The use of diamonds as an investment and financial hedging tool has grown rapidly over the last few years to point that there is even an interesting section about it in Wikipedia.
The reason is quite obvious and actually makes lots of sense:
Diamond investment should fall into your category of alternative investments with all it entails.
This means that they should be a small portion of your portfolio etc.
The idea is actually quite simple. As I mentioned, investing in diamonds is based on the fact that diamonds are physical commodities. As such, you can easily buy them everywhere, even online. The recommendations below are the basic guidelines, a how to invest in diamonds tips and tricks if you wish. But most important we also cover the risks so please read thoroughly till the end…
When looking to make an investment, any investment, you need to consider several things including how you exit. Some investors will go ahead and say that it is the most important part of the investment. The first advantage of coloured diamonds is exactly that…
As mentioned above it is in my personal opinion that trying to sell a 1 carat D VS1 diamond will be quite difficult. Don't get me wrong, a 1 carat D VS will probably be easier selling than a 1 carat D Flawless because a D FL costs so much more while providing the end customer so little added value that the amount of people that are willing to pay this premium is very limited. For those who don't know, in VS1 diamonds you cannot see the inclusions without a loupe and for the non-professionals probably even with a loupe.
It is a delicate equation. You need to find the right diamond that has enough demand and on the other side of the equation there are only few sellers - investment grade diamonds. Coloured diamonds by definition fall exactly into that category. The supply is limited being that only 1 out of 10,000 diamonds is a natural coloured diamond and the demand is constantly rising. They are unique and sought after. It seems that the equation keeps tilting the right way and as a diamond investor - time is on your side.
Natural Yellow Diamonds - standing out in the crowd
This also takes us directly into the second advantage which is (to our opinion) that there are more reasons for coloured diamonds prices to increase than in regular colourless diamonds.
Consider yourself - Did you know about coloured diamonds 20 years ago?
There is an expectance for a strong increase in demand for diamonds (all diamonds) from the evolving markets such as China and India where the middle class is growing every year. Regardless, there is also a strong increase in demand for natural coloured diamonds in matured and evolved markets that are now getting more familiar with it. Coloured diamonds are by far rarer. When we connect the dots, investing in coloured diamonds makes sense.