Why would I start investing in coloured diamonds to diversify my portfolio?

Why would I start investing in coloured diamonds to diversify my portfolio?

  • How has the value of coloured diamonds evolved over the years?
  • Why should I not invest in stocks in the diamond mining sector?
  • What concrete advantages does investing in coloured diamonds offer?

In an unpredictable stock market, many investors are on the lookout for alternative investments. Diamonds gain in popularity year after year since not only their intrinsic worth keeps appreciating, but they receive additional aesthetic and emotional value.  A remarkable subgroup of the precious stones is coloured diamonds. They are far rarer than the colourless type and yield more profits because of it.

How has the value of coloured diamonds evolved over the years?

The value of diamonds is expressed through their value per carat. Although that value steadily rises for colourless diamonds, coloured diamonds play a different league entirely.  Since they are exponentially rarer than the already rare colourless type, the gap between supply and demand grows faster and stronger. Depending on the colour intensity only a few are found every year.

Not only the intrinsic value influences supply and demand, so do societal changes. Celebrities and socialites today often opt for engagement rings with coloured diamonds, which grows demand. 

Why should I not invest in stocks in the diamond mining sector?

As with many other stocks, those belonging to diamond mining companies are a higher risk investment. Investing in coloured diamonds is choosing a physical commodity without any counter-party risk. A diamond mining company, on the other hand, can suffer great losses during periods of growth in the diamond market through, for instance, mismanagement. All of the advantages of stability and crisis resistance that diamonds carry go out the window when investing in stocks.

What concrete advantages does investing in coloured diamonds offer?

Besides the absence of counter-party risk, investing in physical coloured diamonds also reaps the benefits of their size. They can be easily safely stored and transported, and even incorporated into a piece of jewellery. Moreover, investing in coloured diamonds is choosing to invest in a status symbol, especially when set in precious jewellery. The jewellery-form keeps the commodity safely in your portfolio until you choose to sell but carries the advantage of being easily used. Not interested in a status symbol? Then you can easily store them away until you are ready to sell.

Where can I start investing in coloured diamonds? How can I liquidate them? Contact the diamond experts at BAUNAT DIAMONDS for a coloured diamond perfect for your portfolio.

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

Related

Most popular