When you should invest. Consider purchasing if you qualify as a diamond investor by your motives.

Value Conservation

An Investment Diamond conserves its value. As opposed to an artificial stone, a natural diamond is rare and a real asset of lasting value. This is not based on magic, but on hard facts, as you can see below.

Inflation-resistancy

Any real asset that is rare, in high demand and hard to duplicate is by its nature inflation-resistant. Gold is, and so are diamonds. In a world of ever increasing monetary supply, fears about inflation seem well-founded. Besides conserving its value, real assets might in future also show appreciating real prices. Gold already shows this tendency, rare diamonds have shown it for years, and we are convinced that even common diamonds will follow suit when investing in diamonds becomes more widespread.   

Tradability

The universal tradability of a diamond contributes to the maintenance of its value. With a diamond, you possess a real asset you can trade worldwide, at any location and any time. Supporting this is its portability, as you can easily bring a diamond to the place where it finds its buyer, independent of any potential physical restrictions. With the GIA certificate, the most accepted and renown grading report worldwide, a Pundia diamond possesses a proof of authenticity that further enhances its tradability.

Value compression

Value is also conserved by compression, in the pure physical sense. There is likely no other real asset which possesses the same value compression as a diamond. To give an example: At current prices, one million USD would buy about 18 kg worth of pure gold bars, but only one very rare diamond of 1 carat (0.2 grams). Along with this enormous value compression comes portability: it is easy to carry a fortune in diamonds with you, effortlessly. A diamond is maybe the most mobile real asset ever.

Market Outlook

In 2015, Bain Consulting published its renown Diamond Industry Report with an outlook on the diamond market, projecting a widening gap between increasing demand and diminishing supply of raw natural diamonds for the third decade of the 21st century and onwards. This projection was consistent with previous studies (McKinsey 2014, Rio Tinto 2010, De Beers 2009, BHP Billiton 2007). The logic was that demand will grown due to increasing middle classes worldwide, buying jewellery with increasing disposable income. Investment Diamonds are mentioned to become a considerable factor for potential demand in the near future. On the supply side, the known deposits of natural diamonds are slowly but surely emptying out, with very little new deposits being discovered. The resulting upward pressure on diamond prices already show in latest market data. The Diamondix Index shows that diamond prices appreciated greatly in the past five years, likely an effect of diverging demand and supply, the increasing inflationary pressures worldwide and the "run" on real assets (see figure to the right). 

Figure: Diamondix Diamond Investment Index for set of representative diamonds of best grades, reflecting market price development (Source: www.diamondas.de, 22.06.2022)

Heritage

A key motive to buy an Investment Diamond is to pass it on to someone you love. This may be the best way of transfering financial and emotional value. And it is very personal, too.

For your partner

Most partners in life cherish receiving something special from you. If you want to pass a part of your wealth to your partner, be it in form of a present or a heritage, an Investment Diamond is an option combining financial value, emotional value, and beauty. It is highly personal, matching the quality of yourself and the person whom you give it to. 

For your children

Besides from the objective reasons why a diamond is an interesting investment object, your children will appreciate receiving a special stone from you as a sign of your personal connection. There is no stronger bond than between a parent and a child. A diamond, being billions of years of age, has the unique power of representing this bond while leaving something of eternal value to your children. From father to son, from mother to daughter.

For your grandchildren

Grandparents play an important role in the lives of their grandchildren. If you want to give your grandchildren something to prepare them for life, it could be a beautiful set of stones which always reminds them of you and which gives them the knowledge that whatever happens in the world, they will have this safe asset from their grandparents seeing them through in times of need.

Portfolio Balancing

A certain part of a financial portfolio is ideally composed of real assets. An Investment Diamond is a prime option for this. Not only because it is an attractive investment, but also because it balances your portfolio in various ways.

Real assets in your portfolio

Real assets have the key function of complementing purely monetary values in your portfolio with an inflation-resistant asset part. Real estate, gold and diamonds are all investment vehicles fulfilling this role. Comparing the price development of real assets over the past years shows that diamonds are yet at the beginning of real asset appreciation, making the Investment Diamond the “hidden champion” of real assets and the time right to take advantage.

Low volatility

The price development of diamonds has been relatively stable over the past decades, contrary to for instance the price development of gold, which has been much more volatile. This is mainly due to the fact that there are very few financial instruments based on diamonds that could influence the price of its underlying. Hence, an important part of the function of Investment Diamonds is a counterweight to higher volatile investments, balancing the overall volatility of your portfolio.

Mobile asset

Due to the high value concentration and mobility of a diamond – it can be transported to any place at any time, with hardly any physical restrictions in its way – it can be seen as an effective counterweight to more immobile assets, such as real estate and gold.  

Speculation

Can Investment Diamonds also be used as speculative vehicles? Not in the typical sense of the word. You should not buy diamonds if you are primarily interested in quick gains. But speculating on price appreciation is not a bad motive if you are in it for the longer haul.

Shortterm speculation

There are many vehicles that can be used for shortterm speculation, but diamonds are not among them. This is principally due to their little volatility, but also due to the cost involved in trading. Best compare a diamond to real estate: buying and reselling a beautiful villa within a short timeframe seldom is beneficial, but aiming for the right moment after holding your asset a couple of years might produce interesting gains. For both the villa and the Investment Diamond, this is a highly valid motive.

Longterm „speculation“

Holding on to your asset for at least a couple of years and then selling it at a mark-up is not real speculation, which by its nature is shortterm-oriented. It rather is an investment. Hence, it perfectly suits the Investment Diamond. As we have pointed out in Market Outlook, there are indeed reasons to expect that diamonds will continue appreciating in value. Having this in mind when buying a diamond is a highly valid purchase motive.

Asset for risky times

Diamonds have always been regarded as a safe haven against crisis, an asset for risky times. In an abstract sense, this is also speculation, as hard times hopefully never come. But should they come, having mobile diamonds at your disposal is a way of safeguarding parts of your wealth. In a more and more unpredictable world, with inflationary pressures taking hold, this is certainly also a valid and honest purchase motive.