Investing in Diamonds: Is it worth buying investment diamonds in 2021?

Zalim
October 11, 2021
Investing in diamonds; is it worth it? If you look at the different ways of investing money, the first thing that usually comes to mind is investing in gold and silver.
investing-in-diamonds

Investing in diamonds; is it worth it? If you look at the different ways of investing money, the first thing that usually comes to mind is investing in gold and silver. But other raw materials could prove useful for a plant. There would, for example, be to name investment diamonds.

We would like to know whether diamonds are a wise investment to protect your assets over the long term. Because even the supposedly safe investment in this type of raw material is not entirely without the risk of loss.

We would like to know whether investment diamonds are a crisis-proof investment, what is important for diamonds as an investment and how the diamond price development is doing.

Table of Contents

Buying diamonds as an investment makes sense?

The diamonds as a financial investment are only really a sensible investment if you are aware of the risks and opportunities of this investment.

As an investor, you should also think about the extent to which the investment diamonds complement your existing portfolio because these diamonds should not necessarily represent the basis of a hedge.

The sparkling stones are not a safe currency in crisis. We’ll also clarify why this is so. First of all, however, it is enough to know that diamonds should not be the first investment when it comes to building financial protection.

Because the two sought-after commodities, gold and silver, should come first.

If you have already invested in gold and silver as crisis currencies or financial investments, then you can look around the diamond market. Because the investment diamonds are definitely a useful addition. Let’s take a look at how the buying and selling of these raw materials are regulated in SouthAfrica. In SouthAfrica, diamonds are subject to VAT.

This means that you have to reckon with a premium of 19 percent, which of course, makes the purchase price of the diamonds a lot higher. Therefore, you should urgently consider this before carelessly embarking on the investment.

Because at a later point in time, it is also about selling the diamonds again – ideally only after several years or decades. This is the only way to really benefit from the diamond price trend without being slowed down by VAT.

If you want to avoid the dilemma of VAT in South Africa, you still have the opportunity to get investment diamonds abroad. Here the value-added tax is usually 7 per cent, for example, in Switzerland.

But one should note how the import regulations are. After all, 15 per cent VAT may then be incurred when importing into SouthAfrica.

investing-in-diamonds

Buying Diamonds Price: How to find out the prices for diamonds

Often you don’t notice it in everyday life, but there are also price fluctuations for diamonds. Accordingly, one should find out exactly how the diamond price trend is before investing. The fact is, however, that this diamond price development is quite constant.

That explains why diamonds are so popular as a financial backup. If you compare the course of the diamond price with that of precious metals, the precious metals do much worse because there is no classic market price for diamonds.

One of the reasons for this is that every diamond is unique. If you now look at the diamond price trend, you will only see small price fluctuations in the course.

As a result, the diamonds are less suitable as a profit-increasing investment. Because a real jump in the price development is not to be expected. If you hold the diamonds for several decades, you can potentially benefit from a slight price increase.

Rather, this situation means that diamonds are more suitable as an investment.

If you want to find out more about the current market price of diamonds, the IDEX (International Diamond Exchange) diamond price list will help. Here you can roughly orientate yourself in terms of price. As an international stock exchange, there is a wide range of diamonds to buy and sell here.

However, it should be noted here that each diamond has its own individual characteristics, which not least determine the price design. Thus, which diamond has, in the end, is a highly individual matter. In addition, the diamond price is not subject to any central setting.

So it is based on the market price as the interplay of demand and supply. However, it can be said that the price of diamonds has risen continuously, albeit modestly, over the past few decades.

What to watch out for to safely buy diamonds

investing-in-diamonds

The diamonds are a sought-after luxury good. However, because global diamond production can usually not meet the high demand for diamonds, this results in a constant increase in the price of diamonds.

Anyone who wants to invest in diamonds should know what matters when buying diamonds.

If the weight of a diamond is more than 0.50 carat, a certificate is required. Especially if you want to use the diamonds as long-term security, you shouldn’t be travelling without a certificate.

International laboratories issue such a certificate. All properties of the diamond are then listed in the gemological report.

Because the report contains all the individual details of the raw material, it is also the unmistakable identification of precisely this diamond.

There are big differences between the individual diamonds. For example, the diamonds can differ in:

  • purity
  • shape
  • proportion
  • Polishing
  • fluorescence
  • symmetry
  • colour
  • weight

Above all, the purity of a diamond is decisive for the pricing. There can be a price difference of around 10 per cent between the individual purity levels.

Beware of information such as “Clarity enhanced” or “Color enhanced” – here. Artificial help was given to make the diamond more beautiful. Accordingly, this raw material is worthless. Furthermore, the fluorescence should be weak or not present at all.

