A study showed that 62% of engaged couples in China buy a diamond wedding ring. With the rising demand of diamonds in China and the supposed decline in the quality and number of gems mined from countries like Russia and Canada, diamonds are viewed as a favorable investment today and will gain value in the years to come.
Based on experience, the price of jewels escalates with inflation. They are said to have more value than houses or cars because they last for such a long time. While the prices of other commodities like silver, gold, copper, rubber, and grains all change due to the economy, diamonds have remained stable; in fact, their value grew every year after the Depression. Investors started buying diamonds in the late 70s in anticipation of a recession, currency reforms, market collapse, and inflation.
Diamonds are regarded as luxury goods, not commodities. Therefore, they are not difficult to sell, just like high-end bags, shoes, watches, and cosmetics. Although diamond production is small compared to other mined materials, diamonds are more profitable. Another advantage is that there is no need for registration, no maintenance cost, and no tax on value gains. Along with gold, diamonds are the only internationally recognized alternative currency and keep the same value globally. Unlike real estate, diamonds don’t lose their value. Unlike stocks, diamond prices are stable and compensation for them is better.
According to a study, white diamonds had annual real returns of 6.4% between 1999 and 2010, which increased to 10% between 2003 and 2010. This is higher compared to global stocks, which had an annual return of -0.1%, while global bonds had a return of 3.3% from 1999 to 2010.
how to invest
Aside from buying actual diamonds, you can opt to invest in an exchange traded fund, stock of an individual diamond mining company, or in a mutual fund that capitalizes directly on mining companies or in the diamond market. You can spend as little as $1,000. With this type of investment, there are wider fluctuations than in the actual market price.
If you choose to own tangible diamonds, you have to have at least $5,000 and wait at least five years before you can sell them, giving you the option to wear them in the meantime. Advisors say that the best way to buy diamonds is through a diamond trader. Jewelers may charge you double the wholesale price unless you are adept in this business. It’s a good idea to monitor the prices of diamonds on the market by visiting diamond retailer sites online, through diamond consulting companies, through financial reports of mining companies, or through auction houses.
When trading with mining companies, be sure to choose an established one.
Mining precious jewels such as diamonds is a booming industry, which creates employment opportunities. With four mining sites, the high quality supply of diamonds in Canada is expected to soar in the next 18 years. Experts predict a steady supply of diamonds worldwide because of a lack of new discoveries. A research firm has forecasted that prices of rough diamonds may increase by 20% by the year 2017. Supply could increase 2% to 3% annually in the coming decade, while demand will go up 7%.
In addition, more and more wealthy people go for the rare stones these days.
As long as the economic situation does not change the buying habits of consumers, diamonds will be much more than just a girl’s best friend.
Beyond gaining capital, investing in diamonds can be an investment for your family. Their value transcends their price tag. A diamond ring can have incredible sentimental value, an emotional attachment as it is passed down from generation to generation. Indeed, diamonds are forever.