Investing in Diamonds vs Gold: Why Diamond Investments Are More Lucrative In Comparison To Gold

Are you eager to make some smart investments for the rainy days?  Do you want to make investments where you do not really have to worry about depreciation?  Well, if this is the case, then invest in diamonds.  A difference of opinion exists here because some people believe that investing in gold is better. We will give you a clear comparison and present convincing points to show that diamond investment should be your preference.

This way it will become easier for you to make your decision. Moreover, you will have this confidence that you have substantial investment lying with you at all times.

Why diamond investment should be your preference in comparison to gold

  • Diamond appreciates in price: The trends have changed in the recent years. Gold is a valuable investment but now diamonds seems to hold better investment prospects for the buyers. Now, the industry players are of the opinion that rings can turn out to be a better replacement in comparison to gold. Drop the idea of investing in gold. The reason is that the diamonds have experienced a steady price appreciation in the recent years. As per the estimates of the experts diamond can easily give a return of about 12% annually. On the contrary, when gold increases in value, the increase is in the single digits.
  • Economically strong countries will drive the demand for the diamonds: The future of diamond investments is bright because the demand will increase in the next years. The reason is countries like China are expected to drive the demand for diamonds. Interestingly, the demand for diamonds is also growing in the US. Now, we can safely state that if you are a diamond necklace owner, then it can safely be said that you will be able to buy more expensive items in the near future. People will be keener to buy diamonds that are branded in the coming years.
  • Diamonds are portable: Well, the truth is that both gold and diamonds have aesthetic value. However, if you compare diamonds and gold, then this gem can be considered more portable. This gem can be termed as a concentrated way to store wealth.
  • Better inflation hedge: The diamond industry does not correlate with the financial market and works independently. This is why the inflation hedge is better for high quality diamonds.

Another thing that needs to be mentioned here is that most of you buy gold in the form of jewellery. This is why when this jewellery has to be liquidated, then it loses the craftsmanship value.

Things you should keep in mind before investing in diamonds

  • Price will depend upon global economy When you are making an investment, then you need to have a clear picture in mind. The most important thing that you need to make a note of is that the prices of diamond will depend upon global scenario. This is why the best time to make diamond investments is when there is economic stability in the market.
  • Judge the quality and real worth of this gem: The most vital aspect that you need to be aware of is that diamonds can only be a worthwhile investment if you buy genuine ones. This is why you should only make an investment in this gems if you have the knowledge regarding the market or you have contacts with industry experts. This way you can get your hands on the best quality diamonds and will not have to worry about losses coming your way.
  • Negotiation is mandatory when buying this gem: It is important that as an investor you should try to negotiate the price of the certified diamonds as well, whenever it is possible.
  • Have a clear perception about the buy-back value: When you are purchasing this expensive gem you need to have a clear idea about the buy-back policy. Remember this policy does differ from jeweler to jeweler. This is why you need to have a clear understanding of this policy when you make a purchase from your jeweler. If we look at the ideal scenario, then a genuine high quality diamond can fetch you about 95% of the market value.
  • Size does matter: If you are new in the diamond investment business, then ideally you should start off by buying one carat diamonds. If you go for a diamond that is less than one carat, then you will not be able to get a fair price for that diamond.
  • Considering the resale value of diamonds: Well, another thing you need to keep in mind when buying diamonds for investment purpose is the resale value. If you have a rare piece of diamond, then you need to make a note of the fact that it will require more effort to sell that diamond. You can sell the rare pieces on auctions or you have to explore different diamond trading platforms. You will need to do a bit of research in this regard and make sure that you get your hands on a reliable platform. However, if you go for medium quality diamonds, then they have more resale value provided there is no discoloration or obvious
  • Considering the cuts: The cut of the diamond also decides the resale value. For example, the princess cuts are quite popular at the moment. However, if you go for heart shape diamonds, then they remain in out of the trend. If you go with the round diamonds, then they have the most resell-able value.

This is why when you are purchasing diamonds, you need to have a clear idea in mind regarding the most sought after diamonds. The real problem is that most of the diamonds that are available in the market are not adequately cut. This is why you should go for the diamond that fits the AGS and GIA standards.

Ideally you should think on the lines of opting for diamond investment if you can wait for the price to mature. This will be the right time to sell this gem.

