Why and how to invest in diamonds?

The economic climate has never been more uncertain. Individuals have more than ever the need for a safe and solid value to place their money. Goodbye therefore to the actions, banking and savings books and hello to precious metals.

In fact, diamond is considered by analysts as an excellent long term investment. The neophytes’ individuals may invest in this precious stone, but for the operation to be successful, we must consider certain precautions.

Why to invest in diamonds?

Besides gold and silver, diamond proves to be a more relevant placement. Discover the main reasons below:

A secure savings plan

More than a precious stone, diamond is a savings product. It can be used as a diversification product and will always have value due to its rarity. Diamond is an ideal investment for consolidating savings in the medium and long term. Unlike gold, it is not useful in times of crisis and the reason is simple. The preference goes for exchanging gold and silver against liquidity but not diamond, which is too valuable as a product.

A product that resists it all

Diamond is the hardest known material. It is the result of carbon crystallization under pressure at a precise temperature. This hardness is also reflected in the market.

It is also one of the most stable materials available. No monetary, financial or geopolitical crisis has so far entered the market significantly. This stability is primarily reflected on price. To keep the prices steady, the diamond universe organizes according to the "tap strategy" of closing mines when there is overproduction. In other words, the rarity which characterizes diamonds is held.

A trend of rising prices

Since the 80s, the price of diamonds has risen steadily. In addition to price regulation within the sector, this is also due to the depletion of world reserves. This scarcity will inevitably translates into higher prices, especially as unlike gold, diamonds do not recycle.

Its value is set to increase in the next 15 years. The other reason is the increase in demand from emerging countries, notably China. The jewelery market in this country is booming. It is carried by the bourgeois middle class and rising number of millionaires.

How to invest in diamonds?

According to experts, investing in diamonds is a great way to consolidate your savings. This should not be done on a whim, but must follow certain precautions.

An investment diamond

There is a difference between diamonds for jewelery and investment diamonds. It's not at the local jeweler that you need to go to get them, but at special institutions such as BAUNAT DIAMONDS. When you want to invest in diamonds, follow the rule of the 4Cs (Carat, Cut, Color and Clarity) corresponding to the weight, size, color and clarity. These are the features that define the value of a diamond. This information is mentioned on the certificate issued by a gemological laboratory. When buying an investment diamond, it is recommended to prefer diamonds that have the rarest features for easy resale.

Tips on a successful investment

For an international investment on long or medium term, the preferred colors are D or E, while the recommended purities are FL, IF or VVS1. The round cut is required. As for the cut, it is better to opt for VG or EX. The weight should be between 2 and 10 carats.

For a patrimonial investment, the preferred colors are D, E or F. For purity, there is a choice between FL, IF, VVS1 and VVS2. The round cut is once more privileged and cut must be either EX or VG. The carat weight is determined by the budget, but ideally between 1 and 6 carats.

For a family investment, the color can be D, E or F, purity can be FL, IF, VVS1, VVS2 or VS1, shape can be round, pear or princess with an EX or VG symmetry. The carat weight of the diamond must be at least 1.00 carat.

For each of the three types of investment, it is always best to have a certification of the most prestigious laboratories, including the GIA (Gemological Institute of America), HRD (Hoge Raad voor Diamant) and IGI (International Gemological Institute).

The importance of certificate

The quality guarantee of a diamond lies above all in its certificate. This is a document in which you can find a true identification of the stone. It contains all the characteristics of the diamond, as well as a description of its qualities and flaws.

Thus, the 4C’s, carat weight, color, cut, clarity as well as the diamond shape will be found on the certificate. The degree of fluorescence, the symmetry and polish, as well as the exact dimensions of the diamond will be mentioned on the certificate.

The certification is done in gemological laboratories. The most important ones are GIA (Gemological Institute of America), HRD (Hoge Raad voor Diamant) and IGI (International Gemological Institute). Diamonds are scanned and analyzed by experts. The smallest details are noted and reported. Laboratories may add comments on the specificity of each stone. This information has an impact on the value of the stone. This is why you should always require the certificate when acquiring an investment diamond.

For traceability, check the certificate number on the girdle of the stone. There is a visible laser engraving, using a magnifying loupe x 15. The value is defined primarily by the carat weight. The higher the carat weight, the higher the diamonds value. However other characteristics should also be taken into account. The round shape is the most requested. You should also make sure that the impurities are limited.

The importance of the 4C’s

To invest in diamonds, it is necessary to know the 4Cs (Carat, Cut, Color and Clarity) which define the quality of the stone. Understand the weight, size, color and clarity. Of course, the bigger the diamond, the greater its value.

However that's not all. The whitest stones located between D and G and having the highest clarity (IF to VS) are the most requested. Finally, round-shaped diamonds are sold more easily. 

Author: Jeremie Politi