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Diamonds: Not just a girl’s best friend, but also an investor's

“Diamonds have been the ultimate representation of life’s most meaningful demonstrations of love and commitment for generations.” – Bruce Cleaver, CEO, De Beers Group

Diamonds are precious gems, that are beautiful romantic tokens of love and coveted objects of desire. Diamonds are now also considered an investor’s best friend.

As per the Diamond Insight Report of 2018 presented by De Beers, the Global consumer demand continued to rise in 2017, driven by sustained growth in the US and increased demand in China. The diamond production also increased both in volume and value in the same year. The positive growth in sales and profitability across all segments of the value chain of the Diamond industry was substantiated in another 2018 Global diamond report of Bain & Company.

Global set up of the Sparkling industry

Major diamond mines are in Botswana, Zimbabwe, Namibia, South Africa, Angola, Russia, Canada and Australia. Major cutting and polishing countries of diamonds are Belgium, Israel, USA, India and China. Important centres of diamond cutting and trading are Surat (India), Antwerp (Belgium), London (UK), New York (USA), Tel Aviv (Israel), Amsterdam (Netherlands). More than 50% of the world’s production of rough, polished and industrial diamond passes through Antwerp. USA, Japan, China, Gulf region and India constitute approximately 70% of diamond jewellery sales.

India’s place in the diamond business

Production or mining of rough diamond in India is negligible. But India is world’s largest cutting and polishing centre for diamonds where 14 out of every 15 rough diamonds of the world are polished. Surat contributes more than 85% of diamond trading in India.

India is world’s 3rd largest diamond consumer with 8% market share. India ranks first with 16.7% market share in total export of diamond. India exports 95% of total imported rough diamond, as per statistics from the Gems and Jewellery Export promotion council (GJEPC)

A cut above the rest

Diamonds make for a considerably secure long-term investment. Diamond pieces are portable, as they are small in size, easy to store and carry. You can wear your investment and enjoy as long as you want without worrying about its durability. This sparkling gem is a concentrated way to store wealth.

Diamonds act as a hedge against inflation as they do not depend on financial markets. Use it as an alternate investment, just like wine and art it epitomises the owner’s pride if you have bought the right pieces.

Tough luck – the downside

Buying a diamond is very easy, but selling it may not be as easy as gold. The buyback policy of diamonds may vary from one jeweller to another. Plus, the price is not as transparent as gold, so there is a high probability that an ignorant buyer may end up paying a higher price than its actual worth. The market is also facing serious competition from lab grown diamonds that cost much lesser and look similar to an untrained eye.

Diamonds – not just a millionaire’s investment

If investors do their research well and deal with reputable companies only then investing in this precious gem is definitely worthwhile. While buying, keep the 5 Cs of diamond in mind – carat, cut, colour, clarity and ‘certificate’. Ensure you only buy diamonds certified by accredited and internationally recognised bodies like the Gemmological Institute of America (GIA) that independently assesses for authenticity and grades for quality.

Don’t buy them to resell immediately, as the value of diamonds increases only over a period of time. It’s a good idea to diversify your portfolio, split your budget into buying multiple high-quality diamonds. If you are buying a diamond with the objective of investment, then it’s better to buy a bigger size, say one carat and above, as smaller sized diamonds are unlikely to fetch good returns. And don’t forget to negotiate on price to get some discount, to avoid paying a higher amount.

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