Diamonds investments route

February 28,2022

By lfat Oved

Diamonds are lately becoming a highly sought after route for investors. Although this route is new, it makes sense when analyzing the diamond market in recent years. “We are being approached by money managers of very wealthy clients, or the wealthy clients themselves, who are all considering investing a small percentage of their portfolio in diamonds. This is something we have never seen in the past”, says Henri Barguirdjian, CEO of luxury jewelry Graff Holdings, which was published in an interview by CNBC. “These people have never considered diamonds as an investment. They considered them as something very beautiful and nice to own, it made their wife happy and it’s gorgeous to look at but they always neglected the financial aspect of the transaction. And now they see what has happened with the price of diamonds and they realize it is not so much a bad idea”.

The sudden change is due to a growth in the global diamond market, owing mainly to higher demand in China and India. Not surprisingly, higher diamond prices and increased demand have boosted global diamond stocks as well. “We’ve seen much more demand than we can supply, especially for very expensive diamonds which is where we operate,” noted Gem Diamonds Ltd. CEO Clifford Elphick in an interview on Bloomberg.

Investment Funds Specializing in Diamonds

As the Chinese market grows, the new Chinese millionaires, whose average age is 39, are turning to niche investments to diversify investment portfolios based on more traditional assets and hedge funds against inflation. China has a growing number of investment funds specializing in wine, diamonds and even musical instruments. These so-called “passion funds” offer significant long-term returns.

Alternative to Gold

Experts report that an increasing number of investors have been looking to diamonds as an alternative to gold as another safe shelter for their money, amid financial uncertainty and economic and currency instability

Gold and diamond prices have historically moved in the same direction, with diamonds generally trading at a modest premium to gold. But since the 2008 market crisis gold prices have gotten ahead of diamonds. Diamond prices have been playing catch-up this year and experts predict they will outperform gold and return to a premium position by 2013.

Fancy Investments

And what is the role of fancy color diamonds in this new rush? Some colors, sizes and clarities (quality) are much rarer than others and it is speculated that these diamonds will have much higher prices in the future. Take one of the rarest of all fancies – the Pink colored diamond. “Buying a pink diamond is like buying a painting by Pablo Picasso while he was alive. You know at some point they will run out and increase in value”, says jeweler John Calleija from Australia.

More than 90% of the world’s pink diamonds come from Rio Tinto’s Argyle Mine in Western Australia, which is in the twilight of its lifespan. Supply is expected to dry up by 2019, making pink diamonds up to 50 times more valuable than an equivalent white diamond.

Diamonds are lately becoming a highly sought after route for investors. Although this route is new, it makes sense when analyzing the diamond market in recent years. “We are being approached by money managers of very wealthy clients, or the wealthy clients themselves, who are all considering investing a small percentage of their portfolio in diamonds. This is something we have never seen in the past”, says Henri Barguirdjian, CEO of luxury jewelry Graff Holdings, which was published in an interview by CNBC. “These people have never considered diamonds as an investment. They considered them as something very beautiful and nice to own, it made their wife happy and it’s gorgeous to look at but they always neglected the financial aspect of the transaction. And now they see what has happened with the price of diamonds and they realize it is not so much a bad idea”.

The sudden change is due to a growth in the global diamond market, owing mainly to higher demand in China and India. Not surprisingly, higher diamond prices and increased demand have boosted global diamond stocks as well. “We’ve seen much more demand than we can supply, especially for very expensive diamonds which is where we operate,” noted Gem Diamonds Ltd. CEO Clifford Elphick in an interview on Bloomberg.

Investment Funds Specializing in Diamonds

As the Chinese market grows, the new Chinese millionaires, whose average age is 39, are turning to niche investments to diversify investment portfolios based on more traditional assets and hedge against inflation. China has a growing number of investment funds specializing in wine, diamonds and even musical instruments. These so-called “passion funds” offer significant long-term returns.

Alternative to Gold

Experts report that an increasing number of investors have been looking to diamonds as an alternative to gold as another safe shelter for their money, amid financial uncertainty and economic and currency instability

Gold and diamond prices have historically moved in the same direction, with diamonds generally trading at a modest premium to gold. But since the 2008 market crisis gold prices have got ahead of diamonds. Diamond prices have been playing catch-up this year and experts predict they will outperform gold and return to a premium position by 2013.

Fancy Investments

And what is the part of fancy color diamonds in this new rush? Some colors, sizes and clarities (quality) are much rarer than others and it is speculated that these diamond will have much higher prices in the future. Take one of the rarest of all fancies – the Pink colored diamond. “Buying a pink diamond is like buying a painting by Pablo Picasso while he was alive. You know at some point they will run out and increase in value”, says jeweler John Calleija from Australia.

More than 90% of the world’s pink diamonds come from Rio Tinto’s Argyle Mine in Western Australia, which is in the twilight of its lifespan. Supply is expected to dry up by 2019, making pink diamonds up to 50 times more valuable than an equivalent white diamond.