Top Five Things to Watch Out for When Investing in Diamonds

Before you make any important purchases, you often learn about the product, ask questions, and understand how the purchase will suit your needs and your wants. Likewise when you decide to invest in diamonds, it is imperative that you learn about them, play with them in your hands, become familiar with inner secrets and skills of the trade, and understand how the diamond trading market works. Remember that the yield of returns for diamond investment is dependent on the duration, quality and type. A good way to start is to learn the 4Cs which are the basic assessing criteria for a diamond’s quality. Further, you should spend time with an expert or specialist in diamonds investment and learn the other factors of grading a diamond, such as its purity, cutting proportions, make, treatments, transparency, which are crucial factors that affect the ultimate value of a diamond.

Keep abreast of the market’s current demands every so often to assess the value of your diamond portfolio while keeping in mind that diamonds’ value generally tend to rise over longer periods of time (with the exception of periods of hyperinflation where prices of diamonds can double or triple in half a year). Last but not least, keep the following handy points in mind in order to become a wise and knowledgeable diamond investor:

1. Always go for rounds– Fashion and cutting styles come and go in the diamond industry and rarely do they return, so unless you are looking for something different than from your huge collection of round brilliant diamonds, your best bet to choosing an investable diamond is the ultimate, classic 57 or 58 faceted round-cut diamond which shines brighter than any other shapes of diamonds. Rounds are always in demand and their rate of price increase is always steeper and speedier than fancy shaped diamonds. In auctions and in the diamond trade market, round diamonds always have more prevailing price valuations. Just remember, when proceeding with diamond investment, always choose the diamond which you can resell in the future.

2. Opt for colourless– Although fancy coloured diamonds are popular and they are incredibly expensive as seen in public auctions, this does not suggest that they are worth your first set of investment in diamonds. Should you wish to redeem your investment, it is much more arduous to find a serious buyer for a large and rare intense vivid pink diamond of 10 carats, than to locate a buyer for a 3 carats D colour, internally flawless diamond due to actual market demand and the narrowed number of potential buyers. For novice in diamonds, go for a colourless diamond with good colour grade to secure your investment in both short and long run.

3. Beware of scams– Some irresponsible diamond traders would sell their diamonds in seal packets. When purchasing a diamond, whether for investment or for adornment, never ever buy one without inspecting it under proper white lighting in a white walled room and with the necessary diamond grading tools (e.g. a 10 times magnification loupe, a European white colour card, white colour grading pad, tweezers, etc.) which should be supplied to you at no cost by the seller. Beware of yellow lighting and tinged coloured walls which can alter or enhance the visible colour of a diamond, making it shine more than its normal rate of scintillation.

4. Choose a loose diamond with a grading report,not by a grading report – It is better to buy a diamond first and later set it onto an ornament or jewellery so that you can design it according to your own taste and preference to reflect your personality and character. Buying diamonds that have already been set onto some kinds of mount may obstruct your thorough view of the diamond during inspection and examination. When selecting a diamond, make sure you look at the diamond under a 10 times magnification loupe in a properly lit room to evaluate a diamond’s transparency, purity, surface graining, polish lines, etc. Do not purchase a diamond by just looking at its diamond grading report, there may be characteristics that are not written on the report that you need to view and be aware of before making your purchase. With the help of an expert 對戒 or gemologist, you will be able to identify these hidden features not clearly stated in a gem lab report.

5. Buy at wholesale price – The pricing of diamonds is, in reality, not as mysterious as it seems. The world’s diamond community utilizes the Rapaport Diamond Report as a channel to buy and sell diamonds at unanimously preset prices. At retail shops, diamond retailers put additional prices onto the average diamond prices and gain an extremely high profit margin from consumers. This is partly due to retail competition and the rising rate of high rents in premier locations. Other reasons include retailers’ slow stock turn of their jewellery, high rate of interests for their borrowed capital and security costs of carrying large stocks, their profit margin has to be high enough to cover their cost. Hence, if you are looking to buy a diamond from a retailer, you are partially paying for their operating costs and rent. In order to maximize your investment returns, always buy from diamonds suppliers or wholesalers who price their diamonds according to the Rapaport Diamond Report. Buying diamonds at retail price will eat into your investment pool.

Buying from a trustworthy diamond supplier who is equipped with its own team of experts and gemologists will offer your professional advices and opinions on the stones. Instead of being pressurized to make a purchase at a retail shop, you can simply walk into a wholesaling supplier nowadays and search for a diamond at the comfort of your fingertips.


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