Diamonds are "an ideal investment" with over 15% increase in value every year.
Investment Potential
Why invest in rare ‘fancy’ colored diamonds?
Ordinarily as the demand for a product increases the price goes up which attracts new suppliers who bring more such products to market which makes the price return to normal. This very basic law of supply and demand does not apply to coloured diamonds because each and every one of them is truly unique. Fashioned by nature over many millions of years, each coloured diamond, no matter its size or hue, has its own shade of colour and its own indescribable quality. With no new significant diamond mine discoveries in the last two decades, prices have continued to increase at approximately 15-25% year on year; larger, rarer stones have seen considerably stronger performances and often have doubled estimates at auctions. The global demand for diamonds is set to continue rising as emerging markets, predominantly China and India, continue to purchase rare fancy coloured diamonds in order to protect and increase their wealth. There are numerous reasons why investment graded coloured diamonds have not fallen in value for the past 30 years. The main reasons being are supply and demand fundamentals.
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Supply and Demand
Coloured diamonds are indeed rare; so much so that for every 10,000 carats that are mined, a mere one carat may possess fancy colour.
- Gareth Penny, ex Managing Director of De Beers was quoted in 2010 as saying that “if we continue to diamond mine at this rate we shall run out within 20 years”.
- Most mines are past peak performance; mining firms are actually cutting back in production to extend the life time of their mines.
- Over the past 25 years more than 12,000 kimberlite deposits have been discovered throughout the world and less than 1% has contained enough diamonds to become economically viable. (Source Petra diamonds)
- Out of 170 diamond mining companies there are only 25 in production. (Source Bloomberg)
- Diamonds have “the best fundamentals” said Evy Hambro, who manages the $6.6 billion World Mining Fund in London for Merrill Lynch. “The gap between supply and demand is much greater compared to other commodities’. (Source Bloomberg)
- On average about 250 tons of ore has to be mined and processed before a mere 1 carat diamond is discovered.
- At the Ellendale mine in Australia, which is the world’s largest producer of yellow diamonds, the mine on average only produces in the region of 20,700 carats of fancy yellows a year and the number of intense and vivid yellows are considerably less. (Source Telegraph)
- In the case of blue diamonds approximately 3-4 million tons of ore have to be crushed and processed to potentially find a 1 carat blue diamond.
- Due to their rarity and beauty, coloured diamonds have been in demand for thousands of years.
- Demand from India and China is expected to rise 20% each year for the next 5 years, catching up with America as a major importer of polished stones. (Source De Beers)
- Tiffany & Co in 2010 agreed a 25% price increase for yellow stones from their supplier in order to incorporate yellow diamonds in their own jewellery range. (Source Tiffany & Co)
- Institutions and sovereign nations are purchasing diamonds as a store of wealth and a hedge against economic uncertainty and market volatility.
- “Diamonds could very well outperform base metals in the coming years” said Andrew Ferguson, who manages $313 million at New City Investment Managers in London. “Given the huge increases in demand and the imbalances in supply, I expect good returns.” (Source Bloomberg)
- “Investors are snapping up diamonds as hard assets in order to hedge their portfolios. Many investment consultants are recommending diamonds as “must have” assets for a secure investment portfolio.” (Source Diamond Investment Forecast, Jan. 2010)
- Click here to download a brochure and get more information on how to invest in diamonds.
The benefits of investing in 'fancy' coloured diamonds
- Capital Growth – Fancy coloured diamonds have a rock solid history of steady price appreciation and they are expected to continue increasing in value over time. Over the past 30 years the price of coloured diamonds has not reduced; in fact the price of investment grade coloured diamonds has steadily increased by approximately a minimum of 15-25% per year with some diamonds above a certain carat size showing in excess of 45%.
- Preserving wealth – The rarity of fancy coloured diamonds has taught investors that they are recession proof. Over the decades and especially during times of great economic uncertainty investors have learned that fancy coloured diamonds provide a reliable store of wealth. Past performance shows that in both national and global recessions over the past 30-years investment grade diamonds have sustained their value and have continued to increase.
- Estate planning – as an heirloom fancy coloured diamonds can easily be passed from one generation to the next.
- Correlation with other financial products – the unique and rare nature of fancy coloured diamonds means their value is unconnected to and unaffected by, the trials and tribulations put upon other forms of investment, including the stock market.
- Tangibility – because of the uniqueness of diamonds, diamonds are the most portable form of wealth in the world today. Unlike other tangible assets such as gold, diamonds can easily be taken anywhere in the world and sold.
- Hedge – when there are so many other forms of comparatively high-risk investment opportunities to provide capital growth, investing in fancy coloured diamonds provides a low risk hedge against any losses that may be incurred by investing in other alternative products over the medium to long term.
- Portability and discretion – by contrast to their diminutive size, weight and ease of transportation, diamonds have an extremely high value which in times of need provide an efficient, effective and personal way of moving wealth from one place to another
- Rare & Exotic – without question fancy coloured diamonds are truly rare and exotic; people will derive much personal pleasure and satisfaction from simply owning something so unique.
Click here to download a brochure and get more information on how to invest in diamonds.
