Wealth Report: Investment in Diamond Looking Up

The yearly Wealth Report by Knight Luxury Investment Index has indicated that pearls and coloured diamonds are becoming very significant as an investment in areas of Asia and Middle East. The report has shown an increased demand in coloured diamonds by 167 percent in 10 years since 2005. Prices of pearls have also been reported as skyrocketing as a result of zero or limited natural pearls supply and a huge demand of the commodity in the Arabian Gulf.

Even as the markets keep growing in the Middle East and Asia, the United Kingdom is the region that stood at the top of the Big Spenders Index. The trend is thought to be a result of foreign tourists’ influx into the English Capital and their shopping sprees out of town in shopping areas such as Bicester Village.

Chinese consumers have been named as the most luxury goods consumers globally, accounting for 29 percent of total world spending of luxury items on their own. Nonetheless, majority of Chinese spenders are not doing it in their country but without mainland China. At the same time, sellers of luxury goods expect clients to keep spending on these items more in 2015.

In fact, analysts of coloured diamond trends believe the mounting demand of these diamonds mostly from Asia is encouraging a lot of investment from wealthy consumers, including the menace of diamond mines closing shop and running dry.


Diamonds are forever

It is also expected the supply of diamond globally will plateau come 2020 with the decade following seeing the supply dropping off considerably as giant mining companies indicate. Investing in any form of diamonds is expected to pose a challenge, especially due to the fact that unlike gold, a carat of diamond is not equal to another diamond carat.

Over the years diamond investment has always proved to be unique and never straightforward whether the supply of the stones is high or not due to the fact that valuing diamonds is tricky business. The sheer diamond variety and uniqueness of individual stones unlike gold rules out a pricing mechanism involving ounces with the valuation of the luxury rock boiling down to Clarity, Cut, Colour and Carat with a lot of subjective interpretation in between.


It’s all about the cut

Investment in diamonds is considered lucrative and very sound considering that no matter how the market cycle seems or appears to be, diamonds, more than any other stone, are really forever. In fact, coloured diamond varieties, sometimes termed as fancy stones, have been able to hold their value really well in the last couple of years in contrast with investments in volatile equity.

Building value of diamonds is highly influenced by size as well, considering from 1990 all the way to 2011 the value of three carat diamonds has been going up by a whooping 145% whereas five carat diamonds (0.2g = 1 carat) have seen their value rise by 171%.

The ranking of white or colourless diamonds follows a scale of sliding colour with the ranking of the best blue-white put at D while exceptional whites are ranked as E. Any gem measured lower than the H grade is not worth investing in; it will be considered too yellow with the grades of clarity falling in between Flawless and Imperfect. The most important part of diamond is the cut; it’s the cutter’s skill that brings brilliance to a diamond.