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Investment Diamonds

October 20, 2021


A grading report is mandatory for investment diamonds.

Of course buyers need to know that a diamond is indeed a diamond and that it is natural and untreated. If it is a colorless diamond then folk law tells us that investment diamonds should be top quality. Ever wondered why?

When considering colorless diamonds there are people from many different countries and cultures that believe diamonds are an effective store of wealth. This is especially true of people living in autocratic, unstable, or dictatorial countries. For those people top colored and clarity, diamonds have proven time and time again to be lifesavers. They are also small, easy to hide, and invisible to X-rays! Diamonds become fungible, or easily traded for cash when they are accompanied by a GIA grading report. In times of political strife the report can be sent digitally to any buyer anywhere in the world and once a deal is done the diamond can be sent to an intermediary appraiser who confirms the match and releases funds held in escrow.

In the trade we call these flipping certs. It is only feasible for diamonds that require no human assessment. Flipping certs is a justifiable reason why fluorescent top color and clarity diamonds are not fungible. They need to be seen and checked on the off chance they are milky or hazy.

One of the craziest ideas that have been tried with diamonds is using them as guarantees for investment funds. Martin Rapaport, the economist who established the Rapaport price list, has tried to do this for many years, as have others in the diamond trade. None have succeeded. A decade ago there were a couple of attempts backed by collections of rare fancy colored diamonds. They were held and regularly revalued with limited trading, to establish a supposedly valid measure of asset growth. Both failed. Today there are financiers starting diamond-backed cryptocurrency funds. Good luck with that.

Shortly after I opened my first store I experienced my second burst economic bubble. As a graduate geologist in the early 1970’s there had been a nickel mining boom in West Australia while I was studying. It burst and was partly the reason I ended up as a ‘trinket flogger’ as there were no prospecting jobs for nearly a decade. At the end of the 70’s, there was a global diamond and rare gem bubble burst. Boiler room trading became popular. Brokers employed teams of phone staff and put them wherever there was space, sometimes in the basement or the top floor with the heating and cooling equipment. D Flawless diamonds were being sold for more than double their worth today. Occasionally now, decades later, an elderly many or family who have inherited a diamond in a little sealed plastic package come in to see if we are interested in realizing their investment.

If you have a desire to invest in diamonds I suggest you take a very cold shower first. If you are still really keen, then consider rare fancy colored diamonds, not colorless rocks.

If you want to learn a bit more about diamonds, go to the Learn section of this site and start your research there.

Link through to LEARN

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