Investing in Diamonds
Is diamond a good investment?
Diamonds are a good investment for several reasons. More recently, these precious ‘everlasting’ gemstones have already proven their security aspect for investment purposes, as they offer protection against any credit risks of banks or financial institutions, currency fluctuations and inflation. But not only are diamonds considered as secure investments, moreover the macro-economic law of supply and demand indicates a structural increase of the diamond prices on the world market.
These are the five main reasons which, according to our expertise and experience, explain why investing in diamonds is - from a diversification perspective - an important contributor to your investment portfolio.
Intrinsic and tax friendly profitability
Exceptional emotional value
What are the advantages of Investment Diamonds?
Diamonds are especially suitable as movable assets, because they carry some essential advantages:
Protection against inflation, market collapse, currency reform
Anonymity (no registration required)
World-wide convertibility, meaning that diamonds are - together with gold - the only international accepted alternative currency which keeps the same value all over the world
No taxes on value gains (= tax free betterment)
Hardly no maintenance costs
Price independence - prices are independent of government laws and hence diamonds better retain their values, even during recession
Robust price performance - historically diamonds have recovered well from price and economic slumps.
Diamonds carry an important emotional value, lasting multiple generations.
Theoretically a (world) war could devalue any currency, real estate can lose its value, new technologies can replace resources, competition can ruin companies, but nothing can systematically undermine the long term value of diamonds. While most diamond mines are nowadays known, with time diamonds will become even more rare, just as any natural resource will. This fact carries the key fundamental boosting effect on the long term value of diamonds.
Diamonds are - together with quality artworks - one of the very few goods that combine its practical use with its investment aspect. Meaning: while you can wear your diamonds set into/as jewelry, simultaneously they symbolise your most secure investments.
Strong supply & demand - predicted widening of the supply demand imbalance underpins price with a strong chance of price acceleration.
Finally, while most of the other luxurious goods, such as cars, furniture, furs, etc lose their value over time, this is not the case with diamonds, precisely because of its durable/unbreakable nature.
Diamonds are mostly considered as a secure investment, but on top they give you also the feeling of beauty, luxury and belonging. No other financial investment can offer you that much!
When investing to gain very high or speculative returns, you shouldn’t invest in diamonds.
If you want a very secure investment, which keeps and strengthens its underlying value, and which you can convert at any given time, diamonds are the best for you.
How do diamond prices evolve and how do they respond to crises and crashes?
Diamond prices have the tendency to increase over time, whereby the overall consensus is that this upward price movement is very likely to become even more accentuated.
When you look to the price increase gradation within different diamond sub segments (below 1ct, between 1 to 3 ct, above 3 carat, above 5 carat, etcetera), we notice that the upward slope is positively correlated with the diamond size (carats). This is logic: whereas it is clear that over time diamonds will become even more scarce than they are today, this trend will be even more applicable for the larger sizes. As these larger diamonds are becoming more and more rare, their correspondent prices rise exponentially. This excessive pricing subsequently leads to an exclusive and very limited buyers’ segment, meaning it would require more time to resell such diamonds at a desirable price. That’s why BOYET advises (from a reselling point of view) to invest in the diamond categories between 1 to 5 carat: for these types of investment diamonds the combination “stability, liquidity & profitability” is optimal.
Another important fact is that diamonds are as a whole ‘crisis resistant’. Whereas all the traditional investment portfolio component (shares, bonds, real estate, future contracts) crashed during the financial crisis of 2008, polished diamonds have proven to be relatively more resistant to this crisis. Of course, diamonds are not totally immune to price declines. Peak to valley, between September 2008 (when the fall of Lehman Brothers triggered one of the biggest financial & banking crises of all times) and October 2009, diamond prices declined on average by about 16,5%. Gold fell more than 21%, platinum by 59%, the S&P 500 dropped 52%, the Shanghai stock exchange plummeted by more than 69%. Everything fell – and recovered – at a somewhat different timeline. None was immune to this upsetting crisis, but all lost more than polished diamonds. This remarkable crisis resistance of diamond prices has also been apparent in earlier crises (e.g. end of the nineties, 1987, etcetera). Only in the early eighties of last century, diamonds prices have undergone a steep decline, but this was due to a worldwide distorted & speculative diamond financing mindset, with banks financing artificially inflated stocks instead of sound and trade related business. Nowadays the diamond finance industry is significantly modernized and better equipped in assessing the stocks & trade receivables of diamond companies, making a remake of this period very unlikely.
