The Disadvantages of Investing in Colored Diamonds

A Review of the Multi-Faceted Diamond Investment Color diamonds have become a popular commodity among investors for some time now, for a myriad of reasons, including their impressive …

A Review of the Multi-Faceted Diamond Investment

Color diamonds have become a popular commodity among investors for some time now, for a myriad of reasons, including their impressive price appreciation, compact size, and irresistible beauty. However, like a pancake, as flat as it may be, there are always two sides. It would be extremely unwise not to carefully examine the negative sides of diamond investments, and learn about the suggested solutions to the challenges presented. Here are some of the main points to consider.

Hard to Liquidate

One of the most important things to bear in mind in regards to investments is how and when one can go about liquidating it. Certain assets are fairly simple to liquidate. Unfortunately, this is not the case with diamond investments. Similar to other alternative investment assets, it cannot be sold with the click of a mouse. Rather, there will be a need to allow other investors or diamond enthusiasts an opportunity to connect with your stone. Having said that, the market is huge and many companies remain in business and flourish year after year because the buyers are among us all. There are many different tools available to research when it comes time to liquidate such as marketing through social media platforms, public auctions, online marketplaces and various diamond/jewelry companies.

High Risk of Theft or Loss

Since one of the most appealing aspects of diamonds as investment pieces is their small size, let’s view this from an alternative angle. Such small items can easily bet misplaced, lost, or stolen. Though this is important to consider, one should not avoid the investment opportunity because of the risk. They just have to approach it properly. Insurance will never fully replace a missing diamond. However, obtaining the utmost insurance policy through the most reliable insurance agencies is important. Keep your eye on the diamond by setting it on a piece of jewelry that you wear at all times or consider securing it away in a safe. Ensuring the diamond’s stability is a good way to protect yourself from lost or stolen goods.

Must Be Evaluated by an Expert

Diamonds in general fall into the many categories of items that must be evaluated by an expert before purchase, but this is even truer for color diamonds. As a result of how rare they really are, there are few that fully understand the diamond characteristics with enough depth to properly and adequately assess. Understanding this asset’s market, demands a vast amount of knowledge. Only an individual who has years of experience under their belt with color diamonds specifically should be trusted to help you make decisions regarding color diamonds and sales. Though it may be challenging to get your diamond evaluated by a trustworthy source, when you do, you will be rest assured that you have made a wise purchase or sale.

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Steep Transaction Costs

Due to the difficulty one encounters when attempting to liquidate his or her diamond assets, many turn to public auction houses for the convenience offered. However, this convenience comes at a cost. There are buyer fees as well as seller commissions that must be taken into consideration. Sometimes extra costs are well worth the money spent and in this case it could be the best money ever spent. Selling a diamond can be stressful, so anything that can help, even if it costs, should be considered.

No Dividends

Unlike other investment opportunities, there are no dividends with color diamonds. It does not matter how long you hold onto your diamond for, there are no yearly or quarterly incomes streams. Your diamond is only valuable once it is sold, through the right buyer and for an appropriate sum. Though you will probably have to wait a while to yield a significant return, knowing that ahead of time will prepare you for what is to come. Having that in mind will leave you patient, hopeful, and satisfied when that sale is finally made.

Building the Right Contacts

Whether you are in the market for a new diamond, would like to sell an older one, or are in need of some good diamond advice, there are a number of professionals happy to help. Read up on the current information offered online and find the ones willing to share their knowledge base. Locating dependable contacts from within the trade should be considered an absolute must, for it will expose you to further education, explanations to what is happening in the market, and can potentially help you develop leads down the line.

Setting yourself up ahead of time to deal with the challenges you will eventually have is the greatest way to ensure you are readily prepared. For investing in diamonds can lead to a strikingly bright future.

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.

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