Investing in diamonds

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 doesn’t 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 investing in diamonds. Stones are individually negotiated based on their specific attributes. Also, generally speaking, the further along the value chain (miners, manufacturers, wholesalers, retailers) the higher the price paid. Finally, value appreciation doesn’t necessarily happen overnight and investors should expect to have to hold on to their assets from 5 to 7 years.

That being said, investing in diamonds constitute real tangible assets which offer evident benefits to 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. 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. Yet, another reason to turn to an experienced adviser.

Laferrière & Brixi has been advising clients on investment diamonds for over 10 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 realised when asset is sold

Key Industry Fundamentals

  • Robust demand growth led by emerging consumer middle class in developing economies – particularly China and India:
    • China and India could account for half of global demand by 2025 (up from 12% in 2008)
  • Rough diamond supply structurally constrained, with no material new production expected in near future
    • Declining output from ageing mines, peak global production reached in 2006
    • Few discoveries of major new deposits during the past two decades
  • Demand for rough diamonds is based on pull-through demand from the polished stones used in jewelry Continued growth of worldwide personal luxury goods including diamond jewelry is expected.
    • Consequently, a structural supply demand gap is expected to emerge throughout this decade with continued price upside
    • Rough production unable to keep pace with new demand
  • Consequently, a structural supply demand gap is expected to emerge throughout this decade with continued price upside
    • Rough production unable to keep pace with new demand

Supporting market comments

« It has become a common view that rough diamond prices will be firmly underpinned by a scarcity of new-mined production. That new-mined output is likely to grow slowly, at best, is relatively clear, in our view. We also believe that demand for diamond jewellery will grow on the back of increasing urbanisation in China and a recovery in the US. »

- Diamond Industry Outlook May 20, 2013 RBC Capital Markets

« The rough-diamond market is expected to remain balanced from 2013 through 2017. From 2018 onward, as existing mines get depleted and no major new deposits come online, supply is expected to decline, falling behind expected demand growth that will be driven by China, India and the US. »

- The Global Diamond Report 2013, Bain & Company Inc.


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Laferriere & Brixi is opened by appointment only. Call us to discuss the purchase or sale of your diamond jewelry, or fill the form and we will contact you as soon as possible.

Laferriere & Brixi Diamantaires
1117 St-Catherine W. (corner Peel), suite 714
Montréal, QC, H3B 1H9
(514) 296-3611
6 boul. Desaulniers suite 108
Saint-Lambert, QC J4P 1L3
(450) 671-3101
50 West 47th Street, Floor 11
New York, NY 10036, USA
(212) 790-3600
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