Summarized: the diamond price index shows a structural upward inclination with an solid & inherent crisis resistance, making diamonds suited for investment purposes.
How do the prices of diamond evolve?
Recent studies project a further increase of the diamond prices for the coming decades. This anticipated price increase is mainly triggered by the combined effect of favourable supply and demand trends:
Increasing demand in emerging markets such as India, China, Brazil and Russia
These newly developed countries are characterized by an exploding economy and prosperity, resulting in the creation and/or extension of a social layer: middle class. The rapidly growing middle class and their growing purchasing power have a direct upward effect on the pricing of diamonds on the world market.
Decreasing supply due to limited natural resources and a depleting mining capacity
The global mining of diamonds strongly decreases in comparison to previous years. For the current operational diamond mines, it’s certain that the operating costs will structurally increase, because exploitation and digging activity is forced to descend to deeper layers. And if new diamond mines would be discovered, operating costs will be higher, due to the fact that these new mines will be most probably located in hardly accessible geographical areas.
In conclusion, due to this favourable supply and demand trends, diamond prices are most likely to increase over time.
What are the differences between gold & diamond as investment subjects?
Gold and diamond are often analytically compared for investment purposes by potential investors.
Diamond and gold are valuated in a completely different way. As each diamond is a unique piece with its own specific characteristics concerning carat, colour, clarity and cut, the valuation happens in a totally different way compared with gold, as this natural resource is a homogeneous substance.
How to examine if a diamond is fake or real?
A fake diamond is heavier than the real one when they are the same size. In addition, a fake diamond does not have the same brilliance as a real diamond. In time, it becomes duller, contrary to a real diamond, which never loses its brilliance.
A fog test is also a useful method to distinguish the genuine diamond. A fake one doesn’t repel heat immediately unlike the real one.
As a service to our customers, we can also use a diamond tester at our BOYET DIAMONDS offices to verify if the stone is indeed a diamond.
What diamonds does BOYET DIAMONDS recommend?
To maximize the potential return on future resale, our experts strongly recommend high quality diamonds with the following specifications for carat, color, clarity, cut (4C’s) and certificate:
Thanks to its worldwide established network, BOYET DIAMONDS is able to purchase every possible diamond (a client may request) at the source. BOYET DIAMONDS also offers quotations on demand for intensely naturally coloured diamonds, such as blue, yellow, pink or red.
Which different shapes of diamond does BOYET DIAMONDS offer for investment purposes?
Diamonds come in different shapes. Each shape has different and unique characteristics that come to determine its specific quality. In most cases, BOYET DIAMONDS uses the two following diamond shapes for investment purposes:
The round brilliant cut diamond is by far the most popular and most researched diamond shape available today. This shape has set the traditional standard for all diamond shapes. In addition, a round diamond will typically give you more flexibility in terms of balancing cut, colour, and clarity grades while still getting the fire and brilliance you want.
The princess diamond has a square rectangular shape. Princess-cut diamonds can vary greatly in how square or rectangular they are. The cut requires more weight to be directed toward the diamond's depth in order to maximize brilliance. Depth percentages of 70% to 78% are not uncommon with these diamond shapes.
On demand, BOYET DIAMONDS also offers other diamond shapes such as pear, oval, heart, emerald, radiant or cushion.
What are Hearts and Arrows?
