Your complete guide to investing in Diamonds and diamond price estimation

Throughout history, diamonds have been sought after not only for aesthetics, but also because they can be very sound investments. To understand the potential of diamonds as assets, it is important to understand why the world values them.

Diamonds have intrinsic value: While diamonds have many unique properties, their primary and objective merit lies in the fact that they are the hardest substances on earth, and last virtually for ever.

Diamonds are highly portable: For all their value, diamonds can easily be concealed and carried, and in times of war or threat, diamonds have invariably been the only precious items that fleers have been able to retain.

Diamonds carry their value all over the world: Diamonds are currency and country agnostic, and hold their value anywhere in the world.

Investing in diamonds:

How are diamonds priced? Unlike gold or other commodity, there is no simple price-per-gram system for deciding diamond price. However, the diamond industry refers to international diamond pricing guides that price diamonds according to colour, cut, clarity, carat weight and other parameters.

Do diamonds appreciate in value? Yes, diamonds do appreciate in value, but this is truer of larger solitaires than of small stones. Certain kinds of diamonds are better bets in terms of value appreciation than others.

For example, the round brilliant cut is considered the best choice for diamond investors. Fancy shapes like the princess-cut, heart-shape and cushion cuts are fashionable choices for jewellery, but do not hold value as well as the ever popular round brilliant-cut diamond.

What about quality?It is true that higher the grade, higher the value of diamonds, but the highest-grade diamonds are not necessarily the best investments. In fact, diamonds in the upper mid range (clean and a good colour) are the most "current", i.e., the most bought and sold, which means they are more liquid than the highest grade stones. For example, it is typically easier to sell an H colour, VVS or SI clarity stone, than a D colour stone of flawless clarity.

Most importantly, an investor should only buy diamonds certified by international grading agencies like the GIA, IGI, HRD, or AGS. Certificates bear detailed descriptions of the stones, including unique traits that form the "thumbprint" of the stone. Labs also offer laser inscription services, which makes a diamond readily identifiable. In any case, certified diamonds are easier to sell, since uncertified diamonds will need a full, fresh appraisal, invariably at the seller's expense.

As a tangible, durable asset class with high intrinsic value, diamonds are excellent value holders that form a good hedge investment to retain money value, especially in uncertain and inflationary times. Although they are not a conventional choice for those seeking a quick profit, a shrewd and patient investor can reap handsome gains if he exploits the unique potential of diamonds as investments.

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