I came across a CNBC story recently about the current state of buying diamonds for investment purposes, a trend that has piqued the interest of high net worth individuals worldwide over the past several years as well those looking for a safe place to put their money during these uncertain economic times. The article takes the position that investment grade diamonds (usually rare, fancy colored stones) are only a sensible investment option for those educated about this subject and diamond industry professionals who have an astute awareness of how to value a stone as there is no authoritative pricing index that exists in today’s market.
I would tend to agree with their advice, but it’s worth recognizing all of the positive aspects that investing in diamonds can bring to someone who is looking to diversify their portfolio with tangible assets. Diamonds are one of the safest and most reliable 'uncommoditized' commodities of all time. Since interest rates are currently so low, putting money in the bank or in bonds can bring little return, whereas diamonds have historically gone up in value, especially high quality stones. And, they don’t have to sit in the vault either. Unlike staring at a bank statement or checking your account balance online, you can actually wear and enjoy the stones you purchase, making them ‘wearable assets.’ Plus, they have proven to be less volatile than stocks.
Financial institutions and diamond industry organizations alike have been working to create standardized pricing, like gold, however many argue that since each diamond is unique they need to be valued as such.
This is definitely a topic we will keep our eye on in the months to come.