Are diamonds crisis resistant?

As shown in this graph, the price of diamonds increases over time. It is generally believed that this upward price movement is even likely to accelerate in the future.

Diamonds, moreover, are fully crisis resistant, as can be seen on the chart below. Whereas all the traditional components of an investment portfolio, such as shares, bonds, real estate and future contracts, crashed during the financial crisis of 2008, polished diamonds were hardly affected.

What influences the diamond prices?

Of course, diamonds are not totally immune to a decline in prices. Between September 2008 and October 2009, when the fall of Lehman Brothers triggered one of the biggest financial & banking crises of all times, diamond prices declined by about 16,5% on average. For comparison: the price of gold fell by more than 21%, platinum by 59%, the S&P 500 dropped with more than 52% and the Shanghai stock exchange plummeted with more than 69%. The different markets collapsed and recovered in a somewhat different time span.

Nothing was equal to the challenge this worldwide crisis posed, but polished diamonds proved to the most crisis-resistant. This remarkable resistance was already apparent in earlier crises, such as the crisis at the end of the nineties or the stock market crash of 1987.

When did the diamond prices drop significantly?

Only in the early eighties did diamonds prices decrease sharply. This reason was a worldwide distorted & speculative mindset, with banks financing artificially inflated stocks instead of concluding sound and economically justified business transactions. Nowadays, banks specialized in investment diamonds have modernized significantly and are thus better equipped to assess the stocks & trade receivables of diamond companies. It is thus unlikely that history would repeat itself and that we would face a similar crisis.

Summarized

The diamond price index shows an upward trend and has an inherent and lasting crisis resistance. This makes diamonds an excellent investment.
Discover more detailed information and important facts regarding diamond prices at BAUNAT DIAMONDS.

The BAUNAT difference

When you look at the price increase of different diamonds in the second graph, you will notice that there is a positive correlation between the upward trend and the diamond size (carat weight). This is common sense: over time, diamonds will become even more scarce than they are today. This is even more true for larger diamonds. Their rarity will cause their prices to rise exponentially, resulting in a greater exclusivity. Now is the time to purchase an investment diamond at a correct price.

How can you maximize your return on investment during resale?

This exclusivity leads to a limited amount of buyers and this in turn means that it will require more time to resell these diamonds at a desirable price. To maximize your return on investment during resale, BAUNAT DIAMONDS advises to invest in diamonds with a carat weight between 1 and 5 ct. With these investment diamonds, the combination of “stability, liquidity & profitability” is ideal.

Past performance is not necessarily indicative of future results. All investments carry risk and all investment decisions of an individual remain the responsibility of that individual.

Learn more Maximum security with a certified diamond