With some experts asserting that the recession is almost behind us, the future of the global stock market remains uncertain in the face of unprecedented political change. Increasingly, high net worth individuals are looking into alternative investment sources, with diamonds being one of the most popular choices. One of the reasons diamonds make for such an attractive asset option is their durability. With the stone weight recognised internationally and generally measured by fixed criteria, they are easy to monitor. The high value of diamonds and their very low weight also make it a much easier commodity to transport.
Your investment will pay off in the long term, should you wish to resell. Whilst the last few years saw a slight decline in some white stones prices, it has also seen some record prices been paid for rare collectable coloured stones. In general, the price of diamonds for the over 5 Carat single stones has risen over 150% over the last 25 years
Investing in diamonds is a reasonably safe option even in comparison with purchasing precious metals. Since diamond discoveries are rare, and the individual tones are unique, the prices tend to go up more as fewer rare stones are unearthed. Over the last ten years there has been minor dips in the market for certain sizes. Similar to other commodities, over production drives down prices and produces less demand. This can also be explained by changing trends in gems and stones. For example at the moment, the trend is for fancy coloured diamonds, while in the past their value was much lower than the more traditional counterparts. Salim Hasbani of Hasbani UK and Tresor Paris thinks that the prices of the rarer stones, such as the large pinks, blues, and greens may continue rising around 5-10% or more per annum until 2020.
An example of a recent super-diamond purchase is the diamond named the ‘Blue Moon’. A $48.8 million auction buy was made by a Hong-Kong bidder for his 7 year old daughter. He renamed it ‘Blue Moon of Josephine’ after her, upon purchasing.
So what do you need to look out for when investing in a diamond? One of the most important things to remember is that it is always worth buying the best quality diamond you can get, rather than the biggest of a lesser value. This will maximise the stone’s resale potential, and will make for a better long-term investment.
When considering your options, you need to look out for 4 Cs: Carat, colour, cut and clarity. Carat points to the size of the diamond, with one 1 carat equating to 100 points or 0.2 grams, while the clarity denotes the quality of the diamond.
Among other factors that influence an investor’s buying choices, ethical concern is often of upmost importance. By buying from a legitimate and reputable source that is in compliance with the United Nation Resolutions, you can ensure that your diamond was sourced in a conflict-free manner.
Hasbani also recommends against buying investment diamonds online, and suggests that purchasing at auctions should be approached with caution too: ‘Ensure you do your research on items before buying at an auction, set the highest figure you want to pay in your mind beforehand and try to stick to this’. This will help avoid getting embroiled in a bidding war, and paying more than a retail price as a result, which is often the case at auctions.
Once you have made your purchase, it is important to care for your stones and their safety properly. Always store them in a safe or secure volts, and use a specialist courier when transporting, such as Brinks, Malca Amit or Regency. When transporting your pieces, it is worth remembering that diamonds can scratch other jewellery, and therefore need to be separated. Always keep your diamonds in separate pouches with a soft jewellery cloth or tissue.
One of the advantages of diamonds as an asset is that the purchasing process can be very discreet. It is advisable to ensure the pieces’ movements are only disclosed to others when absolutely necessary, keeping the number of people aware of them to a minimum.
When insuring your precious jewellery, it is best to spend some time shopping around, or even using a specialist agency. Doing so can help cut down your insurance costs significantly.
By Salim Hasbani, Hasbani UK / Tresor Paris