As well as being a girl’s best friend, something that DeBeers turned into a marketing ploy for the ladies, diamonds are proving to be a “Smart Investors” ideal acquisition.
The sales of Natural Colour Diamonds are rising dramatically, with emerging markets in China and India creating such high demands, where prices that were healthy a couple of years ago, are now increasing significantly.
Investment grade coloured diamonds have typically increased in value year on year by circa15-25%, but account for the China factor and in the first six months of this year prices rose by a staggering 17%.
Recently at an auction held at Sotheby’s Hong Kong, a Fancy Vivid Blue, 5.16carat, Pear shaped stone was recently sold for $6.5Million after being expected to reach $5.8Million.
Diamonds are also being hailed as the investor’s friend by American diamond providers, www.rarecoloureddiamonds.com where they are expecting diamonds to double in value over the next five years.
Recently, in an article in the Bank of Scotland’s Ideas magazine, it was suggested that investors as “snapping up diamonds in order to hedge their portfolios against potential decline in the dollar’s value-and many investment consultants are recommending diamonds as must-have assets”. In fact, the idea of diamonds as an alternative asset is an increasingly common theme by the broadsheets and financial markets. Money Week commented that ‘The Bulls are running rampant in the diamond market. DeBeers, which controls 60% of the global market has pushed through two price increases, which have had no impact on demand’. The Telegraph also pointed out that ‘prices in big stones over 4 carats have risen 130% since the beginning of the year on the back of the global shift in wealth’.
This new appetite for loose diamonds stems from a realisation among informed investors that the already rare commodities are about to become even rarer. “The long-term projection is that there aren’t enough diamonds to satisfy demand”, said Globe and Mail.
Midas Commodities Limited is a London based Precious Commodities Brokerage that specialises in alternative assets. They are based in Broadgate London, EC2M 2QY. Please contact Neil Hackley on + 44 (0)20 7965 4530 for more information.