India Infoline Article
BY JIGNESH MEHTA
Published: July 4, 2012

Spreading of risks have needs to be considered and hence the modern-day economy demands hunting new avenues for investment in addition to traditional sources.

In an age where economy and inflation have become almost synonymous to each other, Investment decisions have become much more complex and less secured. Any Investment avenue ideally should fetch more than rate of inflation in a year’s time or else the investment will eventually end-up depreciating the overall investment portfolio.  Spreading of risks have needs to be considered and hence the modern-day economy demands hunting new avenues for investment in addition to traditional sources.

Diamonds are rapidly emerging as one of the most preferred new-age avenue for investments. Most luxury items bought have a wear out time but Jewelry, and especially diamonds, can last forever and have more "intrinsic value" than cars and houses. They are usually an important part of an inheritance. Thus Diamonds make a favourable investment for those looking at widening their risk portfolio.

The market trends also indicate that this is a period favorable for investing in diamonds. Demand will outstrip supply for the next decade as emerging economies in China and India are going through a transition phase to serve the consumer-buying interests. As per the current industry outlook, the diamond industry sees a steady growth and prospective investors can expect good returns on their investments. Based on the quality of the investment made five years back, the investor today would have an appreciation of around 45-50% on the investment.

While investing in diamonds, one must be careful to gather information about diamonds in terms of 4Cs (carat, clarity, colour and cut) and the diverse aspects that make a stone desirable and profitable. Consulting a gemologist, diamond dealer or jeweler to help choose the right selection of stones is also highly advisable. The solitaire one invests in could range in quality and quantity, depending upon the buyer’s budget and choice. One also needs to decide whether to invest in loose diamonds or diamonds set in jewellery. While investing in diamonds there are also alternative sources other than direct commodity investment. Buying shares in diamond mining companies is another viable option for diamond investors. Alternative investment markets (AIM) are listed online to provide information on diamond companies who are preferable for this purpose. With a rise in the number of people investing in the diamond market, there are several listed fund investing companies for rare white and colored diamonds that have been launched.

Investing in diamonds has a few common problems that an investor would face because of the lack of uniform and transparent pricing in the market. Also for a first time investor judging the quality of investment being made and assessing if he is receiving value for money is difficult. Thus investment in diamonds becomes inaccessible. A solution to this is branded loose solitaires that assures you of the quality of diamond and ensures that you are receiving complete value for your money.

Diamond is a suitable commodity investment; however buyers must be careful that they invest in the right stone particularly with incidents of synthetic diamonds being on the rise. Given the proper grading and required certification, customers can be ensured that the stones they buy not only last a lifetime but also reap rich dividends when the time is right.

[India Infoline]