Fancy Colored Diamonds Investment
38 years of auction houses and private dealer records indicate the prices of fancy color diamonds doubling at the dealer level every 5 – 7 years. That’s an average of 12%-15% every year, with even higher rates for the rarer colors! Demand is increasing worldwide, while the earth’s supply of diamonds continuously grows smaller, putting upward pressure on prices.
We are at a very unique and perilous point in time, where global financial markets, governments, currencies, economic systems and financial institutions are more uncertain than they’ve been at any other point in recorded history. The U.S.’s debt crisis could take decades to recover from, and “paper assets” have become worthless virtually overnight. Many currencies are losing their purchasing power at alarming rates due to the printing of new money. It is time for you to preserve and protect your wealth with hard assets that can never be devalued. We provide our clientele with the hardest asset of all – diamonds.
While colorless diamonds are valuable assets, they are much more common than the public is led to believe, and they are highly subject to market manipulation by the few corporations who hold the vast majority of the world’s diamonds. This inventory is released as sparingly as deemed necessary to create false scarcity and increased profit margins. Fancy colored stones, however, are much rarer, and their premium prices reflect this rarity. There are several reasons why fancy colored stones make the ideal asset.
- Steady Increase in price over the past few decades.
Fancy colored diamonds have proven to investors that they are recession-proof. They are one of the select few assets that have increased in value during the recent economic decline. When inflation becomes an issue, smart investors turn to hard assets. Fancy colored diamonds are now considered one of the best investments by both investors and experts alike. Experts agree that the prices of colored diamonds, noting that a barrier was broken in recent years. Pink diamonds in particular have garnered the most appreciation; where they previously sold for around $500,000 per carat, some fancy pinks are now selling for $2 million per carat.
- A Multiple Function Asset:
Besides being a radiant source of inherent beauty, a naturally colored diamond serves as a collectible item, heirloom, and a treasures piece of jewelry. Alternatively, it can be used as a highly private asset, used for estate planning purposes. It’s functional while being extremely aesthetically pleasing.
- A History and Expectation of Accelerated Appreciation:
Colored diamonds are basically a by-product of clear, white diamond production and are between 10,000x (fancy) and 25,000x (vivid) rarer than white diamonds. Since the Middle Ages, man has come to recognize their intrinsic value in the schema of world treasures. In recent years, consumer demand has steadily increased for these rarest of diamonds due to their beauty and uniqueness. Even if global mine production for white diamonds explodes in the years ahead (extremely unlikely due to major interest in price maintenance by major corporations), it is apparent that burgeoning tangible asset demand is available to absorb the incremental supply of colored stones. Over the long-term, prices are likely to firm at the historical rate of many percentage points over the annual inflation rate, and should the alternative investment of fancy colored stones become widely recognized, the rate will increase along with demand. In fact, since 2002, the entire spectrum of fancy colored diamonds from browns to super-rare orange and purple have seen annual price increases from 10% – 35%. Very rare pink diamonds have appreciated nearly 100% per year.
- Increase in Demand for Fancy Colored Diamonds:
With decreasing supplies of highly graded fancy colored diamonds, and steadily increasing demand for them, these precious stones are expected to continue their dramatic increase in price over the next several decades. South African production of fancy colored diamonds has declined by about 50% over the past 2 years. With new markets like Asia & Brazil opening up for rare colored diamonds, there should be significant upper pressure on prices. Investors who take advantage of the situation as it presently stands are predicted to profit the most over the long term.
- High Value Ratio to Weight & Size:
Because we do live in a turbulent world, security is an ever-increasing concern. We have heard many stories of clients wearing very expensive fancy colored diamonds that the public perceives simple as colored gemstones of nominal value. Alternatively, they’ll simply carry millions of dollars worth of stones in their pockets, unnoticed by metal detectors and small enough as to not raise any suspicion. Most people typically think of brilliant colorless when mention is made of diamonds. Once again, one does not have to invest in outside depository services to safe-keep a colored diamond, because vast amount of wealth can be stores in the most minimal of space, one one’s property or even person if need be. The easy concealment and high portability of colorless diamonds combine to add practicality to their value. For example, a 2 carat fancy intense yellow diamond worth $50,000 weighs less than 1/70th of an ounce and occupies less space than a dime would in your pocket. $50,000 worth of 24 karat gold weighs 30 Troy ounces. With colored stones, you can easily conceal millions of dollars worth of wealthy on your person if necessary.
- Well-Established Quality and Valuation Methods:
With the advent of colored diamond grading laboratories like GIA, the questions regarding the quantification of a diamond’s standing with respect to sought-after qualities are answered in plain language for everyone to read. Some subjectivity always enters the valuation process of any asset, even with professional grading services, but with the expert opinions of a respected lab and gemologist, the owner of a colored diamond is well-positioned to obtain a determination of the current market value. No two colored diamonds are exactly alike, but the well-established criteria used to determine their worth are.
Due to the increased demand for these rare stones, prices have soared. Diamond experts predict that the prices of these finite resources will continue to escalate for decades to come, and recommend them as one of the best investments that can be made at this time. If you choose to invest in a timeless asset with one of the greatest potentials for increasing and preserving your wealth, begin to educate yourself on fancy colored diamonds, and choose the largest fancy colored diamond your budget will allow.
Charles for Raymond Lee Jewelers, South Florida’s source for buying, selling and trading GIA certified fancy colored diamonds.