The stable and positive price evolution of diamonds as an investment

  • Diamonds as an investment
  • Liquidity of products as a trigger to sell and buy
  • Spread of the investment portfolio

Diamond as an investment

Investing is always a risk, but in general, diamonds are considered a sustainable and safe choice. Isn’t it interesting to opt for diamonds as an investment in the long term? Therefore, a long term research is necessary. As a benchmark for the rare ‘Fancy Vivid’ blue diamond (1 carat),  20 products and raw materials were selected, such as cocoa, wheat, coffee, sugar, cotton, gold, silver, iron ore, crude oil and natural gas.

Liquidity of products as a trigger to sell and buy

Over a six-year period, the rare blue diamond is the only one out of twenty products and commodities that has risen (strongly, + 73.91%), with the exception of orange juice (+ 9.87%). However, unlike orange juice, the coloured diamond has had a steady growth with limited volatility every year.

For many products and commodities, there is a high degree of liquidity that allows a quick sale. An emotional or rash decision by various traders on the market has a fast impact on world prices. Besides, limited durable products such as wheat, sugar or cocoa must be resold to final producers or consumers within a certain period of time. It’s an inelastic offer because the offered amount will not vary widely with a high or low market price. Products like diamonds, obviously don’t have an expiration date and therefore, won’t be sold at a low price. Diamonds as an investment can be considered a sustainable investment.

Spread of the investment portfolio

Diamonds as an investment isn’t only profitable in the short term but also as a durable investment. More and more investors find their way to fancy coloured diamonds, which increases the demand gradually. However, the demand rises faster than the supply, which will imply a price increase in long term.

Diamonds as an investment are very interesting, but investors should be cautious when buying coloured diamonds. Not every size, shape, colour and colour intensity will be equally lucrative. Thorough research and sufficient knowledge is needed to be able to invest in a sustainable and profitable way. Therefore, it is recommended to be assisted by experts who know the market and know what the perfect diamonds are to chose as an investment. Last but not least, a smart spread of the investment portfolio is of great importance. The spread between real estate, funds and diamonds will lead to a more optimized return, which is at a lower risk than any individual investment in a portfolio.

At BAUNAT DIAMONDS our experts always give personal and objective advice. Together we look for the investment that best suits your goals. You can always contact us.

Author: Daan Deruyter

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