Investing In Diamonds

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When one thinks of making an investment the thought of putting your moeny into diamonds is not the first one that comes to mind. However, as Vashi Dominguez jeweller to the stars and CEO of Vashi.com, explains, now might be the time to change your approach.

As the Mark Twain saying goes; 'Let us not be too particular. It is better to have old second-hand diamonds than none at all'. These precious stones have long been treasured for their beauty and status. There has never been a better time to invest in diamonds especially in this changing economic climate.

With much uncertainty on how the market will overturn, long term investments have not been the focus or the priority for many people today. From property, stocks and shares, art to vintage wines and whiskies; diamonds have been proven to be a robust and longevity investment that is lucrative for more than a lifetime. There are three popular ways to capitalise in diamonds that can see a good return on your investment.

Firstly, by investing in the commodity directly; buying the gems and storing them to sell at a later date. Secondly, by buying shares in a diamond mining company and thirdly, investing in a diamond-based fund or investment vehicle. Buying the actual diamond, whether loose or set in jewellery is the most popular way to invest. My advice would be to spend at least £5,000 on a quality stone and plan to keep it for at least five years. Always purchase through a reputable diamond trader; unless you’re an expert and you can stand to lose money if you choose to purchase from a jewellery retailer.

Today, investing in fine jewellery is a better proposition although one needs to ensure the jewellery is being purchased at true wholesale prices. Whilst the jewellery purchased at high-end stores is forecasted to increase in value over time, unfortunately these buyers will never see a return because they have paid a premium price to start. Buyers should be aware that VAT is levied at 20 per cent on all retail purchases, and cannot be reclaimed when sold on unless you are in the trade, making it a disincentive to casual buyers hoping to make a short-term profit.

Unlike real estate investments, diamonds don’t require on-going maintenance nor do they incur continual taxes, making them an inflation-proof investment and also simply anyone can own. You need not register ownership of a diamond nor alert others of your purchase, making investment fairly hassle free. It is important to consider that there are many variables affecting the value of an individual gem.

Traditionally, the ‘4 C’s’ are integral to the value of a diamond, the most important of these being the cut. The cut is what gives a diamond its brilliance and a badly cut large diamond will not sparkle in the same way as a smaller well cut stone. Colour is usually considered the next consideration. Avoid any colour grade lower than an ‘H’ as it then begins to become too yellow to be highly desirable as an investment stone.

Ensure that you get a good clarity; the best grading you can get is ‘flawless’. Finally, size does matter and investors can reap the rewards from a large diamond. For example, the price of a typical five-carat stone (a carat = 0.2g) has grown by more than 150 per cent over the past ten years however diamonds of all sizes are considered a sound investment.

The second investment route is to invest in a specialist diamond fund or an actively managed commodities fund. These tend to be dominated by producers of gold, oil or copper but could have limited exposure to precious stones. Make sure you do your research. Another and cheaper way to gain exposure would be to invest in the companies behind the diamonds. Beware, this could prove risky if investing in the smaller diamond mines which may struggle with operational issues or a less than robust corporate structure.

If you’re looking for a safer investment with the knowledge that diamonds will remain popular for many years to come then there is no better way to invest your money.

Interested in investing in diamonds, or simple buying some for a loved one? Then head over to Vashi now.

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