Investing in diamonds ? the next big thing?

At a time when a sustained recovery in the global economy still looks like a distant dream, investment in many commodities seems to be sluggish at best. This appears to be the case with diamonds, as many investors choose to put their money into gold instead, but could diamonds be a more profitable alternative?

Experts see a sparkle

The likes of CNN business presenter Richard Quest have suggested that investing in diamonds may be a good way to return a profit, even if demand for the precious stones might not be so high in key markets such as Western Europe. Part of the reason why may be that in emerging economies like China and Brazil, demand for luxury goods including diamond jewellery is on the rise.

Meanwhile, some investors residing in developed countries have a keen interest in finding the ultimate diamond: one that’s completely flawless and would look great on its own as well as in a ring. At some auctions, the best diamonds can fetch well over $1m, making the diamond trade a highly lucrative business.

Flawless diamond to go for record amount

An auction at Christie’s in Geneva could see a 101.73 Carat D-Flawless diamond sold for as much as $30m. It’s well-known that finding the perfect diamond is so rare that people are willing to pay top dollar in order to get it.

As with other gemstones, nature means that diamonds have millions of variations that can be hard to correct, meaning that miners are left with whatever they get. This means that they can either get lucky or are left with diamonds that are unlikely to sell for a huge amount.

A sound investment

Nevertheless, investing in diamonds could be a good idea according to experts. Those in the know such as Vashi Dominguez from Diamond Manufacturers spoke to various media outlets about how they can deliver.

“The diamond market is looking very positive. Demand is becoming stronger every day as supplies are becoming shorter. However, to get any return from your investment, you have to buy diamonds at wholesale prices”, he said to CNN.

“Standards are a problem, especially with over 600 different varieties. Finding two identical diamonds is hard too, hence the increase in value, while heart-shaped diamonds fetch up to $1.2m, so they represent a wise investment if handled carefully”, he added.