(Newswire.net — September 19, 2020) — Did you know that nearly 90 percent of Americans now anticipate a recession due to current events, from the pandemic to violent protests and the upcoming election? Of course, economic dips and spikes are nothing new.
Since 2008, the global economy has borne witness to many fluctuations, resulting in challenging times. Grounded in these experiences, today’s investor seeks out real alternatives.
Although gold and silver get most of the lip service, more investors are turning their attention to diamonds, both white and natural colored. If you’re new to the market, you may wonder how to invest in precious gems.
Fortunately, it’s easier than you think. Here’s our ultimate guide to diamond investments and how to make them work for you.
Should I Invest in Diamonds?
Let’s start with a question that we get a lot, “Should I invest in diamonds?” The answer depends on various factors, including your investment style, short- and long-term goals, and ability to stomach risk.
That said, the benefits of investing in diamonds are many. They include the fact that diamonds come with:
- Durability
- Convenient storage
- Protection from inflation
- Physical ownership
- Multiple uses
To better understand these advantages, let’s examine each one more thoroughly.
Durability
The durability of diamonds is world-renowned. They won’t break or wear because they represent the hardest substance on the planet after wurtzite boron nitride.
Of course, you’ll have to make sure you don’t lose them. But there’s insurance to protect against that.
Convenient Storage
Diamonds also take up little room. They’re an excellent means of transfer and one that’s been around since time immemorial.
You can easily keep a stone with $1 million in the tiniest of safes. This makes holding them unobtrusive.
Protection from Inflation
Would you like to invest in a substance that’s impervious to the stranglehold of inflation? Then, diamonds represent one of your best options. Along with real estate, silver, and gold, these physical holdings generally appreciate with inflation.
Even if you don’t want to invest in diamonds for esthetic reasons, they prove an excellent way to safeguard your money against devaluation.
Physical Ownership
There’s something to be said for an investment that you can physically possess. Unlike stocks, which only appear tangible in terms of the reports you receive, diamonds come with physical ownership.
As a result, you can look at them whenever you like, hold them, and even wear them. In other words, you’ll have a greater sense of peace and confidence with this type of investment than stocks located somewhere in the aether.
Multipurpose Uses
The last point touches on our next one. Diamonds represent multi-purpose investments. Why? Because of their durability and value.
They don’t wear off, get scratched, or chip, and there’s no such thing as a “second hand” diamond. So, you can turn your investment into wearable jewelry without any loss in value.
Tips on How to Invest in Diamonds
You’ve got a better idea of why diamonds represent such an attractive investment. Now, let’s dive into practical tips for getting the most for your money.
For starters, know that diamonds should only make up a small portion of your overall portfolio. Why? Because they fall into the category of alternative investments.
Because diamonds are physical commodities, you can purchase them anywhere. Some investors even acquire them online.
Keep this advice in mind as you start exploring the market:
- Set a budget
- Get knowledgeable
- Diversify your holdings
- Let logic guide all purchases
- Research the value of diamonds
- Understand the pros and cons of mounted vs. loose gems
- Know what you’re buying
- Ask plenty of questions
- Always look for affordable options
We need to take a closer look at each one of these tips so that you have a thorough understanding of how investing in diamonds works.
Set a Budget
Diamonds have enthralled and captivated generations of human beings with their clarity and beauty. That’s why they remain such a popular investment item. That said, it can be easy to get seduced by specific jewels.
That’s why you must set a budget ahead of time and stick to it. While you should expect to pay more upfront for diamonds than stocks, stay within a budget that’s reasonable to you.
Get Knowledgeable
Before you start investing in stones, make sure you have a thorough grasp of diamond purchasing categories. That means familiarity with the four Cs of diamonds:
-
Clarity
-
Color
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Cut
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Carat weight
What if you’ve decided to invest primarily in colored diamonds? Then, explore the ins and outs of investing in these stones before making any purchases.
Diversify Your Holdings
Just like your portfolio, think diversity when it comes to diamonds. Instead of putting all your eggs in one basket by purchasing one diamond with your total budget, think two or even three.
Besides splitting your funds across more than one jewel, avoid purchasing the same kinds of stones. Explore colored diamond options. From pink to green and blue, you’ve got plenty of choices.
Since you can only guess which type of diamond will rise most in value moving forward, this approach lets you hedge your bets.
Let Logic Guide All Purchases
Some diamond investors will counsel you to stick with rare purchases. After all, why go with something that everyone else has?
Simultaneously, others will argue that pieces should be in great demand. Who’s right?
Let logic guide you when it comes to purchasing diamonds. Yes, rare pieces put you in a league all your own, but if demand proves low, you’ve got a problem.
For example, think a round diamond or cushion-cut over a marquise. No matter the color of the diamond, this cut will fetch a higher price.
Also, consider other factors such as clarity. For instance, a VS diamond will do better than one with I2 clarity.
Research the Value of Diamonds
Although this point might seem too obvious to list, you’d be surprised how many investors buy rashly. You must have a thorough grasp of the market before making purchases.
