is a term so broad that without specifying the type of diamond, it is comparable to investing in stocks without indicating the category.

At these times that we learn to appreciate the benefits of physical goods. This is why we see the increase in value of gold, silver, platinum and recently, also of white and naturally colored diamonds.
Using diamond investments as a financial protection is rapidly growing in recent years and the reasons for that is quite clear

  • A diamond is an investment against inflation

Other commodities such as real estate, gold, and silver are investment products against inflation. On the contrast, diamonds are more durable and are movable property. This is also the reason buying diamonds as an investment is always a good thing – to have part of your investment portfolio as diamonds

  • Diamonds do not take up much space

Diamonds have always been good to transit. The fact that such a small item can be worth so much money, and a diamond that is worth a million dollars can easily be kept in a small safe.

  • A diamond is durable, is not broken and eroded.

Diamond is the hardest material on earth, therefore it is not required to worry about anything happening to it. All that must be done is not to lose it, and for this reason it is very important to insure it.

  • Psychology

A diamond is a physical product that can be held, looked at, and even worn. It can make the investor feel safer - unlike shares and financial securities, which are merely lines on a computer screen.

Investing in diamonds should be a part of your portfolio along with other investment, even as a small portion of the investment portfolio.

The idea is actually quite simple. Investing in diamonds is based on the fact that diamonds are physical goods. As such they can be bought easily anywhere, even online. My recommendations are basic guidelines on how to invest and buy diamonds. With that, it is very important to take into account the risks, which is why it would be better to continue to read my recommendations.

  • Diamonds can be enjoyed it while you have them

Since diamonds do not wear out and there is no reason to sell them, they can be embedded in a piece of jewelry and be worn while they are used for investment purposes.

A basic lesson

Learn the language of diamonds. Start with the 4C’s

http://www.moti-israeli-diamonds.com/Understanding-Diamond-Prices

Set a budget

Keep in mind that it should be a part of your investment portfolio. True, unlike bonds, the initial amount needed is a little higher, but that's no reason to go for a higher budget in the investment portfolio.

Compare prices

The price of diamonds is different than that of stocks. It is not defined by thousands of buyers and sellers in the international stock markets. However, with a large number of wholesalers and online retailers you can easily compare similar diamonds and their asking price.

Diversify the diamond type of the portfolio

Do not buy just one diamond in the amount you budgeted. If the decision was to invest in diamonds, for example $ 30,000, you should consider buying three or even four diamonds not of the same type (i.e. different sizes and qualities) because you do not know what kind of diamond will decrease or increase it value when you want to sell it.

Know what you are buying.

Buy only diamonds which are documented. Remember that every little change of the diamond’s properties means a lot of money. I would highly recommend buying diamonds with the GIA certificates. It is the best known gemological laboratory and one you can rely on its findings.

Other than the matter of buying diamonds as an investment, when the time comes to sell your diamond, a buyer would be willing to pay an appropriate price if you present the GIA certificate

Buy your diamonds cheap

I do not mean for you to buy cheap diamonds, buying it from a retailer means you buy your diamond after a lot of brokers who received their share did.

By purchasing cheap we do not mean to buy cheap diamonds (vice versa). This means buying as high up the distribution chain as you can.
Skip brokers. Try to buy directly from manufacturers. Many diamond manufacturers have online stores and are gladly willing to sell directly to end customers like you. Just make sure to stick to my advice on how to buy diamonds online.

Do not be shy

Ask lots of questions. Try to reach diamond experts and consultants. Use the diamond community, social networks are full of people who are very happy to help. Some of them have already invested in diamonds and will share some of their personal experience

Price transparency

While commodities such as gold or silver can have their price checked anytime on the Stock Exchange, the Rapaport Diamond Price List is available, which most diamond professionals trust. However, this is not enough, even if you can get a copy of it, it would not be useful for a number of reasons. The price list takes into account only the fundamental factors of weight, clarity and color.

But in the end, the price is set by the market. With supply and demand it is possible to buy some diamonds above and below the list price, a difference of 10% means a lot. Also, this list refers only colorless diamonds and there is no current list for colored diamonds – which we will write about separately.

The only way to overcome this drawback is to do a lot of research, buy from a reputable dealer known as fair, and make online comparison.

Lack of merchantability
Buying diamonds is relatively easy. However, selling is a whole different story. There are many companies who buy diamonds just as there are many companies that buy gold, but they always pay the lower side of the price.
Alternatively, you can try to sell to other retailers, but they will probably be tough and you will have to make do with their pricing

Embedded or Loose

Chances are that when the time comes and you decide to sell your diamond which is set in a jewelry piece, the buyer, which may be a merchant, a jewelry store, or even a private person, will not pay for the jewelry, but only for the diamond itself, and only the diamond will be valued for appraisal.

Does this mean you should not embed it in a piece of jewelry? Not necessarily. Not everyone can imagine how a diamond would look like not set in jewelry. Professional placement can be a great tool to help you sell your diamond. Professional and good placement can bring out the color and hide flaws of a diamond, and let's not forget that when you have a diamond set in jewelry you can enjoy it as long as you have it.

Patience is a virtue.

Diamonds are not stocks. There is little chance that the value of a diamond you bought will be 20% higher by the next year (which sometimes happens with stocks). Take the diamonds you bought as a long term investment.

So, you decided that the diamond industry is fascinating?

You can invest in diamonds by buying shares of companies associated with diamonds.
There is the ETF (Exchange Trade Fund) that tracks diamonds and gemstones companies, invests in a variety of companies that manufacture and sell diamonds.

Another way is to create your own portfolio. By buying shares of mining companies such as Anglo American, Alrosa, Rio Tinto and other big companies which you can get information about online.

You can also invest in diamond jewelry companies such as Cartier, Harry Winston and Tiffany.
Every investment involves some sort of gamble. All you can do is minimize the risks, try to rely on the information you can get.

In conclusion,

Diamonds as an investment have their advantages and, of course, their disadvantages.

I believe that being aware of the shortcomings, and using them wisely to minimize the risks involved.

Moti Israeli Diamonds - for the right decision in a brilliant investment.

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