Why diamonds are an investor’s best friend

While the value of gold, which has always been seen as a safe investment, has plunged over the past few months, traders are predicting that diamonds have a glittering future as a solid investment option. Interest in the gem spiked following gloomy financial figures from the US and China, along with concerns over a national sell-off of Cypriot gold reserves that sent prices plummeting in April and dented confidence in the gold market.

“We started selling diamonds to investors a year and half ago and we are seeing increased interest because prices are rising and gold has become a more precarious investment,” says a spokesman from diamond brokers, the Waldman Diamond Company, based in New York.

“Investors are people who like diamonds and who recognise their dual value – sentimental and economic,” says the Waldman Diamond Company spokesman. “People who invest in gold store it in vaults and don’t take it out and stroke it. Diamond investors are more like the types of people who invest in paintings – people want to appreciate their diamonds.”

Kristopher Schellhas, a former Chicago Board of Trade futures trader, also believes diamonds are a good investment option. Kristopher, who is the co-owner of US-based Investment Diamond Exchange, which tracks the diamond market and helps investors buy the precious rocks, says, “Emerging economies are fuelling unprecedented demand for diamonds and jewellery. The fundamentals for diamond price appreciation are amazing now because all the existing diamond mines that are substantial are at their peak capacity.”

When global diamond dealer De Beers created the phrase, ‘A diamond is forever’ in a 1948 marketing campaign, it wasn’t commenting on the physical strength of the gemstone, but the famous phrase is as scientifically factual as it is romantic.

Splinters from stars

Diamonds have been objects of desire for thousands of years. It is thought that they were first recognised for their beauty and used for decorative purposes in India between 3,000 and 6,000 years ago. Records show that deposits were found along the Krishna and Godavari Rivers and that the ancient Indians used them in worship. The ancient Greeks and Romans also recognised the value of the stones and believed they were splinters from stars.

Most of the diamonds used in jewellery today were mined in Africa, Canada, Russia, Brazil and Australia.

The rarity and beauty of diamonds have given them an almost mythical appeal, and the most famous ones are steeped in history and draw crowds when they are put on display.

Dubai has a thriving diamond trade and Pure Gold’s Karim has some advice for people who are looking to invest in a diamond or are lucky enough to own one already. “A diamond’s brilliance and ability to reflect light depends on its clarity and cut,” he says. “The fewer inclusions, the less distorted the light will be. Different angles and cuts are designed to enhance the way diamonds reflect light.

“There is no special care necessary for diamonds, just ensure that you take basic care of them. Always clean diamonds with a soft cloth, avoid using substances such as ammonia. Soak your diamonds in a mixture of mild liquid detergent and warm water and use a soft brush to clean them. Take care not to touch the stones with your fingers. Dry them with a tissue. If you cannot clean them yourself, you can take them to a jeweller.”