Colored diamonds, unlike other investments, exhibit investment characteristics that different classes of assets can only dream of. With their high resale value, high quality, and lack of price transparency, colored diamonds are a worthy addition to your portfolio.
Lack of price transparency
One of the most significant issues that have plagued the diamond trade is the lack of price transparency. As a result, fund managers have needed help finding suitable investment vehicles for diamonds.
Fortunately, new technologies like blockchain have brought transparency to this industry. These innovations can help transform diamonds into investable financial products.
The CEDEX system is one example of how a platform can help make diamonds an investable asset. It is a decentralized trading platform that is based on the use of blockchain technology. Allowing traders to base their decisions on accurate data allows for a more thorough assessment of the value of gemstones.
Despite this, investors should be careful when investing in diamonds. Several factors contribute to the market’s need for more transparency. This includes price volatility and the absence of a standard price index. In addition, diamonds are subject to price inefficiencies due to insider trading.
The Rapaport Group is working to create a more liquid market for investment-grade diamonds to solve these issues. They are also developing a transparent price structure for the average investor.
Investing in the crypto market can be risky. It is essential to do your homework and work with a trusted advisor. A few of these concerns include the lack of price transparency and the inability to measure the quality of an investment.
High resale value
A diamond’s resale value from lab created diamonds depends on several factors. One of the most important factors is the diamond’s cut, color, and clarity. The larger the stone and the higher the carat weight, the more expensive it will be.
There are several ways to get a fair deal on your diamonds. You can find a private buyer and sell your diamond online, use a reputable jewelry broker, or get a diamond appraisal.
An appraisal is an assessment of the diamond’s quality. It includes the type of stone, the carat weight, the cut, and the color.
The most effective way to determine a diamond’s resale value is to visit a local jeweler. They will give you an appraisal of the diamond’s value and help you compare prices. Often, they will also buy the diamond in bulk. This allows them to mark it up and turn a small profit.
Wholesalers are the best option for getting a fair price on your diamonds. They often buy in bulk and will sell them at a discount. However, they also have expenses you may have yet to include in the price.
Retailers will also mark up their products. Their markups can be as high as 100% to 200%, depending on the store. To arrive at their final pricing, retailers double the costs of the diamond. For example, if you purchased a solitaire for $6,000, the retail price will include the cost of the diamond, the retail commission, and the manufacturer’s markup.
Diversification of your investment portfolio
Diversification is a process of spreading your investment portfolio across a variety of different asset classes. While not guaranteeing that your investment portfolio will not suffer a loss, it can help offset some of the risks.
Diversification can be achieved by investing in several different types of stocks, bonds, real estate, and commodities. Choosing investments with a low correlation to the market is key to diversification.
Some examples of diversified portfolios include a pharmaceutical company, an oil service firm, a software developer, an internet service provider, and a computer hardware and software manufacturer. A diversified portfolio will also include assets that respond differently to economic conditions and offer better dividend returns.
A diversified portfolio will include stocks, bonds, and cash. Although the U.S. dollar has declined by 96% since 1913, a diversified portfolio may include foreign stocks subject to currency and country-specific risks.
Stocks have higher volatility than bonds. Bonds can be subdivided into investment-grade and junk bonds. The difference between these two asset classes is primarily a matter of risk.
Diversifying your portfolio with diamonds is one way to add an uncorrelated asset. Diamonds are less volatile than other assets and often produce returns when other assets fall. They can be traded with lower friction, making them an excellent addition to a diversified investment portfolio.
Colored diamonds exhibit investment characteristics that other classes can only dream of emulating
There are some characteristics that colored diamonds exhibit that other classes of diamonds cannot. One of the first is their rarity, which means that they are often more expensive than regular colorless diamonds. This is true in every price range, from low to high. But certain factors will help you determine a reasonable budget for colored diamonds.
For starters, consider how rare your desired color is. Some common colors include pink, yellow, brown, green, orange, and purple. However, these can also be extremely rare, resulting in very high prices. Red diamonds are the most common but are also among the most valuable. Pure red diamonds can fetch millions of dollars per carat. Even secondary hues of red diamonds can exceed the benchmark.
The next important factor to keep in mind is color grading. Diamonds with lesser color grading and lighter saturation may qualify for a discount. On the other hand, more desirable cuts and attributes can result in exponential price increases.
Another consideration to consider is the size of the diamond. A small fancy light diamond is usually less expensive than a larger blue diamond. When looking for colored diamonds, you will also want to consider the shape of the diamond. Many manufacturers prefer a cushion or oval shape. Also, the amount of weight you buy will influence your final cost.