In times of economic and political uncertainty, real value resources are an excellent idea for investment. Gold, for example, because of its real value, has often been used by investors as collateral. Because this is a matter of substance, it can be stored on its own, but the problem arises with larger amounts of gold that are becoming more and more difficult to hide. One small diamond, easily fit in your pocket, can be worth a few tens of kilograms of gold.
An unknown majority of the investment options that can solve these problems is investment in color diamonds. These stones have a constant, impressive history of price increases, independant of the economic or political environment.
Colored diamonds can provide security such as gold: They are a tangible asset of real value. But unlike gold, it’s easy to store.
In the past, only aristocratic and monarchs had colored diamonds, and today the situation is changing not only because of the high demand from new markets, but also because of the increased interest from celeists and record selling prices. The media recently wrote the highest price ever paid for the jewel. It was a fantastic pink diamond that was sold for $83 million.
Demand growth has been driven by economic growth in China, Russia, India and the Middle East, which is in the cultures where tangible assets and investments with internal value are traditionally more valued.
The growing demand in Asia was revealed at the record Christmas’s auction in Hong Kong on November 29, 2010, where the total amount of items valued was $78.9 million. The auction sold 14.23 karaoke-like Hyper pink diamond for $23.2 million, making it the most expensive jewel ever sold at the auction in Asia.
The Argyle mine was launched in Mumbai for the first time in 2009 and China for the first time in 2010, reflecting the growth of new markets. Demand in these countries and the increase in the interest of color diamonds worldwide have also led to price increases, making color diamonds even more attractive to investment.
Color diamonds are extremely rare. For every 10,000 carat extracted from Earth, only 1 carat is colored, while 1 out of 25.000 carat is of a fantastic color. Of course, this translates into a price of a carat of several to several times as much as a colorless carat.
The paper certificate is only evidence of the asset but is not an asset in itself, whereas colored diamonds are tangible assets. You can physically have colored diamonds, giving you complete control and access to your investment. The value is in the diamond you actually own instead of a certificate that has no value in itself.
Colored diamonds are portable. Having large quantities of goods or material assets is often impractical, but color diamonds are the most concentrated form of wealth in the world and allow the equivalent of unimaginable sums of money to be carried in a pocket. At a time of political concern, diamonds often provide a safe escape and the possibility to start life again without losing all of their assets.
Diamonds are the hardest known substance of man. Only a diamond can cut a second diamond. Diamonds are not affected by temperature or humidity. This means that diamonds can be stored and transported easily and safely.
Colored diamonds are virtually not exposed to inflation because they have an intrinsic value that is very resistant to periods of economic uncertainty.
Diamonds are evaluated by independant laboratories such as the American Gemmological Institute (GIA) or the Gemmological Institute in Antwerp (HRD). These labs evaluate diamonds based on color, brightness, cut and carat count. These reports allow you to compare one diamond to another.
The current volatile financial circumstances have shown that stocks, bonds and real estate are not as safe as they were once believed to create a sense of awareness that wages and savings should be allocated in some more secure place. Over the past years, diamonds with fantastic colors have proved to be an increasingly popular and secure choice of investments, loved and appreciated not only for their investment potential, but also for practical applications and unrivaled beauty.
The law of supply and demand is determined by the effect that the availability of the goods in question and the demand for that goods have on the price. The combination of low supply and high demand results in a steady increase in the price of color diamonds. The diamonds with fantastic colors are very rare and the decreasing supply translates into a constant price increase, beating records year by year. Some natural fantasy diamonds are much less expensive than others (red for example), thus achieving much higher prices.