The Hearts and Arrows pattern refers to a symmetrical light pattern visible using a special viewer in diamonds cut within certain narrow specifications.
The brilliant cut diamond has 57 facets. When all these facets are in harmony, the result is a repeatable and nearly perfect pattern of
eight symmetrical arrows when the diamond viewed from the top and
eight symmetrical hearts when the diamond is viewed from the bottom.
Experts in the diamond industry disagree on which diamonds should receive the ‘Hearts and Arrows’ label. This is because there is no industry standard, therefore one person or company can label a diamond as ‘Hearts and Arrows’, while another may not agree. In the diamond industry, the term ‘super ideal’ is a common term that is used to describe diamonds that have perfect optical symmetry. Most diamonds with an overall cut graded by GIA as ‘3 x Excellent’ (with Excellent cut, symmetry and polish) or American Gem Society as ‘0’ (or ‘Ideal’) will have some sort of hearts and arrows pattern when seen through a H&A viewer, but the pattern may not be perfect. Most experts in the diamond industry believe the Hearts and Arrows pattern should be graded, and only those with the highest grade should be called Hearts and Arrows. Those people also believe that the presence of the Hearts and Arrows pattern alone is not enough to be considered a Hearts and Arrows diamond; the pattern must be perfect to fit within certain guidelines.
Often the presence of the Hearts and Arrows pattern is taken as confirmation that the diamond is well cut. This is not necessarily true. In a round diamond, a clearly defined set of 8 hearts and 8 arrows is a sign of excellent optical symmetry, an important component of cut. As such, its appearance is a very likely a sign of superior cut, but not a guarantee.
The laboratories IGI and HRD grade Hearts & Arrows as an ‘optimal cut’. IGI even has a specific certificate. GIA does not recognize Hearts & Arrows as a component of the cut grade, this party because of the fact that the presence of the pattern is not a guarantee of the cut. But, GIA certificates will sometimes contain a note stating ‘Laser Inscription: H&A.’ This note on the GIA certificate simply indicates that ’H&A’ was laser inscribed on the girdle of the diamond before it was graded by GIA. Neither the ‘H&A’ laser inscription, nor the corresponding note on the GIA certificate, is an indication that GIA observed the Hearts and Arrows pattern on the specific diamond.
The diamond industry has not established firm criteria for evaluating diamonds on Hearts & Arrows. For consumers looking to purchase diamonds with this specification and cut quality, it is best to review the Hearts and Arrows images under a H&A viewer.
Our BOYET experts can answer all other additional questions that you may have, and, if you like, search for diamonds on your behalf that match your criteria.
Browse the best online geek pranks and trick your classmates and colleagues!
Do the BOYET DIAMONDS come with certificates and/or laser inscription?
BOYET DIAMONDS offers only classified & tested diamonds, which are certified by the world most renowned grading institutes. Each polished diamond (above 0.30 Ct) carries its own identity via a unique certificate. This is a laminate-protected document that summarizes a diamond's vital information based on the 4 C’s and describes precisely its characteristics that help determine its value. A certificate does not give any indication of a diamond's monetary value. The most renowned certificates of the diamond industry are:
GIA: Gemological Institute of America
Furthermore all diamonds purchased from BOYET DIAMONDS for investment purposes, starting from 1 Ct, are available upon request with laser inscription of the certification number in the diamond.
More information on naturally coloured diamonds
Natural fancy diamonds are very exclusive and rare, even rarer than colourless diamonds. A true natural coloured diamond has been gifted to us by nature and can be found in a variety of colours, from pink to yellow to brown and even red. Fancy coloured diamonds are only to be found in very limited areas.
Only one in every 10,000 diamonds has a natural colour and is therefore called a fancy coloured diamond. Fancy coloured diamonds are purchased almost exclusively for the intensity and distribution of the colour of the diamond. Criteria considered when purchasing a white or colourless diamond, such as cut proportions and clarity, are less important when purchasing a fancy coloured diamond.
