A diamond is not merely an exquisite accessory, it is a valuable investment. Monarchs and aristocrats have treasured their exceptional diamonds that have fetched multiple million dollars around the world for generations. A diamond is valuable and a prominent status symbol.
The value of diamonds has undergone steep fluctuations over the decades. From economic downturns during the global recession and thriving excesses of the 1980s to the unprecedented global pandemic of COVID-19 – the value and resultant prices of diamonds reflect the markets’ vagaries.
However, the most notable determinant of a diamond’s price is its availability. The circle of diamond supply decides the worth of diamond as a commodity as demand for diamonds remains fairly stable. The unearthing of a new diamond mine boosts the supply and consequently, a fall in prices.
Are diamonds a good investment? Will the value of my diamond maximise over time?
The answer is mostly yes. In general, a diamond’s actual value certainly gains over the years, but how quickly or even how much, it will maximise yield is more complex to answer. The primary concern for retail buyers involves their purchase of diamond jewellery either an engagement ring or diamond-studded bespoke jewellery piece.
Like most items of considerable value, the price of a diamond increases in proportion to inflation. A diamond your mother bought in 1975 will certainly be worth significantly more in 2020. Nevertheless, whether the price rise is the consequence of a diamond’s scarcity or inflation is a point of discussion and relies on various factors.
What makes a diamond worthy of investment?
Primarily, it all comes down to the ever-so-critical 4Cs. The Cut, Colour, Clarity, and Carat Weight of a diamond determine its value and ultimate price. What makes a worthy investment is whether or not a diamond is rare. A larger diamond is actually a rare natural occurrence, therefore, larger carat weight is one indication of a comparatively more rare gemstone. However, irrespective of a diamond’s size, ideal colour and seamless clarity make for two equally rarer components.
The value of a diamond can be maximised by finding a flawless or near flawless, colourless or of minimum eye-invisible colour and perfectly cut sample. Such rare specimens will always feature on top of the demand list and fetch a definitive greater value in the market. A rarer diamond will obviously experience faster appreciation in value, thanks to market inflation as well as the constant demand and controlled supply of impeccable diamonds.
Imperfect diamonds displaying sizable flaws are far from rare or valuable and unlikely to appreciate in value over the years. They only hold a value which will fluctuate more frequently, unlike a perfect stone.
All this being said, a colourless diamond is not your only choice when it comes to investing. Natural fancy type diamonds like coloured diamonds such as an intense yellow or brilliant brown are regarded as investment grade gemstones. Some colours like vibrant blue or splendid pink are even scarcer in nature and thus their cost appreciates substantially.