Diamonds could be a profitable business for investors who want to face a tough market.
Moreover, the price of a diamond is not directly linked to the stock markets, which means that it keeps its value even in times of crisis, and in times of inflation its value increases.
Should I invest in diamonds?
In the eye of gemologists, investing in diamonds is one of the safest and most profitable investments if certain criteria are met. It is very important that the quality of the diamond is as good as possible because quantity is not that important when it comes to diamonds.
Beyond the many investment options, let’s call them “classical”, there is one that too few people talk about: Investing in internationally certified diamonds. Caution! We are not talking about gold jewelry now, but precious stones certified by prestigious and guaranteed gemological laboratories.
The World Diamond Center from Antwerpen is the location of the most famous diamond labs and the most prominent diamond assessors. In a James Bond-like market, this is the place where the most valuable gems in the world are traded and certified.
Certainly, diamond engagement rings are desired by any woman, but there are fewer people who know that these fascinating gems have a great investment value. Beyond the jewel, besides giving someone you love a little work of art of a jeweler master, the investment in diamonds is too little talked about.
International Diamond Certification
At the Antwerpen Diamond Market, the gems stock is updated every 3 minutes. So, you are aware of the latest news and the most competitive prices. All diamonds in stock are certified diamonds and evaluated by the internationally recognized gemology laboratories GIA, IGI, IGL, and HRD.
There are several globally recognized institutions issuing diamond certificates and classification or analysis reports. These are the most important of them:
Gemological Institute of America (GIA) – established in 1931, GIA is the most well-known and appreciated authority in the field of identifying and classifying diamonds (natural and synthetic), colored gems, and pearls. It is the institution that, in the years ‘40, established the 4C of diamonds and laid the foundation for the International Diamond Grading System™, which has remained to date the basic standard for assessing the quality of diamonds.
The 4C refers to:
- Cut – the brightness of a diamond depends on the cut. A diamond with a perfect cut reflects the light on one face to the other and projects it toward the top of the stone. Therefore, the cut affects the beauty of a diamond as well as its value. So, a poorly cut diamond looks dark and lifeless, regardless of color, clarity, and size. Note that the cut does not refer to the shape of the diamond but how well it reflects the light.
- Clarity – refers to the presence or absence of imperfections (inclusions) or spots. Most of these inclusions do not affect the beauty of stone, being microscopic. Each stone is unique and contains a few inclusions – there are no perfect stones. The diamond that is nearing perfection, is called “flawless”, and is extremely rare so only a few jewelry experts from all over the world have ever seen one. Clarity is measured with the help of a magnifying glass with a zoom of 10X and can be:
- FL – No inclusions or visible spots;
- IF – No inclusions but spots are visible;
- VVS1 and VVS2 – Inclusions are difficult;
- VS1 and VS2 – Inclusions are minor and vary from difficult to light;
- SI1 and SI2 – Inclusions are noticeable;
- I1, I2, I3 – Inclusions are obvious and can affect the transparency and brightness of the diamond.
- Color – graded from D (colorless) to Z (light yellow). Although nuances are a matter of taste and you can choose a blue diamond ring, its value will not be the same as that of a colorless diamond. The less colored a diamond is (even colorless) the more valuable it is. Many of these color differences are so subtle that they are only visible to the experts in the field under laboratory conditions. The smaller the diamond, the more difficult it is to see these differences.
- Carat – refers to the weight of the diamond. The heavier it is, the more it is worth. 1 carat is the equivalent of 0,2 grams, that is, a paper clip. It is always useful to remember that the price of a diamond is determined by all the quality factors 4C, not just its weight. For example, a crystal clear 1ct diamond costs much more than a 1ct diamond with poor clarity.
The size of a diamond is given by its weight in the carat. The more a diamond weighs, the larger it is.
American Gemological Society (AGS) – an institution established in 1934. AGS experts do not use classical certification, but use a numerical scale, from 0 (ideal proportions) to 10 (least desirable), to assess the diary cut. Other laboratories can mark the cute as “excellent”, “very good”, “good”, “fair” or “poor”;
International Gemological Institute (IGI) – is an institution established in 1975 and its oldest laboratory is that of Antwerp, Belgium. In 2005 it was the first laboratory in the world to start the evaluation of diamonds in laboratory.
The International Diamond Grading and Research Institute (IIDGR) – established in 2008 by the Beers Group Industry Services, a leader in the field, with over 130 years of experience in the industry, provides a premium market rating service supported by innovative technology.
Besides having a certificate attesting to the origin of the precious stone in your hand, it will also be laser engraved and can easily be checked online on the site of the laboratory that issued the certificate.
The decision to invest in gems may not be so simple. We are used to hearing about other financial terms like Stock exchange, FOREX, gold, oil, or shares. With all these, it is a fact that internationally certified diamonds are the most stable way to preserve the value of money.
Auctions dedicated to diamonds are rare
Some specialists say diamonds are too niche to bring a significant profit. In addition, auctions are rare and the evaluation of jewelry is considered more of an art than science.
“Who wants to buy diamonds as an investment should choose some that are large and colorful,” says Holly Midwinter-Porter, a representative of UK jewel Boodles. “The red and green ones are the rarest, and unlike the white ones, the processed ones are only found in one or two areas of the world”, said Porter. Rare diamonds can double in price if their portability makes them more attractive than gold or art for some investors.
Another option for investors is the diamond jewelry market as they are considered more profitable due to the original added value.
How do you start and how much does it cost?
The basic formula by which the price of a diamond is calculated is:
Cost = Carat Weight x Diamond Price Per Carat
Starting from this, a grid looks like this:
1.00ct round ideal cut hearts and arrows = $7,900 per carat
2ct = $13,000 per carat or $27,000 total
3ct = $20,000 – $100,000
4ct = $39,000 – $163,000
But these are some basic prices at which they start. Things are a little more complicated because there are (at least) 4 factors that influence the price of a processed diamond: Carat, color, clarity, and cut. These variables bear values that give an impressive number of combinations and prices. So, it’s best not to make any reckless gesture when you start investing, without doing proper research. Ask a specialist, go to a physical shop and get all the necessary information.
Could diamonds disappear?
It is natural for there to be crises, fluctuations, and tensions like on any market, but Michael Vaughn, the secretary-general of the World Federation of Diamond Markets, sure thinks about the possibility: “According to estimates, by 2029, at the current level of diamond fields, diamond production will end unless new reserves are found.”
Vaughn’s statement is aimed at a period not so distant in time and, even if reality denies it, diamonds remain an exceptional way to invest or treasure the value. These gems are eternal and have fascinated entire generations. Look at them now as an investment and not as a part of a piece of jewelry like a ring.
An investment decision depends on the investment profit and the risk appetite of the investor.
It is known that higher-risk investments can bring higher returns, but also higher losses. In the case of low- or medium-risk businesses, it takes years before the investment starts to pay off.
This type of business (investments in gold and diamonds, trade with these products) is suitable for aggressive investors who are willing to take high risks and are looking for businesses with the highest level of growth. These are not for conservative investors who will seek to protect their capital, profit being a secondary objective for them.
The fascination force of a diamond must never be underestimated. The word “precious” is fully justified. There are issues an investor spots without needing to see or reach a diamond. Even if the stone is not mounted in a jewel, the value itself is the one that makes an investor act.