Natural Fancy Color Diamonds as an Investment
Today’s volatile markets have convinced many investors to add hard assets to their portfolios as a means of preserving their wealth. Money can be viewed as having two distinct functions. It is a medium of exchange and also serves as a store of value. When the markets are unstable, capital is often moved into hard assets to preserve value. These hard assets are held through difficult economic times and when the economy improves, the hard assets can be translated back into currency often at increased value. Rare art, antiquities, gold, silver, some precious gemstones, exceptional white diamonds and natural color diamonds are considered hard assets. Today’s investors are seeking strategies to preserve their wealth and are choosing color diamonds as an important part of their portfolio.
Color diamonds are exceptionally rare. For every 1 carat color diamond, 10,000 carats of white diamonds are mined. Of the production of color diamonds mined, less than 1% of color diamond production would be considered investment grade.
Natural color diamonds are exotic, exceptionally beautiful and exhibit a dazzling array of all the colors of the rainbow as well as browns and blacks. All color diamonds are rare, the scarcest being pink, blue, orange, green, and red. Each color diamond is an entirely unique specimen. Investing in fancy color diamonds gives an investor a unique and exquisite gem that no one else can possess.
Color diamonds are becoming more difficult to procure. Older mines are shutting down due to less and less rough diamonds mined and fewer new mines are opening. The major producer of pink color diamonds has predicted that the Argyle Mine in Australia will be closing in 2018, due to the ending of diamond production from this source.
In addition to the production of color diamonds, the current global market has increased the demand for these rare diamonds. The landscape of the investor market has changed to a global market with investors not only from Europe and North America, but many new areas such as China, India, Russia and Latin America. These new centers of wealth are also finding methods to preserve their new wealth in hard assets, especially since their currency is less dependable and more volatile. This new wealth is turning to color diamonds, investment grade white diamonds and investment grade gemstones. Competition for these rare gems will increase over the next ten years as these new economies grow.
Color diamonds are extremely durable; they are the hardest substance known. They are not affected by humidity, temperature or shocks creating an asset that can be stored or transported without potentially damaging the asset.
Natural fancy color diamonds are the most concentrated form of wealth on the planet. One million dollars worth of diamonds can fit into your pocket and weigh less than a gram whereas a million dollars worth of gold would weigh close to 40 pounds. Color diamonds are easy to store and transport. Color diamonds can easily be stored in a safety deposit box, or set into jewelry and be enjoyed and easily transported anywhere in the world. Natural color diamonds can be sold anywhere and in any currency.
Diamonds are no longer subject to cartel control. Diamonds and gemstones are an unregistered asset and therefore a very private asset. There is no disclosure or registration of diamond and gemstone holdings required in most countries. There is no record as to what is in a safety deposit box. There is no reporting to any government on transactions of diamonds and gemstones, keeping the ownership of any gem private. Under the new United States anti-terrorist act, the dealer/broker is only required to keep record of the type and the amount of payment used in the transaction for any gemstone. Client lists and contact information are deemed proprietary in the trade and are never released to any government agency.
Natural color diamonds have a history of steady appreciation. In 2008, when gold fell 30% and white diamonds dropped 20%, natural fancy color diamonds did not fall at all and continue to appreciate. In the past 30 years, fancy color diamonds have never depreciated in value. Auction houses’ records show that many important diamonds have doubled in value every 5 years. Most investors consider natural color diamonds as a medium to long-term investment. Real appreciation of natural fancy color diamonds develops over time. It is suggested to let this hard asset to appreciate for 4 – 6 years before reselling. There are no fixed prices for natural color diamonds, just like other hard asset investments such as rare art and antiquities, the price is realized the day it is sold. Many investors utilize natural color diamonds as a long-term investment to pass on to the next generation. There are many factors that will effect the appreciation of color diamonds, one being the closing of some diamond mines, new ones that have yet to be discovered, and the desire from the new centers of wealth to invest in natural color diamonds. Purchasing natural color diamonds now will prove to be a good investment as the demand for natural color diamonds from these new centers of wealth increase each year.
Today there are well-established criteria for gemological laboratories to determine and describe diamond characteristics. A report from a trusted gemological laboratory accurately describes an individual diamond. When investing in a natural color diamond it is important for the diamond to have an accompanying gemological laboratory report. Having a report from a respected lab will enable the owner to obtain current market value.
Other advantages of natural color diamonds as a hard asset are, that the radiant beauty of the diamond can serve as a collectible item, a treasured piece of jewelry or be used in estate planning purposes. It is a functional asset that is also an aesthetically pleasing object that can be both utilized and appreciated on a daily basis.
Thomas Michaels Designers, Inc. educates investors as to the nuances of natural color diamonds, investment white diamonds and investment color gemstones. Through the resources and expertise we have developed over 30+ years in the diamond, gemstone and jewelry industry, we are able to supply the most exclusive and desirable investment diamonds and gemstones available in the world.
