With historically low interest rates on saving accounts which continue to drag on and risky investments which do not suit every investor profile, alternative investments such as diamonds are now becoming ever more popular. What if I do not know anything about diamonds? This is not a problem with these 6 tips and a team of diamond experts at your disposal.
The value of the diamond has annually increased by an average of 15% since the end of the nineteen fifties. The price evolves independent from the financial markets and is therefore completely crisis-proof. The supply remains stable, whilst demand continues to rise. The growing economies in Asia and the Middle East are important demanding parties.
Even though demand is steadily increasing, the supply has stagnated during recent years, as a result of a lack of new diamond mines. Plus any new diamond mines will take around 10 to 12 years before they are fully productive. Diamond giant De Beers has also responded to falling demand projections by mining less when this is needed. This growing demand, combined with a stagnating supply, continues to push up the market value.
The growing demand does not just come from consumers and growing economies, such as the BRIC countries. Approximately 80% of the rough diamonds end up in the industry. In concrete terms this means that, even in case of a significant decline in the jewellery trade, investing in diamonds will still be profitable. And a decline like this certainly should not be expected with a constantly stable diamond jewellery market.
Even now diamonds often suffer a bad reputation as a result of the earlier trading in conflict diamonds. However, nowadays you do not need to worry about this any more when you want to invest in diamonds. This is because the Kimberley process was approved at the World Diamond Conference in 2000. Today you can only buy conflict-free diamonds in Belgium.
Even though synthetic diamonds are still real diamonds, we do not recommend these for investment purposes. They are less rare and have a less strong emotional value, which means you are better off choosing the real thing. In addition, synthetic diamonds only represent 0.01% of the total diamond market, which does not have any realistic impact on the sale of real diamonds.
The optimal relationship between supply and demand, complemented by the diamond’s intrinsic value, has made it a very crisis-proof investment. Even when the diamond market finds itself in times of severe crisis, this will still only be worth a very small percentage when compared to other raw materials. This makes investing in diamonds one of the most stable investments you can opt for, also in the future.
Would you like more information about investing in diamonds? Ask BNT Diamonds’ diamond experts for advice or request a quotation now.
