Diamonds VS The Dow Jones VS Gold

Investing In Diamonds - Why Now?

In the past, fixed-income investments such as stocks and shares have been a popular form of investment. While stocks and bonds are a great way to earn interest as opposed to leaving funds in a savings account, other avenues of investment and investing in diamonds should be considered.

The advantages of investing in diamonds are that they are relatively i, can be worn and enjoyed while their value increases and they are durable, requiring no maintenance or storage fees. This article will examine the benefits of investing in loose diamonds and diamond jewelry. We will also compare the investments of diamonds with other forms of investment.

The Popularity Of Diamonds

The rise in the popularity of diamonds has been largely helped by the De Beers diamond syndicate. When De Beers began, they needed to combat the increasingly saturated market, which was in danger of decreasing the value of diamonds. Through a powerful marketing strategy De Beers was able to convince the public that an engagement ring must contain a diamond. Until then, just 10% of engagement rings contained diamonds.

Through successful marketing they were able as early as 1941 to increase diamond sales by 55%. By 1943 the public was exposed to and convinced by De Beers that "Diamonds are Forever". This phrase epitomized both the physical and emotional value of a diamond, a symbol of love that is highly durable and will not be broken.

This simple phrase had a huge impact not only on De Beers as a company, but on the industry as a whole. Today, an engagement ring containing a diamond has become the norm.

Investing In Rough And Polished Diamonds

Of course, purchasing a rough diamond will be much less expensive than buying a polished diamond. A rough diamond, if purchased correctly, can provide you with a higher potential return, although this also comes with higher risk. When assessing a rough diamond, it is difficult to assess its potential quality and value as a polished stone, meaning that even for industry experts, there is always an element of risk involved.

It is often difficult to establish the clarity and color grade of a diamond. Further, on average most diamonds lose half their carat weight during the polishing process. In contrast, by purchasing a polished diamond the benefits are immediate and the customer can enjoy the diamond by setting it into an item of jewelry. In contrast, a rough diamond will require more work and risk taking to turn it into a finished product. Therefore, unless you are an industry expert or you are building a portfolio of rough diamonds, it will probably serve you better to invest in polished stones.

Natural Fancy Colored Diamonds

Loose white diamonds, particularly those weighing under 2 carats, are easily obtainable. Some fancy colors, however, are becoming increasingly rare. By 2018, the largest natural pink diamond mine, the Argyle Mine in Australia, is expected to close. This will make pink natural diamonds even rarer and more difficult to procure, resulting in a projected continual increase in value. Further, for every 10,000 carats of white diamonds mined, only 1 carat of colored diamonds will be mined, with just 1% of those mined being of investment quality.

Historically, colored diamonds have continually appreciated in value against other investments. For example, in 2008 the value of gold fell by 30%, while natural fancy color diamonds rose by 4%. Diamonds weighing over 5 carats and of pure red, pink or blue colors are projected to be the best investment due to their high rarity and uniqueness. If you are considering investing in natural fancy color diamonds, be sure be sure to conduct research on the benefits of such an investment, as well as what to look for when purchasing a fancy color diamond.

Natural color diamonds
are a pretty investment

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How To Ensure You Are Making A Good Investment

Firstly, it is important to establish the main characteristics to look for when purchasing a diamond as an investment. Namely, you should consider the "4 Cs" of diamonds: Color, Carat weight, Clarity and Cut. While some stones are rarer and more expensive, this does not necessarily mean they stand to bring a higher return on investment. For example, a D (colorless), FL (flawless) diamond will cost far more than a D color, VS clarity graded diamond (imperfections that can be seen through a loupe with difficulty), but will be more difficult to sell. This is because the difference in cost is very high compared to the benefit it provides the average buyer.

However, investing in more common, lower clarity and color diamonds will attract potential buyers more easily but will not give you such a large return on investment. The market for these types of stones is saturated and many diamond engagement rings sold today contain this type of stone. You may therefore find yourself having to lower the asking price in order to find a buyer.

Here are some pointers to keep in mind when considering purchasing polished diamonds as an investment:

Cost

Time span

If you are looking for a quick return, investing in a diamond is not for you. You should be prepared to allow a number of years to pass by for the stone to collect a good return on the investment. While rare stones are likely to increase in value, it will most likely take at least five years for you to see any return on your investment.

Rarity

As a general rule, a rare diamond or a diamond that is becoming less accessible has a higher potential return on investment. However, be prepared to wait to find the right buyer who is looking for your specific diamond.

The Dow Jones

Investing in stocks and shares, such as the Dow Jones, is a far more common form of investment. Those who conduct the correct research and have some knowledge in the industry can stand to earn a good return. However, there is risk involved. Over the past decade, including the economic crash in 2008 which saw the Dow Jones drop 50% in just 15 months, investors could have seen an annual return on investment of 4.5%.

Those who reinvested their Dow saw a return of 7.5%. However, investors need to keep a close eye on the market in order to make a return on their investment. For example, in 2008, when the global economic recession hit markets hard and affected the Dow Jones, investors had to decide between withdrawing their investment and limiting their losses or riding out the storm. Therefore, investing in the Dow can certainly be beneficial, but there is risk involved.

Investing In Gold

Gold is considered by many to be a safe investment. Gold can come in two main forms; as a piece of jewelry or in its raw form, often as bars of gold. The benefit of investing in gold jewelry is that you will be able to benefit from it immediately, just like polished diamonds. However, estimating and retrieving the investment value of a gold in a piece of jewelry is complicated. You would have to search in order to find someone willing to pay you a good price for the gold in the jewelry.

Further, if the jewelry contains other precious metals or gems, such as diamonds, you will need to hope you find someone who will pay for those precious metals and gems. The benefit of investing in gold bars is that calculating their value is simpler and they are accepted universally. However, when compared to diamonds, bars remain in storage while diamonds can be worn.

Deciding What To Invest

As has been demonstrated throughout this article, there are benefits to be gained from each of the three forms of investment we have examined: diamonds, gold and the Dow Jones. If you are looking for an investment which has potential to bring a good return within one or two years and you have performed the necessary research, you may well be tempted to invest in the Dow Jones.

However, there is risk involved and potential for difficult decisions to make at times when the global economy suffers. Gold is often regarded as a safe investment but as with many commodities, is slightly unpredictable. For example, between 2003 and 2013, the price of gold fluctuated between $300 an ounce to $2,000 and then back to around $1,300 by 2013. This is evidence that it is difficult to predict the return on investment against inflation.

When it comes to diamonds, certain diamonds will give you a high chance of a good return. However, it is important to examine the benefits of investing in diamonds beforehand in order to ensure you are investing in diamonds that will bring high returns, particularly the rarer pink, blue, green and red diamonds which increase in value at a faster rate than white diamonds.
Whatever your next investment, we wish you good luck.

Do you have any more questions about investing in diamonds? Fee free to contact us at 1-800-557-7095 or email [email protected] where one of our experts will happily help.