Saturday, November 28th, 2009 | 3 Comments
The Investible Diamond
With $70m in gems and jewelry trading hands in Geneva earlier this month, it’s no wonder there’s growing talk of investing in diamonds as another hard asset to store value, like gold. For the most part, diamonds have been a poor place to diversify because of the complexity of the market and the abundance of supply. Indeed, diamond prices are falling around the world as consumer demand ebbs at the lower end. But the stratosphere of diamond trading–especially in colored diamonds–goes from strength to strength. The Wall Street Journal details the new funds:
- In March, alternative investment manager KPR Capital launched a Cayman Islands-domiciled open-ended investment diamond fund with a minimum buy in of $250,000.
- A few weeks earlier, Alfa Capital, the Russian investment group, launched a diamond investment fund with a minimum investment of €1m and an estimated yield of 15% to 17%.
- This month the Emotional Assets Fund was launched, investing in a number of assets from fine art and rare stamps to diamonds and diamond jewelry. The fund is targeting a growth rate of 15% per annum with a minimum investment of £100,000.
Then Tara Loader Wilkinson talks more about where value lies in the diamond market:
“If you want to buy diamonds for investment purposes, they should be big and fancy (colorful),” says Holly Midwinter-Porter, a gemologist at U.K. jeweler Boodles. “Red and green are the rarest, and unlike white, man-made diamonds, are finite as they are only found in one or two areas in the world.” She says returns on rare diamonds can enjoy double digit growth a year, and their portability makes them more appealing than gold or art to some investors.
Another option for investors is the vintage diamond jewelry market — considered capable of more lucrative returns because of the added value of provenance. Mr. Butler brokered a $4.5 million deal with the Louvre in 2004 for an antique emerald and diamond necklace and ear rings by Nitot, presented as a wedding present by Emperor Napoleon to his second empress, Marie Louise of Austria. The owners had bought it for a fraction of the sale price 10 years before.
Diamonds: An Investor’s Best Friend? (Wall Street Journal)
Also of Interest:
- Diamond Market Details
Are large diamonds an investment vehicle? There’s a growing chorus of participants who say yes. The Wall Street Journal looks... - Diamond Market Holds Shine
Saul Singer sent us this interesting report on the diamond investment market. We do want to caution readers that Mr.... - Asian Private Buyers Drive Diamond Market
Diamonds.net recaps the recent Sotheby’s sale of $30m worth of diamonds and jewelry in New York. The sale was comparable... - Diamond Prices Reflect Gold
Upward Price Movement Continues For Polished Diamonds Prices for investment-grade polished diamonds continue to move upwards, inching up a further... - Art Funds: Who’s Left Standing?
The Art Newspaper conducts a tour of the art fund universe. The report isn’t very encouraging [All bullet points are...
Diamonds on the front and halfway inside the hoop. Fund Investing
There is no question that special diamonds as well as certain streams of "investment grade" white diamonds are being accepted and/or acknowledged as alternative asset investments in their own right. One needs to understand exactly which diamonds are classified as such, information which can be gotten from a number of industry and diamond investment experts like Fusion Alternatives or even Diamondmkt.com, but with steady returns of around 15% per annum with less volatility than commodities like gold etc, it is an area well worth looking at.
In line with most commodity prices, rough diamonds plunged into a trough around mid-2008. Most prices have recovered well by now, although it seems that diamonds remain somewhat behind the curve.