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Why is diamond a good investment?

Why is diamond a good investment?

  • What comments does the industry receive about its ethical background?
  • Why would diamonds not be a good investment?
  • How does synthetic diamond influence the market?

In economically difficult times it is often a challenge to find a worthwhile investment towards the future. Even though diamond is a particularly good investment in volatile times because of its proven crisis resistance, criticism does not cease. Where does it come from? How much of it is true?

What comments does the industry receive about its ethical background?

A popular argument against investing in diamonds, is that it would be unethical. In 1998 it was revealed that many diamonds were mined by men, women and children in areas of conflict to finance guerrilla battles. The dehumanizing practices shocked the world and the image has stuck, with many still believing these diamonds are being traded today. However, that has not been the case for a long time. After the revelation of blood diamonds, the Kimberley Process was developed to ban them from the global diamond market.                           

Even though many have never heard of the process, today it is responsible for no less than 99,8% of rough diamonds worldwide. That makes it nigh impossible to buy blood diamonds, especially when they have been certified. 

Why would diamonds not be a good investment?

Not only from an ethical standpoint are diamonds often criticised, their investment value is also regularly questioned. Opposing parties claim opaque pricing and low resale possibilities. Those arguments, however, are misinterpretations of the current and future diamond market. The lack of price transparency is unfounded, to say the least. As with many commodities, diamond prices rely on supply and demand, which is always difficult to accurately predict. Moreover, trends in diamond prices have been historically reliable.

As for resale value, diamond prices are calculated on the same basis when selling as when buying: the global diamond price reports. These are publicly accessible and published weekly by Rapaport, where you can easily access them yourself.

How does synthetic diamond influence the market?

The same critics who distrust diamond’s ethical background and investment value, predict the decimation of the industry due to the development of synthetic diamonds. They are also convinced that millennials will cause a major turnaround by collectively opting for synthetic diamonds, even though millennials have shown to prefer natural diamonds. They opt for investments in luxury goods which yield emotional as well as monetary value, of which synthetic diamond has neither. Finally, synthetic diamonds only make up a tiny percentage of the global diamond market, not nearly enough to cause fluctuations.

Is diamond a good investment? It is when you choose the right gem. What type of diamond is perfect for my portfolio? Contact your diamond expert at BAUNAT DIAMONDS for your ideal investment.

Author: Inge De Wee
Source: BAUNAT

With this article, BAUNAT strives to inform you thoroughly about investing in diamonds. No investment can be guaranteed to be without risk or fully according to your expectations. That is why we recommend to research the risks and aspects of investing in diamond properly to ensure that you make the right choice for your portfolio.

START TO INVEST See our selection of loose diamonds

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