How to move about the process when you want to invest in diamonds

Developing an understanding of the 4c’s

Well, if you obsessed with the idea of investing in diamonds, then it is important to have the necessary insight about the 4c’s of diamonds. This way you will be confident about the fact that you are making the right pick. Well, the value of a diamond is affected by the following 4c’s. This includes carat weight, color, clarity and cut.

  • Carat weight: When you are buying a diamond for investment purpose, then carat weight does make a difference. The carat can be termed as the unit of weight which is used for measuring this gem. You need to keep in mind that the price of this gem increases exponentially.
  • Color: When you purchase diamonds as an investment, then the color makes a difference as well. Ideally, you should go for colorless diamonds. The reason is that they allow the maximum light refraction. This means that the whiter diamonds have more value. This means that you should have a clear idea about the color grades of the diamonds.

The color D is representative of the colorless diamonds which have the maximum value. Additionally, the Grade E and F also fall in the color category. However, Grade D is superior to Grade E and F. The Grade G, H, I and J fall in the category of near colorless.

The Grade K, L and M fall in the category of faint. Grade N, O, Q, P and R fall in the category of very light. Grade S, T, U, V, W, X, Y and Z are associated with the light diamond class.

  • Diamond clarity: Well, when you have to understand the clarity grade of the diamond, then it actually refers to flaws of the diamond. Now, this gem has two basic kinds of flaws. They are the blemishes and inclusions. The compositions are found within this gem and the defects are found on the surface of the diamond. If you see any cracks and air bubbles on your diamond, then they are inclusions. If you see chips, pits and scratches, then they are blemishes. The diamond may develop some scars during the process of cutting as well.

Diamonds with few or no flaws are considered valuable. This is why we will explore the clarity scale as well because it will make a difference if you have to make an investment on this gem. Now, Grade F is considered to be flawless. This means that there are no inclusions or blemishes on Grade F diamond when it is viewed using 10x magnification. The next grade is internally flawless. This means that the diamond has no inclusions and the blemishes are only visible to an experienced grader who views the gem using 10x magnification.

The next grades are VVS1 and VVS2. This means that when a grader uses 10x magnification to spot the blemishes or inclusions, then it is difficult for him to see these flaws. Now, we will talk about grades S1 and S2. The inclusions of these diamonds can easily be seen by a skilled grader using 10x magnification. The grades I1, I2, and I3 are the lowest grade diamonds. The inclusions of these categories are quite evident when the grader looks at them under the 10x magnification.

  • Cut: The cut of a diamond shows its reflection properties and its shape as well. Now, you can easily determine the reflection quality of the diamond through its cut. It will not be wrong to state that the cut is the most important aspect in the 4c’s. A good cut contributes to the brilliance of the diamond. The brilliance of this gem is the element of brightness. The finish and the angle of a diamond help in determining how the diamond can handle the light.

 The best diamond grade is ideal cut. The primary objective of this cut is to maximize the element of brightness. This is why the smart move will be to invest in the ideal cut diamonds. You are likely to find ideal cut diamonds in the round shape only. The next preferable category is excellent cut. The excellent cut diamonds cost less in comparison to the perfect cut. The next grade is perfect cut diamonds. The quality about this cut is that they can reflect all the light that enters the diamond. However, they are slightly inferior to ideal cut in terms of girdle width and table size. The next grade is good cut. However, you should avoid opting for poor and fair cut diamonds. The poor and impartial cut diamonds focus more on carat weight and have a poor reflection.

Deciding your budget and diversifying the portfolio

Now that you have a clear idea about the 4c’s , next you should set your budget. It is advisable to diversify your portfolio if you are eager to invest in diamonds. This means that if you are willing to spend about $20,000 on diamonds, then you should consider buying two diamonds of $10,0000 each. Moreover, it is not important to buy the same type of diamonds. You can opt for varying types.

For example, you can go for one pink, one green and one yellow diamond. This way you can liquidate a portion of your portfolio whenever you want. When you want to purchase a diamond, then you should compare the prices of different retailers. It will be advisable that you should go for diamonds that come with a GIA certificate. This will be a more reliable investment on your part.

Going for a mounted or loose diamond

Now, there is no doubt that a diamond with a smart setting can offer more return. However, you need to make a note of the fact that it becomes almost impossible to grade this gem when it is mounted. The buyer might request you to remove the setting when he is planning to buy the diamond.

Well, we believe that after going through all the details you must be convinced that it is more viable to invest in diamonds than in gold. This is why you should make sure that you start exploring the diamond market right away to pave the way for a secure future. You will not regret this investment all.

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