There’s no question that 2013 has not been the best of years for gold and silver. Back in April, we witnessed quite a downward turn to price levels not seen since 2010.
The “silver” lining in all of this is the fact that you can acquire gold and silver coins at a considerably lower dollar amount than in 2011. As we’ve explained in prior posts, much of the decline that occurred in April was driven by activity in the “paper” gold/silver market, not in “physical” metals.
In fact, physical demand ticked higher when the markets were seemingly crashing, especially in China and India. However, the slide in gold and silver did prompt new interest in alternative physical investments with safe haven appeal– namely diamonds.
Rather than just serving as a timeless adornment for rings and necklaces, diamonds could very easily become a highly-valued “investment” asset in the years ahead
That’s according to Matt Manson, CEO of Stornway Diamond. Commenting in an interview with Kitco, Manson explains that “…the target in the future is to have 15-20% of world diamond demand be people purchasing diamonds for just this purpose, for physical diamonds as an investment vehicle.”
Rob Burton of Platlandia cited how “investment” diamonds (…those over 3 carats) were able to weather the 2008 downturn. He explains in an interview with Mining Weekly that “…a 3 ct diamond has increased 145% in price since 2008 and 5 ct diamonds increased by 174% in price between 1999 and 2011.”
Not everyone though believes diamonds are suitable for investing…
Rohin Dhar of Priceonomics for example claims that diamonds are in fact pretty common, and is an asset that loses “…50% of its value.” He cites diamond giant DeBeers as carefully restricting supply, which keeps the price high. In the end, Dhar explains that the market for diamonds is neither liquid nor fungible. Being able to resell something quickly is the real test of a liquid market.
If you buy a diamond at retail, it can be marked up anywhere from 100% to 200% according to diamond detractors. When you go to sell it, you’ll have to settle for less than wholesale.
Two competing views – what’s an investor to do?
Diamond Investing News recently ran an interesting piece where they consulted with Leibish Polnauer, president of Liebish & Co., and Colin Ferguson, founder of Rare Investment to address some of these points made by detractors.
One of the biggest problems surrounding the diamond investing question is that potential investors are looking at the wrong diamonds.
For example, Dhar’s claim that any diamond you buy has a 100-200% markup assumes you’re just running down to your local jeweler and buying some diamonds out of the case. According to Polnauer and Ferguson, doing this does not constitute an investment.
You don’t run to your local jeweler to buy gold and silver coins right?
Ferguson in fact explains that his Vancouver-based organization, which specializes in exposing investors to “natural fancy colored diamonds,” has “never recommended white diamonds for an investment.”
Polnauer and Ferguson though did caution that not all diamonds are suitable for investment. When asked, they explained that “pink diamonds or yellow diamonds above 2 carats, fancy intense or vivid, with great quality” are suitable for investment purposes.
One other concern shared by skeptics is the grade. One discussion board thread we recently visited provided some insight into the concern. If you take a look at our selection of diamond bullion melee, you’ll see we say I2 or higher.
It’s true that I2 isn’t the most desirable, but they’re pretty rare in the stocks we receive. In the interest of setting realistic expectations though, we say I2+ and price accordingly just in case you end up with an I2 grade diamond in your sleeve, despite the limited possibility.
Many investors are also concerned with how diamonds are valued. Unlike gold and silver, there is no simple valuation index.
Despite these concerns, diamonds can make for great investments, provided you purchase them from an experienced dealer with the right stocks
Diamonds for sale at ProvidentMetals.com are indeed investment grade diamonds. These are not stones you see at your local jewelry counter – these are diamonds intended to serve as an investment.
With that said, many novice investors may rush out to their local jewelry store and pay way more for stones than they’re worth.
One way to think about this is to compare diamond investing to numismatic and bullion coins. One thing these two share in common is the trap that many novice investors fall into – namely, paying much higher premiums.
If you’re an investor, you don’t want to buy a British Sovereign from the 1800s – its value is based on its rarity just as much as its metal content. Rather, you want to consider the U.S. Gold Eagle or Canadian Gold Maple – a coin that’s being minted today.
Diamonds share this dynamic in that you don’t buy the same diamond for investment as you would buy for an engagement ring.
This point is perhaps the most critical to understand about investing in diamonds…
Provident Metals’ selection of diamonds for investing is certified grade I2+ and conflict-free.
What are your thoughts?
Do you think diamond investing will grow in the years ahead?
Or, are diamonds not an investment at all as claimed by detractors?
We want to hear from you!! Please feel free to leave a comment below, or drop us a line on our Facebook or Twitter page today.
People do invest in gold and silver but now a days,diamond is a very good option regarding the same. The various processes or some true facts for such investing are really informative and useful.