Investing: diamonds or gold?

  • Investing: diamond is an interesting investment
  • Potential return on gold is descending

Gold and diamonds, a safe investment?

In times of crisis, more and more investors choose to invest in gold or diamonds. These natural commodities never lose their intrinsic value and are therefore a safe choice. Although, the gold price has substantially decreased over the past few years, so the return on gold will be significantly lower during the coming years. Luckily, diamonds have been dealt better cards.

Today, China, India and the Middle East make up the largest part of the diamond demand side. Nowadays, for example, 40 percent of Chinese city women gets married boasting a diamond engagement ring. Twenty years ago this percentage was close to zero.

The supply side however, remained stable, due to the simple fact that in recent years no new major diamond mines were discovered. Even if tomorrow a new diamond source would be laid bare, it would take at least 10 to 12 years to get it up and running. This combination of factors leads to increased market prices.

Diamonds: a full-fledged investment good

Investors in countries such as China, Russia or India, have long since appreciated diamonds as the valuable investment good they are. Now, investors in Europe and the United States are starting to jump on the bandwagon, though diamonds may not be a suitable investment option for everyone.

If you want to invest in diamonds you will require, to some extent, knowledge about the diamond market and you will have to allow yourself to rely on the advice of an expert. A diamond ring worth € 100,000 has more potential from an investment perspective, than a ring worth € 1000. In comparison, if you buy a painting worth €1000, three years later, it will rarely be worth fivefold.

That is not to say that investment diamonds necessarily have to be the rarest quality. In fact, rare diamonds are more difficult to sell. Diamonds of average quality, with no visible imperfections or discolorations are more salable and guarantee a larger proportional increase in value than the most rare, exclusive diamonds.

Would you like to get to know more about investing in diamonds? Feel free to consult the diamond expert team at BAUNAT. They would be more than glad to share their years of experience with you to maximize the return on your investment. Who chooses to invest in diamonds, chooses a safe investment in a stable market.

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Author: Laetitia De Backer

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