Diamond Investing Secrets

Diamonds have always had a certain appeal to people of all ages. They have been treasured for centuries. Their popularity however, has risen steadily since the 19th century because of improvements in their cutting techniques, increased supply and successful advertising. Approximately, only 20% of mined diamonds are converted into jewellery while the other 80% is for industrial use in making drill parts, lasers and surgical equipment. Their prices fluctuate with world economy and global demand.

Some of the diamond investing secrets to look at is the diamond’s color, carat, cut, shape and clarity. Commonly called the four Cs, knowing what makes a great diamond great, is essential if one is to become a successful diamond investor. All of these factors influence the value of a diamond. Being familiar with these facets will equip one with vast knowledge to make a wise investment.

Another diamond investing secret that most investors take advantage of is the fact that there is no shortage of diamonds. This makes using diamonds a feasible investment. Most investors are also aware that buying a diamond is easy, while selling one can be problematic. Keeping this fact in mind makes investors especially cautious. Investors will usually ask for a written assurance that once they make a sale, there is a possibility to rebuy the diamond near the purchase price within an allotted period.

Another of the diamond investing secrets is the fact that diamonds are a highly concentrated asset. They can be carried anywhere and at all times as loose stones or jewellery.  A quality diamond of about 2 or 3 grams can be worth as much as gold weighing 220 pounds. This condensed value and portability makes them very versatile. Diamond investment also carries with it the benefit of complete ownership and financial privacy. This means diamonds are not directly affected by bond or stock markets. According to statistics, diamond prices have in fact had an annual price increase of about 15% on average since 1949.As one diamond manufacturer, “Diamonds hold their value well”. International diamond demand appears to rise and the boom of some economies like China has definitely contributed to this sharp increase in demand.

Investors are also aware that diamonds have low liquidity and knowing this diamond-investing secret helps them to calculate the worth of the investment. Since diamonds do not have a terminal market like other commodities, this reduces their effectiveness as investment mediums. Lack of a commodities exchange, central storage facility or a clearinghouse makes disposing of diamonds a hard catch. Another diamond investing secret has to do with the value added tax or a sales tax that comes with diamonds. To get good returns, the investor will need to do a calculation and see how much he or she will get after tax deductions and other overhead costs.

The lack of liquidity in diamonds has even enabled some investors to in effect, become traders rather than investors by advertising their willingness to buy and sell diamonds. Using some of these diamond-investing secrets has indeed proved to be successful for some.