Wednesday, April 23, 2014

Is Diamond A Good Investment Alternative To Gold?

diamond necklace sets

Usually, people from last generation don’t invest their hard earned money in diamonds. Instead of this, they consider solid yellow gold worth buying. In short, for them, ornaments made of gold of highest purity such as necklace sets, earrings, rings, bracelets etc. are the best investment options. In contrast, stone-stud jewelry has never caught the fancy of a prudent buyer because of the reason that these ornaments are made in gold of low carat weight such as 18 or 14K. Therefore, people from older generation prefer investing their money in items made of gold.

However, time has changed, and modern folk considers precious diamonds as one of the best investment options. They, now, consider putting their money in stones because it offers good return to them. In fact, diamonds prices in recent few years have witnessed a gradual appreciation and this means that investing in diamonds is the prudent decision. However, before you plan to invest in diamonds, you should know ins and outs of entire process that affects your investment. Just like any form of investments, diamond purchase also has its own share of pros and cons and you should be very well aware of this in order to get most out of your investment. In the below section of this article is given a detailed description about everything related to diamond investment which you should know before investing in a stone.

Buying Gemstones for Investment Purpose – Prose

Over the last few years, diamonds have become the most preferred investment option for people as compared to gold. There are several factors that make stones a good investment option than the latter metal.

Size: the size of a diamond makes it the most preferred investment option compared to gold as gold bullions or bars take a lot of room whilst the same amount of diamond can be stored in a small place. Secondly, even a tiny piece of diamond costs double or triple compared to gold trinket of the same size. Hence, investing in a stone has always been a wisest person’s first choice.

Durability: as you know, diamonds are the hardest thing on the Earth. This means that a diamond ornament will never wear off over the time. As long as you take a good care of your stone jewelry, nothing will happen to it. This means that you can wear your stone jewelry such as diamond necklace sets with pride, for a long time.

Insurability: just like any other precious metal such as gold and silver and a commodity like real estate, you can also insure a diamond. This way, you don’t have to worry about losing your gemstone. In fact, diamond trinkets are considered as more movable and long-lasting investment than any other physical commodity and hence, investing in gems makes for the best investment choice for a person. Besides, gems have immense financial benefits.

Buying Gemstones for Investment Purpose – Cons

There is no doubt that diamonds are a great investment option. However, keeping all the advantages of having a stone trinket as an investment purpose aside, there are few disadvantages involved in purchasing gems. What are these risks, let’s find out here.

Absence of Cost Transparency: gold is a precious metal that has a popular price index; everyone is aware of that and follows it when it comes to buying a gold item. In contrast, diamond’s price is solely dependent on the supply and demand of stones in the market. This means that there is not a standard price index for diamonds that people can follow to buy it.

Low Re-Sale Value: if you are buying diamonds as an investment purpose then you must consider the fact that buying gems is very much easier than selling them. A few jewelers and diamond sellers, however, buy such diamonds but they offer a price for it that is quite lower than the cost you purchased the rock for.

Long Term Profit: if you are looking for a short-term investment or want quick returns from your gemstone then diamonds are not the best investment option for you. In contrast, you can invest in them only if you are ready to wait for gains.

Few Important Rules to Keep in Mind While Investing in Gemstones

Since, diamond price depends exclusively on market condition (if the demand is high, supply will also be higher and so does the price of a gemstone), investing in a gemstone is always tricky. Then again, their lower resale value makes it hard to invest in gems. However, if you consider gems as a small portion of your investment plans and invest in them as an alternative investment category then only the diamond jewelries are a great tool of investment. What’s more, you should be aware of basic guidelines of spending in rocks. So, let’s begin with 4C’s of a diamond.

Understand the Basics: before purchasing a gem for you, first understand the 4 C’s of a rock namely carat, clarity, cut, and color. The lower the inclusions a diamond has, the higher will be its clarity grade. Then, a well cut diamond will sparkle the most. This means that, the better a gem is cut, the higher will be its sparkle. Likewise, carat is the measurement of a diamond’s weight. At last, color grade of a diamond should be lower because a colorless diamond has great value. When you buy a diamond keeping these 4C’s in mind, chances are that you buy the most precious gemstone for your money. This way, when you resale it, you will get a good return on your investment.

Set a Budget: After understanding the basics, the next step is fixing a budget that you like to spend in diamonds. So, whether you are investing in diamond jewelries such as diamond necklace sets, earrings, etc. or buying a loose diamond, setting a budget for your investment is a must. Initially, you have to spend a lot of money on a gem but in the long run, it will prove to be extremely beneficial to you in monetary terms.

Purchase your Gemstone: once you have set a budget, it’s time to make the purchase. Though, before buying a gem, compare prices with different online retailers. Also, invest only in certified gems. GIA is one of the most celebrated gemological laboratories that have strict rules for diamond certifications. This means that GIA-certified gem is the most preferred stone that you can sale it at higher price.

Common Mistakes that You should Avoid While Investing in Gems

  1. Don’t expect a good return in short period of time. You must remember that gemstones never offer short term profits because of the fact that a diamond’s value increases over time. Also, diamond’s price fluctuates, now and again.
  2. Why you invest your hard earned money on something? Obviously for gain, right? So, never overpay for a diamond initially that you might not sale at a good price.
  • Never pay for a wrong diamond. This means that always buy a certified gem because it has great value. This means that whether you are buying diamonds in a setting or purchasing loose diamonds in wholesale,ensure it’s a certified gemstone.

The extract of above discussion is that, diamond jewelries are a beautiful investment option provided that you do your groundwork well and beforehand. These trinkets offer excellent return as long as you don’t expect a quick gain. What’s more, investing in diamonds also gives you an access to the world’s one of the rare gems and you can wear it as long as you wish.

Is Diamond a Good Replacement to Yellow Metal as an Investment Option?

Definitely a diamond is a good replacement to gold as an investment option due to the stable price appreciation that has been seen in recent few years. In fact, diamond’s price is not prone to instability as compared to gold’s cost. What’s more, there is no liquidity issue involved with a diamond and hence, it is almost sure that you will get at least ninety percent of current price of a diamond, at any given time.  However, this doesn’t mean that you can get a quick return on your investment as diamonds increase in value gradually. This means that you can invest in a gem today and reap the benefits after some time.

However, it is recommended that you should buy a diamond of high quality that you can sale at a higher price. Always go for certified gems because authenticated gemstones are much easier to trade than those without any certification. GIA (Gemological Institute of America), AGS (American Gemological society), EGL (European Gemological Laboratory), and IGI (International gemological Institute) are some of the famous laboratories in the world that certify loose diamonds for their quality. All of them, GIA is the most celebrated laboratory that has strict standards for evaluating a diamond’s quality. So, here is a piece of advice, always go for GIA certified jewels as their trading value is higher compared to gems that are either not certified by any laboratory or certified by a much celebrated certifying agency than GIA.

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