Monaco-based diamond investment expert Alberto Domenico Vitale discusses the complexities and ROI of diamond investment.
Investing in diamonds enables you to diversify and balance your portfolio. It differentiates itself from other financial instruments such as real estate, immovable and moveable assets, gold and other commodities and isn’t subject to any kind of speculation ensuring non-taxable and anonymous capital. Diamonds guarantee peace of mind and safety, however, it is important to keep in mind the advice not to exceed the value of your assets by an investment of 20 or 30%.
The diamond market holds a positive trend despite changes in the world’s economy. In the last 50 years the trend has been positive apart from during the 1975 oil crisis and a slight decrease in 2009 (-9%) that immediately recovered in 2010 (+ 22%). The graph below shows the difference between production (blue line) and demand (red line) from 2006 to 2020 forecasts. The diamond market has become more stable and flexible thanks to communication technologies and individual’s free movement.
Diamonds are mined worldwide (today there are 13 countries, mostly African, producing over 1,000,000 carats per year) with no government influence over its flows and prices. For these reasons, the average price of diamonds has increased tenfold from the 1960s to today. The year 2015 (shown above) is a very important and crucial year for diamond investment. If the trend of demand remains increasing, we will see an increase in the price of the diamond. A particular characteristic is their increase in value is not affected nor follows the fluctuation of currencies.
It is important to note that over time the price of diamonds has maintained a constant trend towards growth. This is for various reasons including that the diamond market can be considered an oligopoly, due to the presence of a limited number of large sellers.
The gold price, has totally unpredictable trends. If we add the low volatility of the diamond and the ease of transport and resale, the diamond is undoubtedly the safe haven par excellence. In this graph this value of 9% is for all type of diamonds. For the high end quality, in particularly for the naturally coloured the trend is much positive because Less than 1 percent of all diamonds mined globally have colour. In the image below it is possible to appreciate the difference in term of appreciation.
To determine the market price, the prices only take into consideration three of the 4Cs: Carat, Color and Clarity. It is then up to the expert gemologist to consider the fourth 4 C, the Cut. In addition, other “Cs” are vital: Certification and “Customize”.
At VITALE 1913 we understand that one of the main problems is due to the types of certificates the customer holds as their only guarantee. Furthermore, we found that many jewelers didn’t have the adequate knowledge to buy and sell diamonds which today are the only real type of interesting investment. Our strategy has therefore created the fifth “C” – Certification. It is essential these parameters are considered together. Often prices are evaluated only on the basis of the weight, the purity and the color. The biggest mistake is to overlook the quality of the cut (not only the type of cut!). A round or brilliant cut can be of low or other quality and reflect light better or worse. This can modify the pricing up to the 20%.
Our added-value lies in the interpretation of the certificate and the translation of the value of the proposed diamond. The certificates that we offer are exclusively by recognized bodies: GIA, HRD and IGI. Our dedicated team of expert gemologists have a lifetime of experience in valuating and determining the right diamond investment for you.
There are no imitations that have all the structural characteristics of the diamond. For this reason, it remains the most sought after and dreamed of stone and therefore an excellent investment!
Ensuring the longevity of your investment is paramount. The Jewellery Safe by VITALE 1913 provides clients with peace-of-mind asset protection and specialised management of their most precious jewels and watches. Every aspect of your jewellery, through the creation, purchase, valuation, storage and after-care is designed with the utmost care. The Jewellery Safe gives you protection designed exclusively for your jewellery by those who understand and value it.
Alberto Domenico Vitale is a multilingual entrepreneur and founder and president of Vitale 1913 in Monaco. Vitale 1913 are distinguished diamond jewelers and diamond investment experts, renowned for their expertise in creating bespoke jewellery with the world’s most rare and precious gems and diamonds.