Diamonds as an Investment
The Diamond Industry is Changing
Over the past 10 years, diamonds have become a wealth preservation asset.
WHY IS THIS HAPPENING?
In the past, marketing campaigns for the diamond industry were fully focused on diamond jewelry igniting the emotional drive of the consumer to purchase a diamond. In 1947, De Beers’ famous marketing campaign slogan, ‘A diamond is forever’, associated the gifting of diamond jewelry with an emotional, life event, such as falling in love, anniversaries, and the birth of a child.
This kind of marketing approach is not unusual and many industries were successful in creating an emotional demand among consumers to help sell their products. However, from a consumer’s perspective, buying diamonds is not equivalent to buying a pair of pants or shoes. Diamonds are very different. Diamonds are rare in nature and they have limited availability. For this reason, diamonds become part of the market of rarities, just like art pieces and other collectibles. Therefore, diamonds have been turned into an asset that can be purchased as part of a financial decision.
Times are changing and social norms are transforming as well. As a new generation becomes the main consumer – a generation that doesn’t buy diamonds as a status symbol, nor as a symbol of love – sellers have to shift their focus to promote diamonds as an investment; a rare collectible.
As a diamond purchase becomes more of a financial decision than an emotional one, buyers are not spending money on a gift, but on a family asset with the potential to serve the purpose of wealth preservation.
SHOULD YOU ADD DIAMONDS TO YOUR PORTFOLIO?
Diamonds are becoming hard asset alternatives, maximizing profits and liquidity.
What if you could store your wealth in a hard asset that not only offers strong price growth, but easy portability?
Over the years we have specialized in a certain class of diamonds called Investment Grade diamonds, comprising of mainly large and natural fancy color diamonds. We collect one-of-a-kind gems that are special due to their rarity, and we have become known as the source of these kind of jewels.
Today, as investors are looking to diversify their portfolio, they tend to purchase rare jewels as hard asset investments. Most of those jewels stay in the family for generations and are handed down as heirlooms.
Diamonds are a portable, alternative store of savings and wealth that are being increasingly utilized for diversification. In uncertain times, portability should be a part of an investor’s diversification. Diamonds are the densest and most portable form of savings and wealth in existence. Real estate is fixed, and gold is heavy, but a handful of investment-grade diamonds can be worth millions and fit in a pocket.
During the last few years, many wealth managers have begun making real assets available to their high-net-worth and affluent clients and the asset management industry is catering to this growing demand. The long-term, buy-and-hold investment time line is very attractive for families preparing for future generations. Others find that a short-term spin of purchasing and selling the right diamond yields high lucrative returns.
Investors are exploring the advantages that investing in diamonds can offer, such as tax advantages relating to long-term capital gains and tax breaks on inheritance of personal collectibles.
Over the last few years, auction prices for rare color diamonds have soared, sparking a huge increase in demand from investors. It is forecasted that by the year 2020, demand for these gems will surpass supply, driving the value of these rare gems even higher.