Investing in Diamonds

Investing in Diamonds

For centuries, diamonds have been considered a store of wealth and used to hedge against inflation. Natural diamonds maintain value over time even in uncertain economic times.

Start or complete your diamond collection 

Diamonds are an alternative form of investment much like collectable cars, wine, or art. The long-term value appreciation being derived from its scarcity and increased gap between limited supply and increased demand. Although the overall macro-economic outlook is very attractive for diamonds, with limited new diamonds mines and increased demand from emerging markets,* the intrinsic nature of the market does not make it suitable for everyone.

First, diamonds come in many shapes, sizes, colors and degrees of quality. Since it is not a homogenous commodity, there is no spot pricing with a terminal market (like gold for example) which makes diamonds relatively illiquid. Because of this diversity, advisors need a certain amount of expertise to cherry pick the winners and asses which stone is more likely to increase in value.

Determining the right price to pay is also an issue before you decide to invest in diamonds. Stones are individually negotiated based on their specific attributes. Also, the further along the value chain (miners, manufacturers, wholesalers, retailers) the higher the price paid. Finally, value appreciation does not necessarily happen overnight, and investors should expect to have to hold on to their assets from 5 to 7 years.

That being said, diamonds constitute a real tangible asset which offers evident benefits to its owners. It is the most concentrated form of storing wealth which can be easily transported in the event of an emergency. Prices are stable and have a low correlation to other traditional forms of investment. Diamonds can also be traded globally. When paper wealth and the stability of other traditional financial assets are perceived more fragile, investing in diamonds can represent a secure form of storing wealth.

Diversify your portfolio with a diamond fund

Laferrière & Brixi has been advising clients on investment diamonds for over 20 years. Clients can buy from existing stock or stones can be brokered based on specific requirements. Sourced from leading dealers, private collectors and manufacturers, stones are selected based on their rarity, superior make, attractive prices, and high expected value appreciation.

Major Benefits Major Drawbacks
Most concentrated and portable form of storing wealth
Stable prices with positive macro-economic outlook
Low correlation with traditional investments
Hedge against inflation
Direct ownership with minimum maintenance fee
Relatively illiquid market with no spot pricing
Lack of price transparency
Provides no income, profit realized when asset is sold

* The Global Diamond Industry 2019- Bain & Company
Laferrière & Brixi Diamantaires

www.lbdiamantaires.com

St-Lambert | Montreal | New York

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