Pros and Cons of Investing in Diamonds

The demand for diamonds continues to grow not only because they are being used in jewelry, but also due to the important part they play in the manufacture of various high-precision medical and industrial tools. Indeed, putting your money in this precious gem can give you very high returns. First, though, consider these pros and cons of diamond investing.

Pros of Investing in Diamonds

1. High Demand and Low Supply

Since 1949, diamond prices have, on the average, enjoyed large annual increases. This is brought about by the fact that the demand for the stone continues to surge in international markets, particularly in Asia, Russia and the Middle East. The natural and flawless varieties are quite rare. As a result, such gems are very expensive when used to adorn priceless jewelry for both men and women. The supply of small and low-grade varieties is also falling because of the growing demand for diamond-tipped precision devices in various industries. In addition, the market for colored diamond varieties has shown huge growth within the last three decades.

2. Portability

If you invest in real estate or collectible cars, you cannot bring them with you all the time. However, if you put money in high-quality diamond jewelry, you can wear the pieces anytime and carry them with you when you travel. Loose stones are even easier to carry and take along with you.

3. Independent Prices

Another good reason to invest in this gemstone is the fact that its price is not affected by fluctuations in stock, oil and bond markets. In fact, the value of this precious stone will not diminish even during economic downturns and other political or social troubles.

4. Easy to Store and Maintain

As a mineral, a diamond is strong and durable. So, it can definitely last for decades. Since the stone is hard, storing and maintaining it is also uncomplicated. If you have a collection of diamonds, just make sure that the gems do not rub or get into contact with one another.

Cons of Investing in Diamonds

1. Requires Huge Capital

Investing in these gemstones can be rewarding, but you will need big money to buy them, as they can be extremely expensive. The natural, flawless and rare ones can easily fetch hundreds of thousands of dollars on the market.

2. Easy to Steal or Lose

The portability of this gem is both an advantage and a disadvantage. Since a diamond can be easily carried around, it can also be easily stolen, misplaced or lost.

3. Synthesized Stones

Now there are companies that specialize in manufacturing synthetic diamond varieties. It is true that the differences between the artificial and natural stones are still very apparent, but once the technology in diamond manufacturing is perfected, the market could be flooded with high-quality imitation stones. This could pose a threat to the value of natural varieties.

4. Not Easy to Resell

If you invest in natural and flawless diamonds, you may find them hard to resell immediately because of their high prices. In case of financial emergencies, you might be forced to sell your investment at a significantly lower price to attract institutional buyers.

blog comments powered by Disqus