As for the proportions of the stone, these should be good or very good to make the diamond really valuable. When it comes to artistry, there are also greases. Therefore, the processing should also be in the range of good to very good.

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Investing in investment diamonds: This is how you determine the authenticity and security of your diamonds

Everyone has probably heard of blood diamonds. However, to not run the risk of buying exactly this type of diamond, you should only buy from recommended sellers. Otherwise, you run the risk of buying diamonds on the black market, which comes indirectly with purchasing weapons in conflict-ridden countries in Africa.

Alternatively, diamond purchases without bills can also be part of a scam that can ruin one’s investment vision.

So you should lookout for a reputable provider. In the meantime, buying diamonds is no longer restricted to local shops. Because the purchase of these investment products in the online area is well equipped. So you can look around the net for a trustworthy partner.

The significant advantage of buying on such a platform is that it is actually investment diamonds.

And not about pieces of jewellery, as is often the case at a jeweller. In order to be able to resell the diamond later without any problems, it should be purchased in a sealed blister with a certificate.

Buying diamonds only makes sense if you can use your cash to do so. If you should consider buying via credit, you should refrain from investing because the interest on the loan can most likely not cover the slight price increase of the diamonds.

Investing in Diamonds: Buying Commodities or CFDs?

investing-in-diamonds

Anyone who knows a little about the stock market will certainly have come across the Diamond CFDs. So why not just invest in these diamond CFDs? Because this is not directly a classic hedge. Rather, with diamond CFDs, you invest in the companies that mine the diamonds.

That is not a bad idea if you want to get into the raw materials sector as a shareholder. However, investing in diamond CFDs does not represent real protection in the form of physical products.

Nevertheless, the diamond CFDs are an interesting addition when it comes to diversifying your own portfolio, especially when you support renowned sponsors with this investment.

But here, you should pay close attention to how the individual stocks and diamond CFDs have developed in recent years. Because not every sponsor was able to really assert himself on the stock exchange and in the world market.

In addition, our test winner broker TradeATF offers the opportunity to invest in commodity CFDs, i.e. derivatives that derive the price development of diamonds. This is by far the easiest way to invest in diamonds.

Diamond stocks

Of course, there is also the option of simply buying diamond stocks. However, it should be noted that most diamond mines will be closed soon, as mining is less and less worthwhile. Nevertheless, we would like to introduce the largest diamond company here.

The reputation of the diamond sponsor De Beer is legendary. The associated share is the Anglo American share. De Beer has been mining for diamonds in South Africa since the 1870s.

Today, the stagnating demand for high-quality jewellery is causing the company more and more problems. Nevertheless, the share is now three times as much as it was in 2016:

So if you want to invest in a family business with tradition, the Anglo American share could be a suitable choice.

Buy investment diamonds Conclusion – do diamonds make sense as an investment?

investing-in-diamonds

Diamonds are not a safe currency in crisis. However, if you are looking for a way to keep your money safe in the form of raw materials in the long term, you are certainly not in a bad position with investment diamonds. Because in the various online shops, there is a large selection of different diamonds from different price segments.

These come with a certificate from reputable sellers, which makes the subsequent sale easy. The diamonds are not suitable as a lucrative investment because a large increase in value is not expected in the next few years. This investment works particularly well in conjunction with investing in commodities such as gold and silver.

You should never purchase a diamond as an investment without a certificate from a reputable laboratory. You can also get diamonds at the classic jeweller, but these are more from the jewellery category. Real investment diamonds should be bought with highight purity and quality to be resold later without a loss.

Some providers specialise in exactly offering these investment diamonds. Packed in a blister and with a certificate, the diamonds should then be stored in a safe place as quickly as possible. With a little luck, you might even see a small increase in value after a few years or decades.

However, the easiest and most sensible way to invest in diamonds is through CFDs. Here we can recommend our test winner broker, TradeATF: With TradeATF, you have the best conditions for investing in raw materials. In addition, TradeATF is fully regulated and licensed.

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FAQs

Anyone who wants to buy diamonds depends on a reputable partner and an online shop that specialises in gold and diamonds.

Gold is still the most popular crisis investment. But diamonds can also be worthwhile. However, it should be noted that the raw material is nowhere near as stable as gold or silver. Therefore, one should always keep an eye on the courses.

That depends on what you hope for from the system. Do you want to keep the glittering stone for decades as a hedge, or are you aiming for quick profits? Those who prefer the latter should always be well advised with stocks.

Anyone who views diamonds purely as an investment object should refrain from buying processed products such as rings or earrings. Due to their processing, these are more expensive than the actual diamond value. Instead, it would be better to buy unprocessed diamonds directly, for example, at opal-schmiede.com.

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