Today, the diamond enjoys an unrivalled status as the emperor among gemstones, particularly when it comes to engagement rings. Many are well aware of the diamond as a symbol of eternal love, purity, and beauty, but what remains more elusive is the understanding of the diamond as a sound investment. In periods of economic flux and instability, it is becoming progressively more important to consider investments that are reasonable and secure. Since many conventional investments yield negligible interest, there is a significant amount of interest on the market for a long-term alternative destined to pay dividends.
For centuries, diamonds have been regarded as stunning treasures and this appeal has not diminished with the passage of time. Diamonds remain a durable commodity exempt from wear, tear, and depreciation and much like gold, are additionally exempt from inflation. Unlike gold, however, the diamond is much easier to transport and store.
Over the last decade, diamonds have appreciated to the token of 3-5% a year. As such, an investment in diamonds requires some patience as it will take a few years for the gemstone to realize its full potential in returns. As wise investors already know, anything good is worth the wait, but what should the prospective investor look for when investing in diamonds?
The 4 C’s
Even the slightest differences in a diamond’s quality are exponentially larger in its overall value. The so-called four C’s (carat, clarity, cut, and color) are imperative when making such an investment. The four C’s are an internationally renowned and recognized set of criteria determined by the GIA (Gemological Institute of America), accepted worldwide.
Carat refers to the carat weight of the diamond. Diamonds between 0.5 and 2 carats are considered wise investments that retain their value and have a promising overall track record. When buying several smaller diamonds, the option to sell the gems individually over time remains appealing to prospective investors.
Clarity stands for the clarity of the diamond and is probably the most difficult quality characteristic to determine. Clarity is defined by the absence or presence of minor inclusions and blemishes on the surface of the diamonds. Many of these cannot even be perceived by the human eye. If budget allows it, we recommend the top four clarity grades for investment: FL (Flawless), IF (Internally Flawless), VVS1 and VVS2 (Very Very Slightly Included).
The cut or polish of a diamond determines the brilliance of the gemstone. It is the cut that gives the diamond its famous sparkle. For an investment, the Brilliant Cut is probably the most suitable, since round diamonds are traded most often and are therefore easier to sell. But the Emerald Cut also enjoys great popularity and captivates with its straightforward design.
The fourth 'C', Color, is not characterized by the color of the diamond, as you might expect, but instead its colorlessness. To this end, the GIA has developed a color scale which categorizes gemstones according to their color grading. The less discoloration the diamond has, the stronger its light reflection and the more the diamond’s overall sheen are. If the diamond is to be considered an investment, we recommend investing in those from the D, E, F, G o der H color scale.