You can find all sorts of arguments on the web about why people should invest in colored diamonds. These articles tend to focus on the unbelievable price performance over the past 15 years, excellent value retention, portability, and relative privacy. It should be no surprise then that colored diamonds are now purchased by far more individuals — both for jewelry, and as alternative investments — than ever before.
Still, before deciding to invest your hard earned funds into colored diamonds, it is important to understand what you're doing, perform some basic research and to build the right connections in the market. Here are some things potential investors need to know.
Basic Diamond Education
Colored diamonds are recognized as the most concentrated and portable form of wealth. However, that does not mean any diamond you purchase will appreciate, nor does it mean that you guaranteed to earn back your initial investment. Sure, they are all beautiful, but there is a lot of information one needs to learn in order to make wise decisions on which diamonds to buy.
The first step is to take two hours and read over all the basic colored diamond education you can find. This should help establish a base of knowledge for you. Here are some good sources to start with:
Type of stones
Concentrate your focus on rare stones with the highest probability of appreciation. Although a high market demand is important, since colored diamonds are a long-term investment you shouldn't mind waiting the additional time it takes to locate the right buyer - irrespective of the general market demand. Look for Pink diamonds, Blue diamonds, or even high quality Yellow stones, and ensure you get it from a reliable source who prices it accordingly.
For investment purposes, all 4Cs (color, clarity, cut, and carat weight) are important to consider. However, the color of the stone, and its intensity, should be the most important factor. Do not concern yourself with the shape of the stone, because if the diamond displays the color well, it likely won’t matter to the potential buyer. The rarest diamonds available are Red, Pink, Blue, and Violet. Also, extremely unique color intensities and color combinations, such as a Vivid Green-Blue or Intense Purple, will catch the eye of those looking to buy your stone in the future.
Consider Your Goal
If you are looking to quickly trade and turnover a profit, colored diamond investment probably isn't for you. Similar to a one-of-a-kind piece of art, finding a buyer may take time. If you can hold out over the long term, though, colored diamonds have proven to be a great investment. For example, in the late 70’s a man purchased the BVLGARI Blue Diamond as a gift for his wife who was about to deliver their first baby boy for $1.4 million. He sold that same diamond in 2010 at Christie’s New York for $15.7 million.
Auction prices for colored diamonds are public record. To fully understand how much these stones have appreciated in value, we encourage you to look through some of the past auction records. Like many other things in life, a little patience can often payoff.
Advantage Points to Ponder
Colored diamonds are the only asset class that contains all of the following advantage points:
- Well Established
Colored diamonds have been collected by the members of royalty, the rich, and famous for years. They are widely traded, internationally recognized goods.
- Long Term Growth
Ever since fancy colored diamonds have been purchased and traded by the general public, they have moved in only one direction. Even during the GFC of 2008, as people looked for tangible hard assets they could hold on to, colored diamonds continued to retain their value.
As a result of their size, colored diamonds can be easily transported from one place to another. Even in an emergency situation, they can easily be stored and concealed in ones pocket or clothing completely unnoticed.
- Multi-Function Asset Class
This point is better known as the “Fun Factor.” As well as being a truly exceptional investment opportunity, color diamonds make for the most fantastic and fashionable pieces of diamond jewelry around.
Diamonds require no reporting for tax purposes. They can be easily stored for safe keeping without ever sharing the information publically.
- Extremely Durable
Both figuratively and physically, diamonds are among the hardest elements on the face of the planet. Physically as a result of the atomic structure of the stones and figuratively as a result of its magnificent performance over time.
Build Your Connections
Last but definitely not least, if you want to be a successful colored diamond investor, you absolutely need to build the right connections within the industry. Finding someone familiar with fancy colored diamonds that you can trust is critical. A trustworthy individual who knows the market will help ensure that when purchasing the stone you pay a fair price, and when selling the diamonds you receive the same. If they are not interested on their own to buy the stone, they can often put you in contact with other potential buyers. They will better identify market trends that may affect the prices realized, and can sometimes give more accurate advice as to where the market is headed.
Diamonds are a world of their own, and understanding each and every characteristic of the stone shouldn’t be done by someone inexperienced. When the time is right, do your research, define your goal, and get in touch with a professional you can trust. Perhaps it’s time to consider coloring up your portfolio.
This article was written by Benji Margolese, Marketing manager of Leibish & Co. Founded in 1979, Leibish & Co. is the world's premier online resource for natural fancy colored diamonds. Based in Ramat Gan, Israel, and with customers around the globe, Leibish enjoys an unparalleled reputation for integrity and service. The Company offers a wide array of GIA-certified colored stones as well as a unique collection of multi-colored diamond jewelry designed in-house such as fancy yellow diamonds. The Leibish & Co. website features a comprehensive knowledge center for the Fancy Colored Diamond Industry, including informative articles about diamonds as an investment and also offers a direct purchasing channel for global buyers.