What to note when buying diamonds!
1. What do I need to consider when I want to buy diamonds for assets protection?
Diamonds can contribute greatly to asset protection as a complementary capital investment when a few basic criteria are respected. Without any claim to completeness, we have collected some of the essential aspects here.
2. How do I purchase diamonds in a most favourable way?
The purchase of diamonds for assets protection is only reasonable when the buying resource is as close as possible to international buying markets ("bourses"). Diamonds that are already at jewelry manufacturers are less suitable for assets protection due to the resulting trade margins. Assets protection is only possible if the equivalent value of the invested capital is as high as possible and if possible increases of diamond values can compensate these trade margins quickly. In case of a resale, good revenues are only reached through favourable purchase prices.
3. Why is it reasonable to buy more than one diamond?
Depending on the amount of capital available for the purchase of diamonds for assets protection, the purchase of a portfolio (diamond portfolio) can be useful to reach optimal usability for different cases of need. This approach is about compiling diamonds of different sizes and qualities to be set adequately in different market situations. For very large diamond portfolios, special single stones and positions of uncut diamonds can be taken into consideration. The larger the diamond portfolio, the more individually compiled according to the customer's needs it should be.
4. Why are the trade margins higher for diamonds than for brokers?
Diamond trade is still an absoutely physical business, stones are handed over in person. Brokers' business, however, is a completely virtual one without the physical stock ever being moved but its values via computers. The trade margins of diamond traders include purchasing costs at international diamond markets, costs of the certificate, costs of transport and insurance, import taxes and handling at customs as well as quality control with doublecheck principle.
5. What role does the currency exchange rate play for diamond purchases?
The lead currency for diamonds, as it is for almost all raw materials, is the US dollar. Therefore, the par value of the euro to the actual one of the US dollar needs to be taken into account, too, when buying diamonds for assets protection.
6. Is the purchase of diamonds subject to value added tax?
Diamond sale is (like for example platinum or silver) subject to VAT, which amounts to 16% in Germany and 20% in Austria. Countries with a lower VAT rate are e.g. Luxemburg with 17%, Switzerland with 8%, Japan with 5%, and Dubai with 0%. In the United States, the VAT rates range between 0 and 11.5%, depending on the state. DIAMONDAS offers the possibility to store diamonds tax-free in Germany, Switzerland, Dubai, Hong Kong and Singapore.
7. What do I need to know when choosing a supplier?
A supplier of diamonds for assets protection should have direct access to international procurement markets to be able to avoid further trade margins. He should have several years of successful experience and be able to convey transparency. Several years of work as acknowledged diamond trader help build trust. This profession also underlies a strict code of ethics. Direct access to diamond markets is also the prerequisite for a favourable resale later.
8. How do I make sure I am not buying conflict diamonds?
To prevent the sale and manufacturing of diamonds from dubious sources and that finance civil wars ("Blood Diamonds"), governments, the diamond industry, and civil organisaztions have joined forces in the so-called "Kimberley Process" for certification of conflict-free diamonds. 74 countries plus all member states of the European Union are taking part therein. You should receive a confirmation of the seller for every (!) purchase of diamonds that the respective stone is a conflict-free one in accordance with applicable UN resolutions.
9. What is important during the purchase procedure?
The purchase of diamonds for assets protection should be handled as discretely as possible on the grounds of security alone. It is also important that shipping is fully insured and that the time of delivery is individually scheduled with the customer.
10. What should be considered should I opt for a buyback?
The point of time when investments shall be turned back into cash is a moment of truth. Therefore, you should think about a possible resale already at the time of the purchase by choosing a seller that is able to reliably transact a buyback and achieve a good price. To do so, he must have direct access to international sales markets to ensure a timely and profitable liquidation. Until corresponding platforms for buying and selling investors have been established, it will be task of the diamond trader to process the buyback in a reliable and profitable manner.
11. Which factors determine diamond prices?
Prices for uncut diamonds are determined by big oligopolists and mining companies that have an interest in a rising long-term value of their production. At the cut diamonds' market, it is still the demand of the jewelry industry that determines prices.