What to know when investing in Diamonds
People are always looking to find investment opportunities to generate income and for saving for the future.
Investment opportunities can be identified in real estate, on the stock market, on the online trading of financial instruments , on commodities like oil and gold.
An asset that people can invest is diamonds. Everyone knows that diamonds are valuable but few people can understand their unique benefits, characteristics, quality and marketability.
Here is what to know when investing in diamonds:
1) Diamonds price is based pure on supply and demand. And as stones become harder and more costly to extract, very little new supply is expected.
2) The diamond industry is not just the business of a single company as many people believe.
At one time, DeBeers group controlled the diamond industry but that came to an end early in 90’s. In our days there are a number of miners and traders in the diamonds industry. The ten companies who have the biggest impact on the worldwide trade of diamonds are:
1. De Beers
3. Rio-Tinto Diamonds
4. Debswana Diamond Company, Ltd.
5. Dominion Diamond Corporation
7. Petra Diamonds
8. Gem Diamonds
9. Anglo American plc
10. Rockwell Diamonds
3) The “road” of a diamond from the time of mining to the retail is on a regional basis.
That means that, some countries are rich in sources, other countries have the technology and expertise in the diamonds processing, where other countries are the most consuming for diamonds.
4) The world’s top diamond producing countries are:
- Russia. Russia is the world’s largest producer and exporter of diamonds by volume, holding what it is believed the world’s largest resources.
- Botswana. Botswana is the home base of De Beers, the largest company in the diamonds industry. In terms of value, Botswana is the leading country and the second largest in terms of volume.
- Democratic Republic of Congo (DRC). The third largest diamond-producing country by volume is Democratic Republic of Congo. DRC has a long history in the diamond mining industry.
- Australia. Australia is the leading producer of color diamonds.
- Canada. Canada plays important role in the diamond industry. It’s the fifth largest diamond-producing country in the world. Canadian diamonds are famous for color improvement through the polishing process.
5) Diamonds are billions of years old, lay deep down the ground and carried to the earth’s surface by deep volcanic eruptions.
Diamonds are made of 100% from carbon. The heat and pressure below the earth’s surface make carbon to bond and create the diamonds.
6) The word diamond derives from the Greek word “adamas,” which means invincible or indestructible.
7) Due to lack of price transparency, when someone is interesting to invest in diamonds must seek advice from an expert who has access to international dealer prices and markets. This will ensure a fair market value pricing.
8) The value of a diamond is based its size, cutting, clarity and color.
9) Diversification in diamonds investment strategy is a wise choice. An investor is better to invest in different sizes of diamonds.
10) Always invest in diamonds grade by authorized institutes.
Diamonds are considered as a secure investment, resistant to economic crisis.
As a commodity, diamonds are fluctuate less than other commodities which are often affected by economical and political uncertainties.
People interested to invest in diamonds must have in mind that selling diamonds is difficult. There are not many channels through which someone may sell diamonds.
A specific Auction venue is an option to buy and sell diamonds but most of them deal with large, high in price diamonds.
Investing in diamonds is an investment like all other investment opportunities and definitely bear a substantial risk.
So, anyone eager to invest in diamonds must have in mind that investing is always a gamble, therefore, don’t gamble with what you can’t afford to lose.