Are Diamonds a Good Investment Today and in the Future?

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With new platforms of investment emerging every day, people are curious to try taking bigger risks an investing in the not so common fields.

Real estate, stocks, bonds and pension funds are some of the most trusted investment schemes available. Can the same be said about investing in diamonds today and in future?

In the case of investments, the sooner you start, the more you will have acquired at the end of your life. Diamonds are a rare stone and is listed as one of the strongest on the Mohs scale of hardness.

They take anywhere between one and 3 billion years to form in nature and the clearest are considered most valuable.

 

Are Diamonds a Good Investment in 2020?

 

As far as the statistics go in the stock trading market, diamond sales have been on a slow incline. If this keeps up, you could try your hand at it but cautiously.

In recent times, there are companies who have developed an amazing technology to create diamonds.

This is fantastic news for the general population who would be please with a simulated diamond but terrible for you as a potential investor. Unless you have a jewelry expert as your side-kick while choosing a diamond to invest in, you may be duped.

If you really must invest in diamonds in 2020, you need to physically apply yourself in terms of research.

 

So, are Diamonds a Good Investment? Why

While you will get a lot of discouraging remarks when you decide to try your hand at diamond investment, there is an opposing side that will laud your decision and be excited to share tips with you.

This team believe in having a good plan, the right knowledge and the best eye in the industry to help you secure a worthy investment. They may further caution you that no profits or benefits are immediate and that patience is the rule of the game.

 

1.Exhaustible Gem

Experts have advised that, as more mining is done and as economies blossom leading to a growing demand in diamonds, the stone will go extinct.

If you share this faith and you have some interest in diamonds, this could be a reason to start investing in big and rare diamonds.

It goes without saying that if diamonds cease to exist, there will be a rise in their demand which will preset you with the right opportunity to sell your diamond.

However, this prediction is not expected to be an immediate happening but rather something about half a century away.

 

2.Form of Currency

Diamonds could come in handy in times of inflation as a form of currency because they retain their value and are immune to effects of inflation. In fact, most people have started shifting to diamond investments as they are more secure against inflation as opposed to stocks and bonds.

So, are Diamonds a Good Investment? Why Not

Many investment analysts will deter you from getting into diamond investments. The present circumstances surrounding diamonds does not look all that good and here are the reasons why.

 

1.Price Drops

Over the years the worth of diamonds has been on a steep decline. The recent production of lab-created diamonds has caused a disruption in the market and the concern is significantly affecting diamond sales. Simulated diamond crystals have flooded the market and because of their affordability and brilliance, white diamond has suffered a decline in demand.

This trend is expected to grow and expand beyond imagination and the analysts fear the worst. Colorful gems of lesser value than diamonds such as ruby, sapphire, emerald and others have caught the eye of jewelry lovers who are frustrated at the impossibility of a diamond rock.

As you buy your diamond in hopes of investing, keep an open mind and be ready to be patient for a number of years before you can reap the rewards.

 

2.Mark-up Factor

The value of a diamond takes into consideration more than the diamond crystal quality or color, similar to any other product in the market. Most diamonds are set on graded gold metals and the value of pure gold in the metal is also added to the last price.

Goods and service taxes, making or developing charges that the jeweler had to endure to facilitate the final diamond stone in its brilliance, will all be recovered through your diamond investment or purchase.

With this in mind and as you hand over your priced diamond crystal to your local jeweler in hopes that he could give you a satisfactory quote, remember the value you will get today will not equal what you paid for.

 

3.Lack of Market

Unless it is exquisitely rare, it is really difficult to sell an old diamond. The design, shape, intricate markings on your engagement ring could be exquisite and which you will pay for in terms of cost of production.

However, the clarity, cut, color and carat weight of the diamond is the most important bit of the purchase. Failing to consider this aspect will have you buy an expensive ring with a less than worthy diamond.

Be sure to go over all the details regarding the diamond’s properties and characteristics. For investment purposes, only buy diamonds with a carat weight above 1 because anything less is not worth all the trouble and there are less chances of making anything from it.

Generally, people are drawn to look into a diamond’s rare cut, color, carat-age, and clarity. You are unlikely to get any bidders if there is nothing exceptional about your diamond so choose wisely.

 

Rigid Form

You cannot melt or transform diamonds into any other shape unlike what is possible with gold bars. Polishing the gem to maintain its sparkle is as much as you can do with it.

While diamonds do lose their brilliance and shine as time passes by, you may still get a buyer for them as some people prefer the less intense glow but that’s a limited market.

 

Pros and Cons of Investing in Diamonds

Pros

  • Diamond investments come in small sizes as compared to gold bars. What is even better is that the size of the diamond doesn’t matter as much as its cut clarity and color which means it could be the size of a seed an be worth more than a gold piece of the same size.
  • With these small diamond crystals, you can store them in any small safe place that would be hard to detect. You won’t have to invest in a warehouse or need to pay for a safe box.
  • Another cool pro about buying diamonds is that aside from acting as an investment, they can also be worn. This multiple functionality is ideal.
  • Diamonds are maybe the hardest stones known to man and you will never have to worry about your investment breaking or changing form.
  • As added security, you can have your diamonds insured like other commodities unaffected by inflation. However, diamonds have a leg up over the others because they are a movable investment.

Cons

  • No transparency exists in transactions and specifically in establishing the price of a diamond because diamonds have no price index. Their value increases and decreases in respect to the demand and supply.
  • There are no opportunities available for trading your diamond. Buying it is easy but unless you have a personal request to sell your diamonds, you may find it hard to sell them. If you do, it will not be at a price close to what you bought them for.
  • Investing in diamonds is a lifetime commitment. You need to apply yourself and be proactively engaged in the stocks and trading sites. You also need to be very patient if you intend on making a good return on your investment.

 

Where does the Research Stand on if Diamonds are a Good Investment?

Investment research analysts believe that investing in diamond is like investing in gold in terms of the returns.

If we asses the current value of diamond stock, it is clear that diamonds will outperform the investments in the stock markets over a long period.

 

Are Diamonds a Good Investment in the Future?

Market updates show a gradual increase in the price of diamonds especially those in the 1-carat grade.

While this may seem promising, the main concern is the going trend. will this keep improving over time or will new tax laws and policies come into effect and destabilize the economy?

Public equity diamond investment schemes have been in existence for barely ten year now and are constantly riddled with challenges.

The PureFunds ISE Diamond, for example was launched in 2012 and they are yet to get a grip on the uncertain or lack of a global standard in diamond investments.

 

Conclusion

As with all other investment options out there, the knowledge, wisdom and understanding of how things work is critical and mandatory.

Diamonds are more complex and the territory on investment has been long unchartered.

While current statistics show a slow increase in diamond prices, there is no sure-fire way of determining how your investments will turn out.

However, if you appreciate the thrill of risk-taking and you have a couple thousand dollars that you won’t be missing anytime soon, try your hand at diamond investments today.

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