Invest in Diamonds

Mother nature’s most resistant substance, diamonds are one of the world's most beautiful and desirable objects. But are diamonds a good investment?

There’s a lot of debate around this question. On the one hand, diamonds’ scarcity and unique characteristics make them an interesting investment option. On the other, they also come with several potential drawbacks one must consider. 

Overall, though, more and more investors turn to diamonds when seeking new alternative investment opportunities. Are they worth the trouble? And how can Splint Invest help you invest in diamonds?

Let’s find out.

 

 

Why invest in diamonds?

As Marylin Monroe famously sang -  diamonds are a girl’s best friend.

And that’s how most people view them to this day. As expensive and beautiful jewellery, the ultimate exhibition of one’s status and wealth. 

But what about their investment potential? Can diamonds be an investor’s best friend, too? Let’s look at some of the main potential advantages of investing in diamonds:

Potential for high returns

Diamonds have a long history of appreciation over time. 

While past performance is no guarantee of future results, this trend suggests that diamonds could be a good long-term investment.

Here’s a quick look at how diamonds compare to traditional stock instruments:

From 2019 to 2022, the stock market offered a better performance than diamonds. This trend changed at the beginning of 2022 and has remained the same. 

The reason?

There are plenty. One is the steadily increasing demand for diamonds, driven by the demand from Asia and attractive investment opportunities in diamonds.

The global diamond market was estimated at $94.9 billion in 2021 and is expected to reach $139.9 billion by 2030 [Straits Research]. Furthermore, the long-term investment horizon and the limited liquidity of the diamond market have a positive impact on their performance.

Protection against inflation & economic downturns

Diamonds have historically held their value well over time, even during periods of inflation. This is because they are a finite resource with a limited supply.

So yes, if you’re looking for a potential inflation hedge, diamonds can be a valid option. 

Diamonds have also been seen as a safe haven asset during economic downturns. This is because, like other alternative investments, they are not tied to the performance of any particular economy or company.

These two factors make investing in diamonds an excellent option for portfolio diversification, as they will be able to protect its performance, softening the blow and decreasing potential losses during an economic crisis. 

Portable and easy to store

Unlike art, luxury cars, or whisky casks, diamonds are small and concentrated in value, which makes them easy to store and transport. 

Diamonds also don’t have overly complex storage needs. As the world’s most durable material, they can withstand any environment without losing their properties. All you need to care about is not losing it. 

Diamonds vs other alternative investments

So yes, diamonds can be a great addition to your investment portfolio. But how do they compare to other popular alternative investments? 

How to invest in diamonds

Like in the case of any other asset, investing in diamonds requires some skill, knowledge, and, well, luck. The good news is that the first two are relatively easy to master.

Let’s go through the key rules and best practices of diamond investments:

Know your diamonds

The first rule of alternative investing - learn as much as possible about the asset you want to buy. This will help you make better, and if not better, certainly more informed investment decisions. 

Investing without at least some basic knowledge is like flipping a coin. 

So, what should you learn about diamonds? For starters, you need to understand the 4Cs - cut, clarity, colour, and carat weight. The GIA (Gemological Institute of America) website is full of useful resources on that topic so be sure to visit it (you can find the link at the bottom of this page). 

Another important step here is to research the diamond market landscape. Track trends, price fluctuations, and factors affecting diamond values. Industry publications, reports, and consulting a diamond investment advisor can also be helpful.

Buy wisely

Spend some time searching for the diamonds you want to buy. 

A good rule of thumb is to look for established diamond dealers or auction houses with a strong reputation and expertise in investment-grade diamonds. Look for membership in professional organizations like the Rapaport Group or International Diamond Exchange.

Be also sure to check certifications. Always insist on a grading report from a respected gemological lab like GIA or IGI (International Geological Institute). These independent assessments verify the diamond's 4Cs and ensure authenticity.

Finally, always compare prices from different vendors before the final decision to ensure you get the fair market value. You can also utilise price guides from Rapaport or GIA, but remember actual prices can vary based on specific qualities.

Plan for the long haul

Investing in diamonds is a marathon, not a sprint. In many instances, you can expect to hold them for several years (5-10+) before seeing a significant return.

Also, keep in mind that the diamond market is less liquid than stocks. Selling might take time and potentially involve selling at a lower price than purchase value. Consider this when determining your investment timeline.

And finally, like with any other investment, it’s better to avoid putting all your eggs in one basket. Diversify your portfolio and spread your investment across multiple diamonds of varying qualities to mitigate risk.

⚠️ What are the risk factors to consider? 

When done right, diamond investments can work brilliantly, offering an excellent addition to your investment portfolio. However, while they provide several unique benefits, they also come with a set of potential risk factors to consider, such as: 

Authenticity: There is a risk of counterfeit or synthetic diamonds being sold as natural diamonds. It is therefore important to choose a reputable and reliable dealer and have the diamonds certified by a recognized institution.

Trusted Supplier: It is important to choose a trustworthy expert who has a good reputation and is willing to answer any questions. If you want to buy a diamond online, you should also ensure that the seller has a good online presence and positive reviews.

Sustainability & Ethical Concerns: Diamonds are often associated with environmental problems and human rights concerns. It is important to ensure that the diamonds have been ethically and sustainably sourced.

Market Volatility: Diamond demand can be influenced by global economic conditions, consumer preferences towards lab-grown diamonds, and availability of mined diamonds. This can lead to unpredictable price swings.

Overview of potential advantages and risks of diamond investments

Invest in diamonds with Splint Invest

Although they provide multiple opportunities, investing in diamonds can be tricky, especially if you aren’t familiar with the nuances and trends of the diamond market.

This makes buying diamonds for investment relatively challenging. But what if we told you there’s an easier route? The answer is joining Splint Invest.

As experts in alternative investments, we provide our members with numerous investment opportunities. Through our platform, you can buy digital shares in alternative investments handpicked by our expert team. 

You don’t need to worry about research, storage, or finding a buyer. We’ll handle everything. All you need to do is invest, sit back, and wait for returns. 

Join Splint Invest today and invest in diamonds and other alternative investments like fine wine, whisky, or art for as little as €50!