Diamonds are forever
PUBLISHED: 06:35 14 July 2014
Investing for the future is always tricky, but the diamond market may just be the answer. Since 1959 diamonds have risen in price by an average of 15pc per annum.
As late as the 1990s, 80pc of the global rough diamond sales was in the hands of one company, De Beers, which also controlled half of all production.
Terry Stevenson, the leading diamond buyer from Lois Jewellery Ltd, located in heart of the jewellery quarter in Birmingham, talks us through the basic valuation template that boils down to the four Cs:
Carat – the weight of the stone, equating to 0.2g per carat
Colour – colourless or “white” diamonds are measured on a sliding colour scale in which the rankings are D (the best blue white) and E (exceptional white). Avoid buying any large gem stone (above 2cts) that registers lower than grade H, as it will be deemed too yellow.
Clarity – the visible inclusions within the stones when magnified with a 10x scope. Clarity grades range from flawless to imperfect three.
Cut – the rarer the cut, containing more facets, the more sparkle. It is the skill of the cutter that gives a diamond its brilliance.
Diamond manufacturers tells us that, for all the vicissitudes of the market cycle, diamonds really are forever. According to certain types, including coloured varieties (“fancies”) diamonds have held had their value over the past few years better than other more volatile equity investments.
The Rapaport Diamond Trade Index reveals: “Size counts when it comes to building value. From 1990 to 2011, the value of three-carat diamonds increased by 145pc, while five-carat diamonds rose by 171pc.
I would add that investing in diamonds is never straightforward. Unlike other precious commodities such as gold, the sheer variety of individual rocks rules out any simple cost-by-ounce pricing mechanism. There’s plenty of room for subjective interpretation, but once certified there’s no mistake and these diamonds are globally sought after.
Diamond investment is always going to be risky, but an intense measure of calm exists at present and the market fundamentals do look strong. Arguably, the most important factor is supply and demand within the US, India, and the Asian markets – predicted to account for 80pc of incremental global demand by 2020, becoming a third wave for diamond investment.
The demand to copy celebratory sparklers is growing and they may come into their own as a portable store of value amid a turbulent commodity trading market. As Zsa Zsa Gabor once said: “I never hated a man enough to give him his diamonds back”.
For more information, contact James at the Gold Shop in Diss.