Buy Diamonds on an Exchange
You can also buy investment grade diamonds on a commodity exchange, such as theSingapore Diamond Investment Exchange (SDiX), which is the world’s first electronic exchange platform in physically settled diamonds. All diamonds listed on the SDiX are graded by the GIA and remain in storage at the Singapore Free Port or in Mumbai, India.
The potential for investing in diamonds is large, with only 5% of the global diamond trade – worth more than US$80 billion in 2014 according to De Beers – bought for this reason, rather than for jewellery, according to estimates by Bain in a Wall Street Journal article.
Be Prepared to Put Down Big Bucks
In these challenging economic times, the diamond market has also taken a hit, with the value of diamond jewellery sold to consumers in 2015 valued at an estimated US$79 billion – down from US$81 billion in 2014, according to De Beers’ 2016 Diamond Insight Report.
To hedge against market uncertainties, investors may want to consider buying diamonds at the higher end of the price spectrum, as these have the advantage of rarity.
William Lamb, president and CEO at Lucara told CNBC that diamonds priced at US$50,000 and above are generally regarded as investment-worthy. He said, “When we look at investment stones, we generally look at a price point of anywhere between $100,000 – $250,000. Those diamonds, because of their rarity, have always appreciated in value so there is a price point in terms of where the investors will start to see the sustainable growth and the store of wealth which is what an investment diameter represents.”
Consider Coloured Diamonds
For the ultra-wealthy, coloured diamonds could make for canny investments as they have surged in value due to their rarity. While pink, blue and red diamonds may cost 10 to 20 times as much as a similar high quality white diamond, says the New York Times, these precious stones also have a track record of offering double-digit returns.
However, while white diamonds can be graded based on the four Cs, there is no such scale for coloured diamonds, which makes them more suitable for long-term investments. “Coloured diamonds don’t have a price list or somebody managing the value,” says Yaniv Marcus, founder of the Diamond Investment and Intelligence Center, in the New York Times article. “It’s a true supply-and-demand free trade. It’s like real estate. It’s value is what someone will pay for it.”