Reasons for investing in diamonds

There are many factors why investors pay attention to diamonds. The most common reason for buying them is to protect the value of their property. Fear of adecline in the purchasing power of cash pushes investors towards durable goods such as real estate, precious metals and diamonds. By analysing the historical prices of gemstones, it can be seen that they did well in times of high inflation and economic crises. What is crucial - they represent an enormous value in a small package and ensure anonymity to their owners and their heirs. You can keep them in a safe or set in jewellery and always have them with you. In this white paper, we will cover the top reasons for investing in diamonds.

Diamonds and the devaluation of money

Due to inflation, the value of money decreases with time. A million dollars now a days is not worth the same as it was 20 years ago. The US dollar's purchasing power has decreased by 35% over the last two decades. For this reason, keeping your assets in the form of cash leads to a gradual decrease in its value.

Chart 1. Purchasing power of American consumers

purchasing power of American consumers graph

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The monetary policy pursued by central banks around the world is conducive to the devaluation of money. This means that various types of benefits and subsidies for the economy as well as low interest rates can quickly lead to high  inflation. Moreover, the interest rates on deposits as well as on treasury bonds are low and do not allow for an increase in savings. In real terms - the investor simply loses on them. Thus, there is a tendency to transfer capital towards durable goods, such as real estate, metals and precious stones. Art and collectibles are also gaining in value. It is commonly believed that such assets hold value very well and protect the property against a decline in purchasing power.

Stable increase in diamond price

While diamond mining volume is falling, the demand is growing. Forecasts indicate that in 2030 the demand and supply gap of rough diamonds will amount to 159 million carats, and in 2050 to 278 million carats. Even in 2014, the supply was balanced by the demand. This shortage is expected to drive up diamond prices inthe coming years.

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Small packages and huge value

Diamonds, like other physical assets such as real estate and precious metals, perform well in periods of high inflation. But unlike the other assets, they accumulate enormous value in a very small package. The average price of a 1-carat colourless diamond with clarity VS2 and colour F is $ 6,947 (according to the RapNetdatabase). The average price of gold in the first four months of 2021 was $1,785 per ounce. For the sake of making a direct comparison, let's abandon the standard weight measurements for gold (troy ounce) and diamond (carat) and compare them using the same measure, i.e. per gram.


One troy ounce is 31.1 grams, and one carat weighs 0.2 grams. So the average price of gold per gram is $ 57.4. A gram ofthe diamond we are considering would cost $ 34,735. This is over 600 times more than a gram of gold. So, the price of one gram of a coloured diamond will beseveral dozen or even several hundred thousand times higher than that of gold.

Diamonds are a portable investment

Securing some of your property in the form of diamonds has an additional advantage over other tangible assets. Precious stones can be easily transported and crossed territorial borders with them, without having to report this fact. It is not necessary to declare the value of the jewellery carried at the airports. It is enough to frame the diamond in a ring, chain or bracelet and you can freely pass through the security gates. In this way, millions of dollars can be taken out of the country. The stones can then be removed from the jewellery and exchanged back for cash, worldwide.

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Investing in diamonds ensures anonymity

There is no institution or centre that maintains records of diamond owners. The owner ofthe diamonds and their heirs enjoy complete anonymity.

Diamonds - investment and decoration

Diamonds, like works of art, combine practical use with an investment aspect. They can be set in jewellery and worn on any occasion. If you need to liquidate the stones- just remove them from the jewellery setting. It will be easier to sell unframed stones than the whole jewellery. The goods sold in this way should be of interest to a larger group of potential buyers who may not share the interest in designing jewellery. Self-made stones will always find a wider audience.

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Diamond prices after crises

Consulting company Bain & Co. checked the prices of 1-carat cut diamonds in the brilliant cut, provided by Rapaport from 1970 to the end of the third quarter of 2019 against the prices of rough stones. It has been noticed that over the past 50 years, the average annual change in the price of cut diamonds has been 3%, and rough diamonds have been 4%, although the supply has increased by an average of 2% annually. During the 2008–09 crisis, the demand for diamond jewellery fell by around 10%. The prices of rough diamonds dropped by 13%, and cut diamonds by 2%. The supply of rough diamonds fell by 26% and sales by 50%. However, sixmonths after the onset of the crisis, the prices of rough diamonds started to rise, and within two years they were at pre-crisis levels.

Chart 2.Prices of rough and cut diamonds in the years 1970-2019

rough and polished diamond prices graph

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Transfer of property in the form of diamonds

Diamonds have their value and are virtually indestructible. As an investment of capital, they can be passed on to future generations.

Diamonds are forever

The diamond has the highest degree on the Mohs hardness scale. It can only be scratched ordamaged with another diamond. Diamonds are therefore the hardest natural material on Earth. Without advanced tools, they cannot be damaged.

Place of diamonds in the investment portfolio

Diamonds, like other fixed assets, can be included in the investment portfolio. Unlike real estate, we can transport them very easily. This is of great importance in crisis situations. Diamonds transferred else where can be exchanged for cash.


Diamonds not only act as a security in the event of war, but in peaceful times, you can invest in them some of your property and pass it on to the next generation maintaining complete anonymity at the same time.

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Fancy Colour Diamonds

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