Diamonds or Not? That is the question...
Every smart investor knows how important it is to keep their portfolios diverse. This helps protect against risk and produce stronger returns.
The sector is primarily for investors who have resources and would like to diversify away from the stock market and other traditional investments. A rule of thumb among diamond traders is this – “The greater the investment in diamonds, the greater the return.” That’s why so many rich folks invest in diamonds.
Most importantly, however, keep your investments in different asset classes, as each will have a different performance timeframe and level of associated risk. Including an alternative investment, such as diamonds, gives your investment portfolio a more balanced dynamic and offers a safer haven for your cash than traditional investment instruments.
So, first we will show you a number of advantages of investing in diamonds.
One undeniable advantage of diamonds is their size to value ratio. Diamonds have the most concentrated value out of all natural resources and other assets. Several millions of dollars can be the size of one small fancy colored stone. No other physical asset can stand up to diamonds in that respect.
The privacy involved with diamond investment is another aspect that can be very attractive to certain investors. Diamonds provide a completely private investment for the owner because they do not require any form of registration or licensing, as many other assets do. There are no government records or any other government intrusions connected to diamond ownership. These factors, in addition to their small size, make diamonds easily concealable “from the all-seeing eye.”
RELATIVE PRICE STABILITY
For example, according to the IDEX website, during the 2014–2015 crisis diamond prices fell by 5.6%, while gold fell by 16.8%.
Currently, most diamond mines are discovered and, as time passes, diamonds will become more and more exceptional pieces, just like any other natural resource. If the investor is interested in making long-term investments, in the future the value of diamonds could multiply, so he could buy right now and save them for a while.
Stones in circulation practically do not become cheaper. Diamond prices are to some extent less exposed to the cyclical tantrums of the stock market. Diamonds have never fallen out of favor; they keep their value, and help to preserve it for the future generations.
But are diamonds a good investment in all cases?
The immediate challenge for most people is that diamonds are very expensive and it can be very difficult to get into the market. Moreover, how do you accurately price a diamond?
Much like commemorative coins, there is a disparity between the retail price and the wholesale value of your purchase.
Unlike other investment alternatives, diamonds don’t yield any regular income. You most probably will only receive high returns on your investment when you keep your purchased stone for some period of time before selling it for a higher price. While you have the actual physical stone and your potential profits might be increasing, you can only see the value of the investment realized after liquidating your investment.
Summarizing, diamonds can be considered to be a safe haven asset, much like gold. Diamond investments as alternative asset can be a good addition for every investor’s diversified portfolio.
P.S. If you have any questions or want to know more, our expert group will be able to fill in the missing information and will help you choose the best offer for your investment portfolio.