Diamonds for asset protection
1. Who should secure assets with diamonds?
If you are thinking about the investment of your financial liquid means in diamonds to secure your assets, you should carefully review this option and analyze your requirements and intentions in depth. Below, you will find several criterions that you should think about.
2. What role can diamonds play when it comes to asset protection?
Should you seek long-term protection for your assets, you will distribute risk and opt for a smart mix of conventional financial products and appropriate tangible assets. Preferred tangible assets include diamonds next to real estates and precious metals as well as modern art and oldtimers. Due to the uncertainties of financial markets, investment managers today advise physical possession of up to 20% of the overall portfolio in the asset classes of precious metals and diamonds.
3. What are the advantages of diamonds over precious metals?
Diamonds are the tangible asset with the highest mobility and have the highest value whilst being very small. For example, 12.5 kg of gold have a value of approximately €400,000, which is comparable to the value of an excellent brilliant of highest quality with the weight of four Carat (= 0.8 gr).
4. How fungible are diamonds?
Diamonds with a first class, international certificate (as of the GIA) are globally fungible. This might be the reason why diamonds are considered the "world's hardest currency". Until appropriate platforms emerge that connect buying and selling investors, it should be the diamond trader's task to process a reliable and profitable buyback.
5. How stable are diamonds' values?
Statistically, diamond prices have developed positively over the last 25 years. The dents caused by market conditions have never had a lasting negative impact on diamond prices. Diamonds always retained their value over the centuries. And the demand for diamonds has alsways surpassed supply.
6. How volatile is the diamond market?
The diamond market is much less volatile than the securites and commodities markets. Trades are not processed virtually but still physically. Customers who want to buy a diamond must do it in person and must pay the full purchase price. Therefore, a daily price fix for diamonds is not possible and financial operators cannot influence pricing indirectly and at short notice as for example big hedge funds do it in case of the gold price.
7. Which factors determine the diamonds' prices?
Uncut diamonds' prices are determined by big oligopolists and mining companies that have an interest in a rising long-term value of their production. Concerning the market for cut diamonds, physical demand of the jewelry industry still determines the price.
8. Can I expect a return when I invest in diamonds?
Serious business partners must answer no to this. Returns in the sense of financial products cannot be achieved with diamonds. Given favorable market and currency developments, value increases are absolutely possible, and experience from the past has shown that value increases are likely. But apart from a possible storage in an external safe, diamonds do not cause any additional costs.