Wed, Jul 24, 2024 02:03:16 AM Hawaii

Why Diamonds May Be the Ultimate Crisis Investment


Why Diamonds May Be the Ultimate Crisis Investment

In times of global financial crisis, the one thing that most people fear the most is where to put their money and whether or not that money will be worth as much tomorrow as it is worth today. It is a scary thought and something that most Americans do not even consider because of the relative stability of the American dollar. However, when other world economies are in flux, eventually this will have a trickledown effect on the American economy.

Protect a Loss in Value

One way that people are protecting themselves from any potential loss in value is to invest in diamonds. It has been proven that, over the decades, the value of the diamond has not only shown stability but it has also shown growth in overall value. For any person who is worried whether or not their dollar in the bank will be worth a dollar tomorrow, a transfer of assets from cash to diamonds may very well be the answer as a crisis investment.

Investing in diamonds as a crisis investment is more than just purchasing a bag of loose diamonds. Purchasing jewelry like a diamond ring is often an even better way to invest. The reason for this is when a person invests in a diamond ring they are actually investing in something that they can wear and enjoy. It is a unique property of this type of investment. If a person invests in oil or stock certificates, that is all they get, but a diamond provides another level of value to people than merely the asset itself.

There is another additional value to investing in a diamond ring versus just investing in a loose diamond. A person can actually add even more value to their investment with the ring and the setting. The simple reason for this is the ever increasing value of the precious metals. Most people are very aware of the meteoric rise of the value of gold in the past ten years. What they may not realize is that the other metals that are commonly used for the construction of rings also rose along a similar path. Building a diamond ring collection is actually a very savvy way to invest for the long haul. Plus this is also a better thing to pass down in the estate to any beneficiaries.


Estate Planning

Cash is not very tax friendly in an estate when passed down to any beneficiaries, followed closely by land and a home. One thing that is more tax friendly is jewelry, which is why so many people make sure they include their diamond ring and other jewelry in their estate to their beneficiaries. It is a gift that keeps on giving because the value of the jewelry is expected to continue to go up and up just as it has done for decades.

Find the Right Investment Ring

The picture becomes even clearer as to why a person should consider diamonds as the ultimate crisis investment, but a person cannot just turn towards the decision of designing their diamond ring for their investment. Purchasing a diamond ring as an investment is a little different that just purchasing a diamond ring for a wedding ring. There has to be consideration for the overall lifetime value of the diamond ring that is purchased so that if it ever had to be liquidated, the diamond ring could then be liquidated rather easily.

The first thing to consider for the purchase of a diamond ring for an investment is the size of the diamond itself. The larger the carat the fast it will appreciate over time, but this does not mean a person should purchase a diamond ring that has multiple diamonds either. A five carat diamond ring with five single carat diamonds is not worth nearly as much as a diamond ring with one five carat diamond in the center. When investing in diamonds, a person needs to put all of their money into the center diamond.

In addition to the size of the diamond, a person needs to pay close attention to the other properties of the center diamond. The more perfect that center diamond is the more value it will hold over time. The basic economics of investing say that since these types of diamonds are rarer, they will increase in value at a much faster rate.

To a lesser degree, the shape of the diamond is also important. There are a lot of different shapes out there which includes princess, marquise, emerald, and oval. The reason that this should be taken into consideration from an investment standpoint is for resale ability. For instance, right now the round brilliant cut diamond is the most popular shape for a diamond ring. By some estimates, 80% of the loose diamonds are of this shape; however, this should not be the only reason for choosing a certain shape but it should at least be considered when purchasing a diamond ring for an investment.

One caveat to all of this is the popular shapes for diamonds do change over time. Just because a round brilliant cut diamond is popular today, does not necessarily mean that it will be the popular choice ten years from now. In fact, plenty of other shapes were popular not too many years ago. This is cyclical, so it is better to use this as a gauge for a shorter term investment, over the next few years, rather than a longer term investment, over the next few decades.

The final thing that a person who is investing in diamonds needs to do is to make sure that their investment is insured. This may seem like a less important concept, but most people would be surprised at how often this is overlooked. There are a lot of people who will spend tens of thousands of dollars on a brand new diamond ring and not even think about insuring it until it is too late.

Every person chooses a different reason to invest in diamond jewelry, but the recent changes in economies and changes in the diamond markets prove that diamonds may be a perfect investment for some investors.

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