I got a call earlier this week from a fellow who works for a diamond brokerage firm. I gave them my contact information when I went to a resource conference earlier this year. He wanted to tell me that their Vancouver office is holding a seminar later this month about investing in diamonds. Fancy colored diamonds in particular. I thought it could be interesting so I agreed to attend. I plan to learn more about what their company does, and the diamond business in general. It should be fun 😀 After our phone conversation I poked around the internet a bit to learn more about this rare commodity and found out that many investors view colored diamonds as a form of alternative investment. I love learning about alternative investments because it broadens my perspective as an investor.
I’ve only done some preliminary research on the topic but from what I’ve found out so far the price of an average grade, colored diamond have doubled to tripled over the last decade or so. Minimum investment through a broker is about $10,000 depending on what you’re looking for. You can invest in diamonds in other ways too, like buying them from established online wholesalers or various retailers. But because of the markup in stores many investors buy rare diamonds through brokers. There’s also news about a diamond investment fund or ETF but I don’t know much about those.
At this point I don’t know if investing in diamonds is a good idea yet. They say diamonds are forever. But are they a dependable long term investment or do they simply represent a silly market where rich people pay for overpriced shiny rocks that don’t have much intrinsic value in the real world? Well that’s what I’m going to find out 😀
I’ve gathered a few Youtube video links below about investing in diamonds in case anyone is interested. Sorry about the poor quality. Please keep in mind that these clips may be very biased so as any prudent investor should do, take any promotional talk you hear with a grain of salt and always do your own research before making important financial decisions. That’s exactly what I’m going to do in the next few weeks, more research.
Are diamonds a safe investment? 4 min
Diamonds – Investor’s new best friend 2.5 min
Investing in rare colored diamonds 8 min
Random Useless Fact: The Average teacher salary in Switzerland in 2010 was $112000 per year
Went to silvergoldbull.com after seeing your tweet on gold prices and saw they now sell colored diamonds !
those are expensive !
Hey cool, you’re right 🙂 Thanks for telling us about the site. Those diamonds ARE very expensive, but wow are they ever pretty though (~o~) That’s good they’re selling the fancy colored diamonds because that’s the only kind worth investing in since colorless diamonds are too common. I don’t know enough about valuating a gem yet so I’m not sure if the prices on silvergoldbull are wholesale or retail but I plan to shop around if I’m going to buy in the future. I know going through a broker they’ll help you find, cut, and serialized/register it with the Canadian government to reduce the risk of fraud later, but I don’t know if all colored diamonds sold online has gone through the same process. Certainly warrents some more looking into but it’s fascinating stuff 😀
Interesting, but I’m always concerned about investments without any real fundamentals behind them. Do you establish a limit on how much you’re willing to invest in commodities like gold or diamonds?
I try to limit my gold and silver exposure to a maximum of 5% of my net worth 🙂 I’m not sure how I feel about investing in diamonds or fine jewelry yet. It’s certainly an exotic type of asset and unlike precious metals, rare diamonds are more risky and only worth it if you plan to hold it for a long period of time. Their price is less volatile however because they are fairly illiquid. If I do spend money on a diamond I don’t expect to pay more than $15,000. If the value increases in the future then great! If not, then at least I’ll have something nice to give to my future girlfriend/wife 😉
I’ll be interested in hearing what you learned. I like the idea of alternative investments, but I don’t think gemstones would be one I would be comfortable with.
Thanks Brian. I’ll definitely have an update on what I learn. From the sources I’ve seen around the internet so far the wholesale price of diamonds have gone up quite significantly over the last few decades, especially in the last 5 years for some reason. I think with a growing middle class in developing countries, the demand will continue to increase for luxury goods. http://www.bevhillscap.com/images/igd-2.png Most beginning investors don’t really hear much about the diamond space because it’s not a very transparent market (it doesn’t trade like other commodities like platinum or coal) and it requires more understanding and involvement to get in. At the end of the day it’s about supply and demand. With a slower rate of diamond production in the world, and a growing global GDP, I think the worst performance any hard asset including diamonds can do is keep up with inflation. The historical figures for diamond appreciation looks good on paper, but I’m still not convinced at this point it’s a good investment because I haven’t yet learned about how and where to sell your diamonds, and transaction fees, brokers fees, tax implications, insurance, or any other possible costs that would eat away at the… Read more »
There’s only a certain group of people who will want to take that pretty diamond off your hands. Diamond’s liquidity isn’t the best. Hard to find buyers in my opinion.
Yeah, and storage is another issue. I’ll probably have to get a safety deposit box at the bank if I have valuable jewelry. I’ll let you know if I learn something new from the presentation next week.
I don’t think diamonds are an investment. They’re a gamble. The price of diamonds is kept artificially high be deBeers and that could end at any time. Used diamonds have a stigma, too, as people figure if someone got divorced/died they don’t want to wear that same bad-luck rock on their finger. If you do take the gamble, be careful not to buy jewelry. The re-sale value of jewelry is very low compared to the initial price. If you bought unset stones you’d have a better chance. I’d be very wary, though. Diamonds, even coloured diamonds, are not particularly rare. And with the campaigns against blood diamonds, you might find the market softens or even collapses. Think what happened to fur coats.
I think in terms of risk diamonds are one of the highest out there. Only certain types of gemstones, typically 3 carats or larger, have appreciated significantly over the last few decades driven up due to questionable business practices by a monopoly. What got me interested is they’re saying some diamonds like the ones found in the Argyle mine in Australia have special properties that aren’t found in any other place on earth. And since the mine is scheduled to shut down production in 2018 some people are willing to pay a premium for its diamonds. Sounds like speculation doesn’t it. What if they discover another diamond mine in the future with even more rare properties. Maybe the diamond industry is even in a bubble right now, I’m not sure. I like you’re idea of unset stones. If I do gamble in this space I will buy a colored diamond that’s not already on a ring 🙂 That should help keep its value at least.
Interesting! I’ll be looking forward to hearing what you’ve learned after attending. I’ve heard a lot of what Bet’s said before, too. But I’m not nearly as educated about it.
Neither am I right now. Hoping to learn something new next week. Diamonds are created inside the earth over many years and it’s pretty cool from a scientific perspective to think that a piece of solid matter that was once buried in the ground when dinosaurs roamed the earth can now be held in the palm of your hand. Looking at a diamond is like looking into hundreds of millions of years of history on our planet (^_^) Nothing else on earth can last that long in a stable form. No wonder they are crazy expensive lol.
So far people used to invest in the various commodities like the gold, Real Estate etc. But now the most admirable investment to the various people is diamond. Diamonds are considered as the most potential investment and is very well liked by the people to invest in.
Great post! Been reading a lot about investing in diamonds. Thanks for the info here!