There have never been as many online diamond retailers as there are today. That means you have no excuse when it comes to price comparisons. So, hop online and start checking the numbers.
Once you feel comfortable about what typical values look like, you’ll be in a much better position to get a great deal.
Learn more about diamond valuation and check out the collection at Crown Gold Exchange.
Understand the Pros and Cons of Mounted vs. Loose Gems
Earlier, we highlighted the multi-purpose nature of diamonds, suggesting that you can mount and wear them before deciding to liquidate them. While all well and good, keep one thing in mind. Mounting a diamond won’t contribute to its value.
Why not? Because people who purchase diamonds have unique plans for them.
The likelihood they’ll want the same setting you had is very low. Assume you’ll get no money for the mounting.
That said, an excellent mounting will still show off your diamond to its best advantage. When done right, it emphasizes the color while hiding inclusions. No wonder mounted diamonds auctioned through Sotheby’s and Christie’s often get the highest prices!
Of course, grading a diamond proves nearly impossible when it’s mounted. Don’t be surprised if an experienced diamond investor requests its removal.
Should you indulge such a request? Absolutely, but you’ll want to make it contingent upon their purchase if everything checks out. We also recommend only investing in diamonds with GIA certificates, which nixes this problem altogether.
Know What You’re Buying
What is a GIA certificate, and why do you need it? It proves that a diamond has undergone a rigorous grading process through GIA, an independent, nonprofit group. GIA educates gem professionals, sets diamond quality standards, and conducts gem research.
Remember when we talked about the four Cs of diamonds? GIA invented these categories. After examining a stone, they release a grading report that addresses each of the Cs based on various scientific procedures.
The problem is that not all diamonds are GIA graded. So, you’ll want to double-check the standards used to evaluate potential investments carefully. After all, you’ll need that GIA certificate again when it’s time to sell your purchase.
Ask Plenty of Questions
Conduct copious research before making diamond investments, and ask lots of questions.
Who should you consult? Get a hold of a diamond consultant or expert. Or use a diamond forum to seek out more information.
Social networks are filled with those ready to offer their expertise. Remember that the only “stupid” question is the one left unasked.
Look for Affordable Options
Another essential strategy for getting the most bang for your buck? Buying diamonds as cheaply as possible. Just don’t fall into the trap of purchasing cheap diamonds in the process.
On the contrary, look for the highest value possible at affordable prices. To do this, skip out on middlemen and women.
Instead, buy as far up the distribution chain as possible. Don’t go to retailers. Instead, head straight to diamond manufacturers. Many now have online stores where you can purchase directly.
It’s never been easier to invest in these precious stones while avoiding unnecessary fees.
Buying Diamonds Online
We’ve mentioned using the internet to purchase diamonds a handful of times in this article. So, let’s address this topic further. After all, if you don’t know what you’re doing, buying online could come with more risk than you bargained for.
Besides following the basic guidelines above, you should only purchase diamonds online from registered diamond manufacturers and dealers. And make sure you see a picture of the actual diamond before clicking “Buy.”
Keep your eyes open for hidden costs, and always use Paypal for the transaction. Why? Because Paypal qualifies merchants, a safeguard you want in place.
Make sure that you have a thorough understanding of the company’s return policy. Most companies offer a 14-day money-back guarantee. While excellent protection, consider how much it could cost for return shipping.
If you prefer not to use Paypal, ensure that the company you work with has secured payment options. For example, make sure you’re on an HTTPS URL, which is encrypted and secure, unlike HTTP.
Keep an eye out for safety seals such as Symantec SSL or VeriSign. You can check on each of these company’s websites to ensure the diamond seller remains protected by the service.
Risks Associated with Diamond Investments
Of course, no guide to investing in diamonds would be complete without addressing the three primary risks associated with diamond purchases. First, price transparency can be an issue.
From the stock exchange to precious metal exchanges, most investment merchandise comes with a price index. Such is not the case with diamonds. Sure, the Rapaport price list helps, but it doesn’t provide enough information.
Although used as a benchmark, getting your hands on a copy can prove challenging. In many cases, it isn’t very beneficial once you do.
Why not? Because Rapaport only covers the most basic characteristics of each gem when it comes to pricing.
Because the market is highly variable due to supply and demand, don’t rely on Rapaport for an accurate valuation. The report can have a 10 percent margin of error, which is hefty, and it only deals only in white, colorless diamonds.
Second, remember that it’s generally much easier to buy a diamond than to sell one. Many retailers remain tough negotiators, and companies who buy diamonds lowball sellers.
You can also go the auction route but know upfront that venues such as Sotheby’s and Christie’s prefer rare gems. They also charge auction fees that many find expensive.
Third, consider diamonds to be long-term investments. They won’t devalue rapidly. Conversely, don’t expect them to appreciate dramatically over the short-haul.
Invest in Diamonds in 2020 and Beyond
Are you ready to invest in diamonds in 2020 and beyond? There couldn’t be a better time to safeguard your money from inflation while diversifying your portfolio.
Ready to find out more about how to protect your investments in 2020 and beyond? Browse our articles now to get the information you need to stay smarter, happier, and richer.