The cause for the colour in coloured diamonds varies from colour to colour. For instance, yellow diamonds owe their cheerful hue to the presence of nitrogen. Blue diamonds, on the other hand, contain boron, which causes a blue colour. The cause of pink and red diamonds' remarkable colour is unknown for certain, though speculations state that they are variations of the result of fractures in the crystal lattice. The rarer the colour, and the more intensely the colour shows, the higher the value. Yellow and brown diamonds are most commonly found, while red, blue, and green diamonds are among the rarest of all fancy colours.
Colour intensity, namely the deepness or richness of the colour, is the most important parameter when purchasing a fancy coloured diamond. The more intense the colour, the rarer and more valuable the diamond will be. Diamonds with lighter colour intensity levels such as faint, very light, light, fancy light, and fancy are more common than diamonds with the richer intensities of fancy intense, fancy vivid, and fancy deep, and thus less in value.
All fancy coloured diamonds of BOYET DIAMONDS are 100% natural, and not treated.
After colour grade, carat weight has the most impact on price for fancy coloured diamonds. One carat equals to 0.2 gram. The word "carat" comes from the "carob" seed, the original unit of measure for diamond traders. As the carat of a diamond increases, the diamond's price increases at an exponential rate because the rarity goes up like this. Fewer than one in one million mined rough diamonds are large enough to produce a polished 1 carat diamond. The diamond prices for fancy coloured diamonds rise exponentially with carat weight.
As diamonds are formed deep within the earth, under extreme heat and pressure, they often contain unique birthmarks, either internal (inclusions) or external (blemishes). Clarity grading goes from LC (loupe clean) or IF (internally flawless) to I3 (included). The higher graded on the clarity scale, the more precious and special, and the higher the price.
Due to the nature of fancy coloured diamonds, clarity is less important than it is in their colourless counterparts. This is true because inclusions tend to be masked by the diamond's colour.
Fancy colour diamonds are primarily cut to emphasize their colour. This contrasts with colourless diamonds, that are cut to maximize their sparkle or brilliance. While fancy coloured diamonds still exhibit brilliance, colour is the most important characteristic considered when they are being cut.
Shape refers to the overall outline of the diamond when viewed from the top (e.g. round, princess or cushion). A lot of fancy coloured diamonds are cut into non-common shapes to enhance their natural colour. Because of the rarity of fancy coloured diamonds, not all colours are available in any shapes at any given time.
Purchasing at BOYET
Why does BOYET DIAMONDS have the best price-quality ratio for investment diamonds?
We invest in efficiency and do everything possible to avoid unnecessary intermediaries. No expensive marketing campaigns, luxurious offices and retail outlets. Our investment will be immediately seen in the BOYET diamond.
BOYET DIAMONDS is based in Shanghai, renowned since 2016 as world centre of the diamond trade. Whole diamond trade takes place in Shanghai. The families behind BOYET DIAMONDS have selected their diamonds directly from the best suppliers of the world since over 4 years.
BOYET DIAMONDS buys its diamonds directly from the source (via a carefully developed network of “niche” diamond manufacturers, mainly located in South Africa ,Russia Surat, India), and sells its investment diamonds and exquisite diamond jewellery collection on-line and in its offices to the client.
Direct buying and selling, avoiding the middleman, combined with a strict stock management, allows BOYET DIAMONDS to offer the best and largest selection at the best price-quality ratio.
In short, BOYET DIAMONDS promises its clients that its prices are in direct correlation with the quality of the products on offer.
To whom BOYET sells its investment diamonds?
Being a fundamentally B2C oriented company - selling its branded diamond jewellery to consumers spread over more than 8 countries - BOYET has a natural inclination to sell its investment diamonds to private individuals or private investment offices. Having said this, we would like to point out that, due to its unique buying capacity (at the very source) & the subsequent exceptional price quality, BOYET is also regularly approached by traditional jewelers across the world to fulfill their diamond requirements.