Why invest in diamonds?
Rising demand and falling supplyDemand for white diamonds is increasing due to considerable demand in the BRIC countries (Brazil, Russia, India and China). And the global market for diamonds will continue to grow – jewellery and engagement rings are no passing fad and have been a staple of social and cultural life for thousands of years. As global financial wealth grows, the need for diamonds will also increase.
Naturally coloured diamonds are extremely rare, as only 1 in every 10,000 carats is naturally coloured, and a vanishingly small percentage of them are pink or blue. Today, clients seek valuables and art that are unique, but that also represent understated luxury.
Very few mines produce the coveted pink and blue diamonds. The Argyle Diamond Mine, which produces 90% of the world’s pink diamonds, is set to close by the end of 2020, which is why prices are expected to rise.
Favourable price trendsPrices for the rare and sought-after pink diamonds are soaring. Since 2005, a 1.00 carat Argyle Vivid Pink diamond has risen in price by 388%, and prices in 2017 alone rose by 15-25%.
A non-volatile commodityDiamond prices have remained stable for more than 30 years with an upward trend, with the exception of relatively small fluctuations. As such, diamonds have been spared the volatility experienced by precious metals, oil, gas and so on. Diamond prices do not respond in the same way as exchange-traded commodities that, with a decline of 10% due to an economic slowdown, immediately plummet in value by 30-50%.
Financial benefits- The return on an investment in diamonds is tax-free for private individuals if the diamond is embedded in a piece of jewellery.
- Investment diamonds are exempt from VAT for private investors if the diamonds are placed in a deposit outside the EU.
